ilugunboy:

I think you are the one making this thing look like rocket science...it's not as complicated as what you are painting it and I will also suggest you don't act as if your argument is superior...that is not how to learn.

We can always disagree to agree.

There is no rocket science. If you are saying "government should spend foreign reserves" then clearly you do not know what foreign reserves are. Government cannot spend that anywhere. Nothing complicated about that.!! I will explain if you issue an IOU and secure it against a piece of Land do you OWN the land . That is essentially what Naira notes are ; a government IOU and the Foreign reserves the "LAND" . Because government is so powerful they can issue as may IOUS as they like (naira notes) but does not increase the value of the Land ..In that respect they are plundering those who hold those IOUS

omonnakoda:

There is no rocket science. If you are saying "government should spend foreign reserves" then clearly you do not know what foreign reserves are. Government cannot spend that anywhere. Nothing complicated about that.!!

Maybe you will indulge me with your own understanding of what foreign reserves are since you are adamant that I don't know.

omonnakoda:

There is no rocket science. If you are saying "government should spend foreign reserves" then clearly you do not know what foreign reserves are. Government cannot spend that anywhere. Nothing complicated about that.!!

The point is this, if the money can be given to one external institution and we get less than 2% on it, why not use it locally to boost the people?

Simple macro economics says S=I SAVINGS = investment. In as much as we dont have a real sector in nigeria, we are seriously far behind. Has someone rightly said use available resources to ginger development by sending youthful nigeria to acquire more technological education . A lot need to be done .China has taken over

omonnakoda:

Sir I do not think you understand what you are talking about. I do not mean any offence or to be disrespectful so please do not take it like that. I suggest you try and study for about two hours what foreign reserves are. Your reference to "the money" demonstrates that clearly. Spending foreign reserves is equal to compulsory acquisition of your citizen's savings That is what I mean by plunder NOT how it is spent. The money DOES NOT BELONG TO GOVERNMENT. If you cannot grasp that there is no basis for discussion.

Brother, I guess you are confused with the economy of a nation's foreign reserve. Yes it is used to cushion the effect of likely currency suck in the international market. But when the economy is not healthy and the reserve is growing. This is a what we refer to as voodoo economy, the case in our economy today.

Standing5:
The point is this, if the money can be given to one external institution and we get less than 2% on it, why not use it locally to boost the people?

That is a different argument about HOW the CBN manages reserves and there have been arguments about local institutions participating which could work but this is a very different notion from government spending the money.The other point is because of our high dependence on imports the turnover of the account is quite high and I believe we spend billions importing things that we could make like rice,chicken etc. That is where we need to focus

Hye-Bits:
Brother, I guess you are confused with the economy of a nation's foreign reserve. Yes it is used to cushion the effect of likely currency suck in the international market. But when the economy is not healthy and the reserve is growing. This is a what we refer to as voodoo economy, the case in our economy today.

...am sure he doesn't experience the stark reality of living in Nigeria.

The other point is because of our high dependence on imports the turnover of the account is quite high and I believe we spend billions importing things that we could make like rice,chicken etc. That is where we need to focus

How do we do this? building the critical mass that can make us net aggregate beneficiary of import/export flow.

ilugunboy:

Maybe you will indulge me with your own understanding of what foreign reserves are since you are adamant that I don't know.

Google is your friend use it but i will mention that reserves do not necessarily have to be "FOREIGN" it could even be gold underground in the CBN vaults what is crucial is that Government cannot appropriate or spend without Monetizing the reserve, read "quantitative easing" read printing more money. Let us assume it is Gold underground. What ever gold there is has already been monetized into paper which people have confidence in based on that gold. What happens if government wakes up one day and decides to sell the gold. That would be VOODOO economics because one must ask whose GOLD is it??

ilugunboy:

Not entirely true.

Let me ask you simple question...what would happen to the economy and the Naira exchange rate if today and for the next six months the price of our main Forex earner ...Crude oil drops to say $25/barrel (God forbid you say?), you will spend that your accumulated reserve to finance the goods that you can otherwise produce in your country but presently imports and your exchange rate will shut through the roof top.

So let me tell you that it's not your accumulated Forex reserve that is presently guaranteeing your relative exchange rate stability but the continue pumping of crude at a good price.

One of the thing Ashiwaju is saying in essence is rather than put the external reserve just for the sake of saving sake..why not pump it into the real economy..that would lead to a win-win situation both for the government and the citizens.

By producing more goods within your country...you are diversifying the economy, generating more employment...reducing the pressure on your Naira..building you GDP..and making the economy overall more healthy.

That to me is what guarantees your currency strength and not just the accumulation of reserves.....reserves on it own won't be forced, it will happen naturally when you don't have the need to spend it on too much imports.

If FG put away the foreign reserve and invest it won't Tinubu start shouting that Nigeria's foreign reserve is empty and that GEJ is embarking on a fruitless project with the money. Opposition will remain opposition no matter what because they have just one job which is to find everything the other party does to be wrong.

ilugunboy:

...am sure he doesn't experience the stark reality of living in Nigeria.



How do we do this? building the critical mass that can make us net aggregate beneficiary of import/export flow.

The reality of living in Nigeria is irrelevant to the issue at hand and is the same whether you live in Kathmandu or Azerbaijan.

omonnakoda:

There is no rocket science. If you are saying "government should spend foreign reserves" then clearly you do not know what foreign reserves are. Government cannot spend that anywhere. Nothing complicated about that.!! I will explain if you issue an IOU and secure it against a piece of Land do you OWN the land . That is essentially what Naira notes are ; a government IOU and the Foreign reserves the "LAND" . Because government is so powerful they can issue as may IOUS as they like (naira notes) but does not increase the value of the Land ..In that respect they are plundering those who hold those IOUS

Now i think i get you...you are confusing/tying the gold-backing of the Naira to the foreign reserves?

If that is what you are implying..then I think we don't have further basis to continue this discussion.

gboss4sure:

If FG put away the foreign reserve and invest it won't Tinubu start shouting that Nigeria's foreign reserve is empty and that GEJ is embarking on a fruitless project with the money. Opposition will remain opposition no matter what because they have just one job which is to find everything the other party does to be wrong.

Gboss

Let isolate the politics and concentrate on the economics substance for now...

ilugunboy:

...am sure he doesn't experience the stark reality of living in Nigeria.

NOT RELEVANT

How do we do this? building the critical mass that can make us net aggregate beneficiary of import/export flow.

Since joining the WTO we have added new problems to those we have. Our markets are force to accept all kinds of rubbish under the guise of WTO obligation and our people have unbridled appetites. India got concessions from the WTO and were able to ban many things thus allowing them to develop. I do not see an alternative to a period of prolonged bans. Unfortunately this can only mean more pain for our poor masses. In particular textile and processed foods.There are always sentiments involved in everything. Who does most importing in Nigeria and how would they react?
The other funds that are being saved like ECA and SWF e.g are reasonable targets but all these monies accrue to Government.THe fact that Government is the only player means that even if the money was twice what it is now nothing will change because of corruption. Nigeria has made more money under PDP than ever before . Where is it?

For example do we need a SWF? in My view only if it invests in Nigeria. There is so much to invest in in Nigeria Refineries/airports et and so I do not disagree that we do not need to be saving. I am just saying that Foreign reserves ARE NOT savings

ilugunboy:


Now i think i get you...you are confusing/tying the gold-backing of the Naira to the foreign reserves?

If that is what you are implying..then I think we don't have further basis to continue this discussion.

GBAM!!
That is EXACTLY what I am saying .
We never had a gold standard but use foreign reserves to support our currency. Foreign reserves belong to CBN not FG

omonnakoda:
NOT RELEVANT



Since joining the WTO we have added new problems to those we have. Our markets are force to accept all kinds of rubbish under the guise of WTO obligation and our people have unbridled appetites. India got concessions from the WTO and were able to ban many things thus allowing them to develop. I do not see an alternative to a period of prolonged bans. Unfortunately this can only mean more pain for our poor masses. In particular textile and processed foods.There are always sentiments involved in everything. Who does most importing in Nigeria and how would they react?
The other funds that are being saved like ECA and SWF e.g are reasonable targets but all these monies accrue to Government.THe fact that Government is the only player means that even if the money was twice what it is now nothing will change because of corruption. Nigeria has made more money under PDP than ever before . Where is it?

For example do we need a SWF? in My view only if it invests in Nigeria. There is so much to invest in in Nigeria Refineries/airports et and so I do not disagree that we do not need to be saving. I am just saying that Foreign reserves ARE NOT savings

All we are saying is let them save the reserve in Nigeria and stop making it external reserve.

Let our banks have access to it..

Presently they are saving the reserve elsewhere...who are those enjoying from accruing benefit? mostly foreigners.

How can a sleeping government practice? They are practicing nothing and are only thinking of 2015. The only person talking now is Okupe. Agric Minister, Works Minister, Finance Minister, Housing Minister, Niger-Delta Minister, Education Minister, Health Minister etc - When last did you hear anything from them? Nothing to do. Nothing to say. Nothing, nothing....I do not even know the names of some of them! Economy may go into coma at this rate? Their achievement is 4 years may just be that they have revived NollyWood. Shame.

ilugunboy:

All we are saying is let them save the reserve in Nigeria and stop making it external reserve.

Let our banks have access to it..

Presently they are saving the reserve elsewhere...who are those enjoying from accruing benefit? mostly foreigners.

It is not as simplistic as you make it sound. We have serious management and integrity issues as we have seen with police pension,petroleum subsidies and NNPC.Last year the FG was borrowing locally at over 10% although it is now coming close to 10 . We have inflation close to 10% so injecting massive funds into our economy overnight is not necessaril helpful. Prices skyrocket and those with stolen funds sustain this because they can pay any amount for common goods which are often imported. It all returns to electricity.Even a business as simple as chicken production i.e a hatchery needs 24 hour power. Operating that with diesel means that it is cheaper to import than produce setting up a vicious cycle. Take cement Dangote selling at nearly 2000 while in India it is 500 .Bringing in reserves will enrich a few and increase their power to import while others languish. Even with what we have already why are we importing petrol? Why no electricity

omonnakoda:
It is not as simplistic as you make it sound. We have serious management and integrity issues as we have seen with police pension,petroleum subsidies and NNPC.Last year the FG was borrowing locally at over 10% although it is now coming close to 10 . We have inflation close to 10% so injecting massive funds into our economy overnight is not necessaril helpful. Prices skyrocket and those with stolen funds sustain this because they can pay any amount for common goods which are often imported. It all returns to electricity.Even a business as simple as chicken production i.e a hatchery needs 24 hour power. Operating that with diesel means that it is cheaper to import than produce setting up a vicious cycle. Take cement Dangote selling at nearly 2000 while in India it is 500 .Bringing in reserves will enrich a few and increase their power to import while others languish. Even with what we have already why are we importing petrol? Why no electricity

All the fears you are expressing still boil down to lack of trust....when you have a forward looking..well intention and focus government....you will rather prefer you have the reserve here than elsewhere.

ilugunboy:

All the fears you are expressing still boil down to lack of trust....when you have a forward looking..well intention and focus government....you will rather prefer you have the reserve here than elsewhere.

Sure but this thread was not so much about location but deployment. I agrre we should have as little of our resources outside our control as possible.During the Libyan war Libyan assets were unilaterally frozen and transferred to rebels.As such we would do well to have our reserves under our control. We cannot have a forward looking etc government as you describe without addressing fundamental issues regarding our nationhood and its continuation. Within the last 12 months we heard of the disappearance of Naira note from the CBN . So corruption is such a cancer in our life but I do not believe TINUBU or his cotraveller CAN fight corruption. Last week we heard of Oil block distribution. Taking that as an example ; how will that change under TINUBU. That for me is the crux. Its all six and one half of a dozen to the other.

ypzilanti:

I'm not a Tinubu supporter, but can you please fault the logic of his assessment. This is Economics 101. You either run a deficit government, or a saving government...you can run a deficit and save at same time. Makes no sense.

what are you vomiting? You mean countries who run deficit budgets don't have foreign reserves? In the last 4 years the u.s has ran deficit budgets yet they still have their foreign reserve for a raining day! It's simple economics!! Every country own debt. Debt is an essential part of big economies, the largest economies on earth own the largest debt ranging from the u.s to the e.u and even china but that does'nt mean they evicerate their savings for a rainy day.

nchewi:


Do u have a brain?? I seriously doubt!!!






Do tell, what is d academic qualification of your father?

you are drowning in quantum idiocy that's why rather than articulating a reason you don't agree with others, you just insult the person. It's an advance stage of lunacy!!

nkem Kalu: ....I WILL SIMPLY CALL U EWU FERNANDA PO COS WORDS SUCH AS 'WE ARE THE LARGEST ECONOMY IN AFRICA' DOES NOT PROVE ANY POINT. THIS IS SIMPLE ECONOMICS THAT TINUBU IS TALKING ABOUT. ANYWAY, MAY BE, U READ PHILOSOPHY OR IGBO/B.K IN SCHOOL AND U DON'T UNDERSTAND THE SIMPLE LOGIC OF ECONOMICS SO NO NEED TO EVEN ARGUE WITH U

you must be a bigger idiot than tinubu, this is simple economics!! Which country on earth evicerates it's foreign reserve because it is indebt? The united states is over 16 trillion in debt have they cleared their reserves? The fund the debt and keep it stable. That is how it workd and that is what nigeria is doing. Ignorance is a disease!!

Symphony007: you must be a bigger idiot than tinubu, this is simple economics!! Which country on earth evicerates it's foreign reserve because it is indebt? The united states is over 16 trillion in debt have they cleared their reserves? The fund the debt and keep it stable. That is how it workd and that is what nigeria is doing. Ignorance is a disease!!

But why borrow someone else money at 16% and lend tours out at 2%? is it because it is called reserve?

Symphony007: you must be a bigger idiot than tinubu, this is simple economics!! Which country on earth evicerates it's foreign reserve because it is indebt? The united states is over 16 trillion in debt have they cleared their reserves? The fund the debt and keep it stable. That is how it workd and that is what nigeria is doing. Ignorance is a disease!!

Which country keeps all its earnings in foreign reserve despite staggering infrastructure deficiency. This is exactly what Nigerian Voodoo economists are doing. Indeed, ignorance could result epidemics.

Symphony007: what are you vomiting? You mean countries who run deficit budgets don't have foreign reserves? In the last 4 years the u.s has ran deficit budgets yet they still have their foreign reserve for a raining day! It's simple economics!! Every country own debt. Debt is an essential part of big economies, the largest economies on earth own the largest debt ranging from the u.s to the e.u and even china but that does'nt mean they evicerate their savings for a rainy day.

The question is not about budget deficit and foreign reserve. It's about infrastructure deficit and foreign reserve. A country can't run budget deficit and infrastructure deficit at the same time to favour forced foreign reserve. This is the point.

Don't you just love the way some people argue - add FOREX + RESERVE = foreign reserve. If you look at accounting theory of Assets and Liabilities, same applies. The Forex position is a major determinant to your local currency, deplete your reserve (asset), you're saddened with liabilities pushing your local currency value way lower.

Obiora4life: Don't you just love the way some people argue - add FOREX + RESERVE = foreign reserve. If you look at accounting theory of Assets and Liabilities, same applies. The Forex position is a major determinant to your local currency, deplete your reserve (asset), you're saddened with liabilities pushing your local currency value way lower.

Be quiet! must you talk on everything ? Nonsense!

omonnakoda: Be quiet! must you talk on everything ? Nonsense!

Yes o, lol

What's your beef with me now?

Obiora4life:

Yes o, lol

What's your beef with me now?

nO vex O bro. I just lashed out. Confirmed No action tonite

Please help me.

In Nigeria , how is this Foreign reserve accrued

is it 1. Sale of Oil or 2 Organisation or people exchanging dollar to Naira

Rent seeking growth wont guarantee prosperity in the long run ...only a real sector growth will guarantee abundance life and prosperity ...talk to China and you will see how virtually they've eliminated rent seeking income from their economy.

ilugunboy: Rent seeking growth wont guarantee prosperity in the long run ...only a real sector growth will guarantee abundance life and prosperity ...talk to China and you will see how virtually they've eliminated rent seeking income from their economy.

What is rent exactly? Depends on how you define it?All businesses are about rent otherwise why bother? Intellectual property by its nature is rent-seeking?