Huge capital flight hits Nigerian economy
Written by Gabriel Omoh, Business Editor
Friday, 05 December 2008
*$13.9bn repatriated in 8 weeks

THE global financial crisis has begun to take its toll on the Nigerian economy as corporate bodies are moving funds massively out of the country and from naira to dollar.

In the last eight weeks alone, a total $13.894 billion went out of the country. While about $757 million went out in the week ending September 9, the amount of foreign exchange flowing out of the country rose to $1.359 billion in the week ending September 19.

It, however, dropped to $452 million on October 3 and moved astronomically to $3.290 billion on October 17.

The foreign exchange outflow went further up to $3.356 billion on October 31 and declined a little to $2.397 billion on November 4 and $2.02 billion and $1.262 billion for the weeks ending November 21 and 28 respectively.

This has resulted in the crash of the naira exchange rate which had remained stable in the last two years.

The CBN has attributed the collapse of the naira at the interbank market to currency speculators who buy and hold currency for them to sell later to make some gain. The movement of funds out of the country comes by way of Nigeria residents buying up dollars with their naira and moving it offshore.

The trend became noticeable in October where in a matter of weeks several billions of dollars were purchased through the banks and bureaux de change. The movement of funds is also in travels — business travel allowance, personal travel allowance, direct remittances and so on.

According to data obtained from CBN over eight weeks, the total amount of foreign exchange that went out through travels amounted to $72.067 million; Debt service/payment $799.194 million;

Wholesale at the Dutch Auction market $6.276 billion; Direct remittance $851.809 million; Letters of credit $3.205 billion and cash sales to banks and bureaux de change $3.170 billion

Market operators are also seeing it from the perspective that the reduction of credit line to Nigeria banks by their foreign counterparts as a result of the global financial meltdown is partly responsible for the high volume of funds leaving the country as the usual 90 days trade credit line has dried up in some banks who have had to meet the needs of their customers through direct sales.

The CBN said, Wednesday, that it would intervene in the matter. Investigation showed that the CBN sold $180 million at the interbank market.

At the open market yesterday, however, the naira exchanged for N137 to the dollar as against the N135 the previous day. But Nigeria’s interbank foreign exchange market remained frozen yesterday as dealers waited to see the outcome of the sale of $180 million by the Central Bank if it would stabilise the naira.

Governor Chukwuma Soludo had said on Wednesday that the Central Bank was ready to intervene from yesterday to ensure stability after dollar supply seemed to have dried up amid unprecedented demand.

He said the Central Bank would meet all demands at a market determined exchange rate and that the apex bank was ready to buy and sell as necessary. “The market still remains closed, we are waiting for the Central Bank intervention. The Central Bank has called around asking for quotes, a banker said yesterday.”

The naira, weakened, close to 8 per cent to almost N130 to the dollar on Tuesday, N135 on Wednesday and N137 yesterday as dealers digested the impact of the 2009 budget proposal announced by the president and reacted to what appeared to be a managed depreciation of the local currency.

The Central Bank allowed the naira, broadly stable for months, to depreciate further against the dollar at its bi-weekly auction on Wednesday, selling at between N127-129 compared to around N117 a week ago.

It sold only $180 million on Wednesday and $100 million on Monday despite demand of about $2 billion, leaving banks scrambling for dollars from other sources

Money market operators said dollar demand was being driven by importers before the Christmas trading season as well as by portfolio investors who have been taking money out of Nigeria as the global credit crisis dampens appetite for risk.

It has also been fuelled by banks, businesses and individuals — worried by the long-term impact of falling oil prices on Nigeria’s economy — shifting their balance sheets out of naira into U.S. dollars.

One banking analyst said he thought the Central Bank might have deliberately restricted dollar supply to the market to flush out speculators and ascertain the true level of underlying demand.

this is just the beginning,the following are the things to watch out for in nigeria
1. Most of the foreign investment from Uk and US in nigeria would be gradually redrawn from our financial,educational and even health sectors.
2. In the coming months the price of oil will fall below $40 for the first time in so many yrs.
3. The fall in the price of oil in the international market will eventually lead to the collapse of the US dollar as a currency.
4. This global financial crisis being experience will linger for a couple of years before full economic recovery will commence.
5. The eventual collapse of the US economy would create a "lacuna" in world affairs, this would lead to the emergence of developing countries including Nigeria

The above is not a prophecy nor is it a prediction, but is something that is going to happen in the world in the coming months. I have always said something similar in the past but I have been often times critise. To my critics in this forum "watch out and see what will happen"

The American economy will eventually collapse.

As recently as a few months ago, people questioned the value of having huge foreign reserves. An illustration of how clueless my fellow Nigerians can be. This forum is littered with threads on this topic.

The key stumbling block to a potential currency collapse, with all its painful effects, is our reserves. I expect a depletion of the reserves to meet budget shortfalls and protect against currency speculation but any notion that Nigeria was shielded from the global economic turmoil will soon be put to rest.

Things might look really gloomy in the immediate short term,
say for the next two quarters, but I expect the recovery to
be just as rapid if not more so.

Everything hinges on how quickly the American economy recovers
of course, and with all the money that has been thrown into the
economy to tackle first the credit crisis, and latterly as well as in future to
stimulate the economy, I am optimistic the American economy will
have a huge rebound.

The fact is, there is still a lot of money slushing around the world, especially
in the Middle East and other sovereign wealth funds around the world, and
once the apetite for risk returns, high yielding assets and high yielding economies
like Nigeria will suffer a deluge.

So a bit of belt tightening for the next few quarters and the good times will roll again.

B T W 4play. . . . . Did you once say Keynesianism had been discredited? Try telling Bernanke that 

pcmecom:

this is just the beginning,the following are the things to watch out for in nigeria
1. Most of the foreign investment from Uk and US in nigeria would be gradually redrawn from our financial,educational and even health sectors.
2. In the coming months the price of oil will fall below $40 for the first time in so many years.
3. The fall in the price of oil in the international market will eventually lead to the collapse of the US dollar as a currency.
4. This global financial crisis being experience will linger for a couple of years before full economic recovery will commence.
5. The eventual collapse of the US economy would create a "lacuna" in world affairs, this would lead to the emergence of developing countries including Nigeria

The above is not a prophecy nor is it a prediction, but is something that is going to happen in the world in the coming months. I have always said something similar in the past but I have been often times critise. To my critics in this forum "watch out and see what will happen"

The American economy will eventually collapse.

American economy has already collapsed or to say the least is on life support. If you are looking for evidence, consider this:
(1) AIG, collapsed and rescued by government.
(2) Citibank collapsed and rescued by the government.
(3)Wachovia Bank collapsed and rescued by government.
(4) The auto industry, collapsed about to be resued by government.
(5) More than 32 million unemployed, unemployment rate at almost 7.00 %
(6)More than 4 million homes foreclosed.
(6) These days, no day or week goes by without a major bank or industry failing.
The collapse of America however poses a serious problem for the world, becuase global currencies are denominated in the dollar and currently there is nothing else to replace it.
The  Chinese who have the potential to replace the US just as the US replaced Britain have 90 % of their assets dollar based. So the world is stuck untill a better sustainable model comes up. Definetly, the US model of capitalism was unsustainable and what is happening now was destined to happen.
Fact is, the US economy was built on a model that allowed everyone to borrow and live beyond their means. This was fine as long as there were pople to loan you the money. Then the US invaded Iraq and was spending $10 billion a month. Essentially, this bankcrupted their economy with all the money being used  to wage an unneeded war, there was no money to loan and boom, things fell apart. It is important to remember that the Soviet Union also collapsed after they used all their money to wage war in Afghanistan.
The capital flight that economies such as Nigeria are witnessing is as a result of American and British (whose economy has collapsed as well) are widrawing funds to pay creditors in their home countries who are either going bankrupt or they themselves are in deep financial problems.
Weather this presents a good opportunity for emerging economies like Nigeria depends on the leadership. For Nigeria, with a clown like Yar'A DOG, forget it. He leacks leadership skills and even if someone offered him a sound insight, he will waste another 2 years making up his mind.
Yar'A DULL will end up being the worst thing to have happend to Nigeria.
Yes, I believe and predict oil prices are heading to the $20 ++ range.
With too many people homeless in America and jobless, they have no need to drive and no homes to heat or cool, so zero demand for oil.
We are all screwed, thanks to Americans and British, but don't count America out yet. They have a cunning way of reinventing themselves either by trickery, force or lies.
God help us all.
revMallam

leave federal reserve out of this! there was once a time some expert call for convertin all reserves to euro when the dollar initally depreciates

like some that beleives that breakin up nigerian will producin paradise, u need your head check, a suitation when a single governor can bankrupt a state is frightening i think!

omi tutu:

B T W 4play. . . . . Did you once say Keynesianism had been discredited? Try telling Bernanke that 

There are 2 misconceptions: that what we are witnessing is a paradigm ideological shift and that free market economists never countenanced priming up aggregate demand in the event of economic crises.

4 Play:

There are 2 misconceptions: that what we are witnessing is a paradigm ideological shift and that free market economists never countenanced priming up aggregate demand in the event of economic crises.

I guess the fault lies with the conflation of Keynes and Keynesianism rather than the validity of his theory.

On the other hand, I find it hard to imagine Hayek is lying still in his grave at the moment.

ikeyman00:

leave federal reserve out of this! there was once a time some expert call for convertin all reserves to euro when the dollar initally depreciates

like some that beleives that breakin up nigerian will producin pradise, u need your head check, a suitation when a single governor can bankrupt a state is frightening i think!

4 Play:

There are 2 misconceptions: that what we are witnessing is a paradigm ideological shift and that free market economists never countenanced priming up aggregate demand in the event of economic crises.

The phrase "Free Market" is an upfront loaded term used by American style capitalists to obfuscate the facts. There is no such thing as "Free Market". It does not and has never existed. All markets are regulated.  If "Free Market" did actually exist, then there will be no need for the EU to subsidize their farmmers and industries and so do the Americans, Chinese etc.
African farmers and manufacturers are the only one that are not subsidized and that explains why they can not compete in the global economy. Even the british pound is subsidized and is not allowed per government policy to fall below a certain level.
"Free Market" is used by US and Europeans to trick developing economies to open their economies to unfair competetion.
The Chinese however found a way around this due to huge economies of scale they have to get around this by paging their currency to the dollar and then devauling even the paged currency. How clever !! The net result has been that, no matter what happens to the dollar, it does not affect them.  American have for long been urging them to rebalance their currency, but they have ignored them.
The problem the world is facing is that, we are facing a situation where people are forced to buy only what they can pay for resulting in less demand for Chinese goods who are the main  financiers of American way of life, (borrow and spend).
Yes, the good times will surely come back, but the days of American leadership is clearly in the rear view mirror.
The Chinese have over one trillion dollars in foreign reserves, the indians have close to 700 billion, the middle East same, Africa has over 200 billion with 60 % of that coming from Nigeria.  US has only 33 billion !!
Yes, there's  lots of money out there, but nobody wants to loan to a company that may not be around tomorrow or even an economy that may not have enough buying power to generate a reasonable returns.
revmallam

That shows what goes arounds must surely come back around, well whatever happens I wish the best for Nigeria But am not sure that will happen due to the kinda leaders we have.

I believe the financial crisis rocking the US economy will be short-lived. By the end of 2nd quarter, normalcy and stability within US going forward should be returning to the market. I agree with you “Omi Tutu” Keynesian theory will definitely bring the economy back to its normal state of mind. US debt is at all time high…but Obama insist on more spending (Direct spending and indirect spending) to prop up employment. Tax season is just around the corner, many people are going to get several refund checks from the government. Also, we have the 2nd economic stimulus package roaring in the house of Representative and Senate. I believe all these spending couple together and some other factors will reduce money hoarding and shore up investors/ consumers confidence, therefore returning the stability back to the system.

Now with huge capital leaving our economy; do we keep quiet because our economy is resilient with huge reserve, cash base society therefore can withstand the financial turmoil or should we use this as an opportunity and avenue to prop up our infrastructure to survive the crisis?. With the price of crude oil at less than $50 per barrel; oil revenue and capital expenditure have been impacted tremendously. Are our policy makers divesting and investing in other cash generating asset that we can count on in good terms and bad terms? Are they by any means necessary boosting our infrastructure, to create an environment for efficient market? Not until we cater for all these scenario will we be free, but if we choose to ignore those warnings …vision 2020 will remain a dream.
God help Nigeria

revmalam

hmmm can i say ever since i join nairaland, damn damn damn mind me, u are the good in analising

no unnecessary preponderance popin up everywhere

suprise their eyez never catch up with u!

courage

I believe the financial crisis rocking the US economy will be short-lived. By the end of 2nd quarter, normalcy and stability within US going forward should be returning to the market. I agree with you “Omi Tutu” Keynesian theory will definitely bring the economy back to its normal state of mind. US debt is at all time high…but Obama insist on more spending (Direct spending and indirect spending) to prop up employment. Tax season is just around the corner, many people are going to get several refund checks from the government. Also, we have the 2nd economic stimulus package roaring in the house of Representative and Senate. I believe all these spending couple together and some other factors will reduce money hoarding and shore up investors/ consumers confidence, therefore returning the stability back to the system.

wonder why u sound so confident, here in Uk if when the goverment reduces the interest rate, they still have to force or beg the bank to pass it to their customers. hmm

my only concern is it high time the FG of nigeria build up infra-structure to create more jobs, in the meantime, the Fg , banks and telecom are the dominate player

courage89:

I believe the financial crisis rocking the US economy will be short-lived. By the end of 2nd quarter, normalcy and stability within US going forward should be returning to the market. I agree with you “Omi Tutu” Keynesian theory will definitely bring the economy back to its normal state of mind. US debt is at all time high…but Obama insist on more spending (Direct spending and indirect spending) to prop up employment. Tax season is just around the corner, many people are going to get several refund checks from the government. Also, we have the 2nd economic stimulus package roaring in the house of Representative and Senate. I believe all these spending couple together and some other factors will reduce money hoarding and shore up investors/ consumers confidence, therefore returning the stability back to the system.

The down turn may be longer than most people expect and even Obama has said it. The reason being that, the savings rate in the US is very low and the US economy is based primarily on real estate values and holdings in company stocks. But as real estate prices continue to deflate due to high unemployment, lack of credit and declining productivity, people have no where to borrow from and banks are not willing to loan money based on declining asset values.
So when people receive the tax refunds, the tendency will be for them to hold onto it and not spend it. Ofourse there is always the minority that are oblivious to basic economic pricinples who will spend.
For things to turn around, it will take a massive infusion of cash given to everyone to spend. Alternatively, a massive reduction of all interest rates on homes in America to a rate below 5% for every primary residence.
With this done, homeowners will then have money to spend and more people will be able to buy homes. Buying a home in America means you will have to furnish it etc and then the spending cycle  begins again.  Like or hate Americans, they are the economic engine of the world becuase they are the only people who spend money they don't have. The chinese, Africans, Europeans, Arabs,  tend to save for what they want.
Once Americans start spending borrowed money again, then, all the money that people are sitting on will be set loose again and perhaps, things will start moving again, but untill real estate prices are up, giving people bogus sense of wealth, am afraid, not much is going to change.
revmallam

Am sorry to say this but I must admit that you all have a positive ideas and show interest in the development of Nigeria But where will all this stand when those in power are not ready for all this developtment and enither do they show more interest for a better Nigeria.

The first thing is not this, cus the main people in power are not ready or willing to, So the problem starts from the people in power not the problem they have or still cursing.

I'm not an expert, but one thing  for sure, is nothin is certain here, we could only hope it works. for eg  a lot of european member state are considerin fundin massive estate development, in the hope of retain jobs and creating more and exist job in order to ignite the market

however in a suitation where therent much confidence and trust in the market, i think one need to worry

F1 just anounce that they are closin the F1 as they no lomger afford the luxury

I can see everyone is expressing his/her very interesting opinion on the current financial crisis and it's pretty impressive how informed we all are. So I figure I can add my own two cents.

In my opinion,(and this might sound like a conspiracy theory) the financial crisis was partially crafted and brewed by the Americans and the British with slight support from a few other western powers.The move was initiated to prevent a potentially catastrophic crash to the American capitalism and indeed the global financial system. I say "partially" because, they didn't start it, they only hastened what had already started.

Before I proceed, take into consideration these facts.
All Four of the world's largest producers of oil are America's key enemies.
These countries are Saudi Arabia, Russia, Iran and Venezuela. Saudi Arabia, while not a political enemy is included, if you consider the fact that Osama is Saudi, 19 of the 21 9/11 bombers were Saudi, and Saudi is also the seat of Islam which is the key focus of the war on terror.So ideologically, Saudi is an enemy of the US.

Oil production
Saudi=11 million barrels per day,
Russia=10 million barrels
Iran = 4 million barrels
Venezuela =3 Million barrels.

America consumes 20 million barrels per day.It produces about 8 million barrels of its consumption, leaving it with export quantity of 12 million barrels.

Oil prices peaked at $147 per barrel, averaged between $120- $130 for months.

At an average price of $125/barrel against the previous $55 a year earlier, these oil producers were making $70/barrel extra.No extra effort, just extra money.
Multiply that by the number of barrels and you get

Saudi= $770 million extra per day
Russia= $700 million extra daily
Iran= $280 million dollars while Venezuela about $200 million extra.

America on the other hand, had to cough out an extra, $840 million on a daily basis. This amounts to an extra $300+ billion dollars yearly.

In the event that the oil prices kept rising to the predicted $200, double these figures, then you'll grasp the enormity. The American economy would have crashed bare naked and all the other western economies would follow suit. But that crash would have come much later, probably in 2009.

Russia and Iran had started displaying very arrogant signals that their new found wealth would be used to decimate America's Super power status. They started forming alliances around the world with very strategic nations. Iran even came to sign a Nuclear nonsense with Yar Adua's Nigeria. They were displaying really threatening signs and the Americans were not going to have that.

So why would the Americans instigate a financial crisis?
Simple. To crash the price of oil.

The increased demand for oil by China and India was mainly fueled by the desire of Americans to consume more and more goods produced by these countries.The more the Americans consumed,the more the Chinese factories produced and the richer the Chinese get, hence their demand for more and more energy which ultimately leads to the rise in the price of oil.

So to crash the price of oil, you cut the demand of oil by the Chinese, by reducing your own consumption. And the only thing that can reduce your consumption is an economic crisis.
The moment the economic crisis was announced, the price of oil started crashing  and has crashed so bad in just six weeks that there is fear it might hit $20. Saudi, Russia and Iran are at a loss as to what has hit them.

While it appears like it's the Americans suffering the economic crisis, America is now saving about $100  per barrel by paying $45 per barrel compared to the peak of July 2008 at $147. That's a saving of $1.2 Billion per day and almost $500 billion over the next one year.
This saving, alongside Obama's infrastructure re-development plan is enough to jumpstart the American economy. In a short while the crisis will be over
.
Some economic/policy goons in the likes of the Brookings Institute and all those other places where they strategise America's future, would be reeling in laughter everytime they see the price of oil go down and down, because they had it all planned out.

As for Nigeria and the capital flight palaver, I think three things make the outlook sooooo bleak.
One is the crash in the price of oil(Oil was about the only reason Nigeria was entering the global economic scene)
Secondly, the guy we have as president knows nothing about governance and it's effect on economic growth.
And finally, Soludo, who would have come out with some smooth strategies to get us out of the mess would be leaving in 2009.

So people, buckle your belts tight, Nigeria might be in for some tough times ahead.

like d best thread on NL

Thinking people. likin it. . .

wow good and brilliant analisation, thx bros for the briefing.

Well seems correct but if its true then after one yr it will happen again cus oil countries will still keep demanding if countries like USA,China and India needs oil badly for their development , Its just sad Nigeria leaders  steal/keep the oil money in their pocket instead of stabilising the country.

Anyway since we have dumb-head government and gentle citizens, well we should ask britain to come colonise us again , cus I can't even smell any bright future for Nigeria.

I do

U smell? and what do u smell ? "Sammy107_d"

PapaBrowne:

I can see everyone is expressing his/her very interesting opinion on the current financial crisis and it's pretty impressive how informed we all are. So I figure I can add my own two cents.

In my opinion,(and this might sound like a conspiracy theory) the financial crisis was partially crafted and brewed by the Americans and the British with slight support from a few other western powers.The move was initiated to prevent a potentially catastrophic crash to the American capitalism and indeed the global financial system. I say "partially" because, they didn't start it, they only hastened what had already started.

No, it is not consipiracy thoery. Your views are similar to those expressed by T. Boone Pickens, one of the wealthiest men in the world and in America. For long, he has argued that by buying high priced oil from America's potential enemies and competitors, America is engaging in what he called, "the greatest wealth transfer in the history of mankind". He argued that America should crash oil prices by developing natural gas powered industrial base.
You maybe wondering what he stood to gain, the answer is that his group of companies controls the largest gasexploration company in the US.
He was dismissed as a man man with too much money and nothing else to do, but when you are worth billions, capitalist neo-cons take you serious while the government openly denies any involvement.
Infact your views are widely held and secretly, many people believe, both what you and T Boone are saying is exactely what is happening.

As for Nigeria, we are doomed with the clown we have as president. Soludo will be leaving next year to join the "world bank"  and Yar'A DOG will replace him with another incompetent idiot.
revmallam

Well corruption rates are actually going down even though it might not seem so, Nigeria is awakened to the idea of diversifying from oil a little, and this thread is enof to smell hope. . .

The problem with the ''conspiracy theories'' as per the price of oil
I think is the flawed analysis as to what has caused initially the
huge price increase and latterly the rapid fall.

The initial surge of oil to the 50 dollar to 80 dollar level was
based on fundamentals, that is rising demand from the emerging
giant economies especially China.

The ensuing spike earlier this year to 148 dollars on the other hand
was very much due to the weakening of the dollar, where oil was used
as an inflation hedge by investors, and this was capitalised on by speculators.

History will not treat Jean Claude Trichet kindly when the story of this crisis is
written. He and other hawks on the ECB were not wholly responsible, but significantly,
for the high price of oil. With their stringent hawkish stance which they maintained
until recently, they were so daft as to not realise the commodity-influenced inflation
which was panicking central banks across Europe was largely due to their own hawkish
stance. The same shortsightedness was exhibited by the Bank of England, and the central
banks in Australia and New Zealand.

The recent fall in commodity prices is not unrelated to the flight to safety, dollar denominated
assets, that have led to the rise in the dollar. Of course fears over a fall in demand as economies
go into recession have also led to the rapid fall in prices.

So basically, there are no invisible conspirators at work I don't think, well as far as the price of oil
is concerned.

But like I said earlier, barring any new discoveries which fundamentally affect the world's appetite for oil,
I suspect oil will prolly return to the 70 to 80 dollar levels, if not higher. There simply is too much money
floating albeit locked away at the moment in risk averse assets, but once all the chinks in the system
have been ironed out, these monies hopefully will be freed up.

Are you sure its not because our brothers want to share more naira when they visit from "obodo oyibo" hence the increase in the dollar strength?

Charlesmud:

wow good and brilliant analisation, thx bros for the briefing.

Well seems correct but if its true then after one yr it will happen again cus oil countries will still keep demanding if countries like USA,China and India needs oil badly for their development , Its just sad Nigeria leaders  steal/keep the oil money in their pocket instead of stabilising the country.
Anyway since we have dumb-head government and gentle citizens, well we should ask britain to come colonise us again , cus I can't even smell any bright future for Nigeria.

I support this motion, just that I think the Americans would do a fairer job at colonizing us. They wouldn't rape us dry, like the British would do.

RevMallam:

No, it is not consipiracy thoery. Your views are similar to those expressed by T. Boone Pickens, one of the wealthiest men in the world and in America. For long, he has argued that by buying high priced oil from America's potential enemies and competitors, America is engaging in what he called, "the greatest wealth transfer in the history of mankind". He argued that America should crash oil prices by developing natural gas powered industrial base.
You maybe wondering what he stood to gain, the answer is that his group of companies controls the largest gasexploration company in the US.
He was dismissed as a man man with too much money and nothing else to do, but when you are worth billions, capitalist neo-cons take you serious while the government openly denies any involvement.
Infact your views are widely held and secretly, many people believe, both what you and T Boone are saying is exactely what is happening.

As for Nigeria, we are doomed with the clown we have as president. Soludo will be leaving next year to join the "world bank"  and Yar'A DOG will replace him with another incompetent idiot.
revmallam

RevMallam,You are right on spot. "The greatest wealth transfer in the history of Mankind" is the best description for what has happened in the global economy for the last two years.
Thanks for introducing me to the Pickens Plan. Pretty interesting.

@omi tutu
The so much money still floating out there( as you've pointed) is not only risk averse, it has also seen much of it's value wiped out.
Most of these monies are held in investment funds which have taken massive hits everywhere.
Money is ephemeral, you can hold it in your hands while it vanishes.

otokx:

Are you sure its not because our brothers want to share more naira when they visit from "obodo oyibo" hence the increase in the dollar strength?

Otokx, it is the direct opposite! When people come in from overseas, they come in with dollars, so the value of the Naira is supposed to rise.
Usually the naira value would and should rise during christmas since there is an influx of cash from overseas. That is predicated on the assumption that all the Christmas importation is done in the early embers like September and October.

PapaBrowne:

So people, buckle your belts tight, Nigeria might be in for some tough times ahead.

Una be alarmist economists.Nothing new.Nothing dey happen. We survived sap and the worst Abacha had to throw at us.Nigeria go better.When things don improve and 'indices' don go up we will be here to read about your explanation and excuses.

Nigerians be pennywise if you are on a salary.If you are into business let the profit pay for its growth and avoid loans.Do not let our economists give you hypertension because most of what goes on in the Nigerian economy is either undocumented or not properly understood.Yet we dey go.

Pennywise:

Una be alarmist economists.Nothing new.Nothing dey happen. We survived sap and the worst Abacha had to throw at us.Nigeria go better.When things don improve and 'indices' don go up we will be here to read about your explanation and excuses.

,  what goes on in the Nigerian economy is either undocumented or not properly understood.Yet we dey go.

This exactely what the problem is. We wait for things to "improve" but we are not the ones making or deciding when the improvements have occured.
Africans wait for others to determine their  fates. Frankly speaking, African economies are in better shapes than most of the Europe and North America, but becuase we have no voice in determining global directions due to stupid leadership, we just follow same people who crashed the world in the first place.

Pennywise:


,  what goes on in the Nigerian economy is either undocumented or not properly understood.Yet we dey go.

Here is another problem. What goes on in any economy should be understood. What is happening in America and Europe is as a result of convulated economic theories based solely on hedonics. Crooks and criminals were allowed to push and introduce various thoeries without understanding the implications.
The entire world believed and followed Americans and the result is what we have.
Personally, I will never employ an American trained economist, because I personally don't believe that true economic principles are taught in American schools and even when they are taught, individuals are not allowed to practice them.

The global or specifically, Amercan and European economic meltdown may be a blessing in disguise. It  may allow the world to rethink and reevaluate  outdated economic models being pushed by americans.

The question is, will our myopic leaders allow people like Soludo to chart the course for an independent economic rebirth that works with the western world and NOT follow their every single dictate?
With clowns like Yar'ADull, I am not holding my breath !!
revmallam

"Well corruption rates are actually going down even though it might not seem so, Nigeria is awakened to the idea of diversifying from oil a little, and this thread is enof to smell hope. . ."

So what have Nigeria divert to since 1960 except oil? ohh sorry i see say u don get mobile phone with one MTN line, Bulshits and poverty

Ose o jare "PapaBrowne", Make them keep up the old story and still dey wait for one miracle wey no go ever happen. Nigeria will come to be the worst country in the world if Nigerians don't act. Investors are already moving out of Nigeria to Europe where there is sensible way of development and stability in growth.

Mr "RevMallam" and Mrs "Pennywise"  I can see both of you are wise and smart, But u didnt tell the rest of the class how you could be able to talk to us easily,fast and direct, U didnt tell us how come you where able to write English for all of us to understand what you are saying, U didnt tell us how come Soludo knows about economy and management.   Since you said Europe and America crashed the world (if not them I don't know what African leaders would have done to this world when after 100.000 years they are still sleeping under tree and Europeans came to Africa to start the development, in just 50,000 years see where we are )

If we were not colonised maybe we would still be eaten uncooked vegetablle and living in a mud house which will distroy our race, Yes the Europeans crashed the world somehow, But if Africans are sensible to be able to create or think for a solution then it would have being good to resolve it all together with contributions of ideas instead of relying on them to solve it and we to use it ( NA them DEY STEAL OUR MONEY FOR NIGERIA ABI OUR SAME BLACK GOVERNMENT LEADERS  ?)

We all better understand the main issue, instead of trying to decieve ourselfs or saying the same issue which we all know already. ( Bad politicians in power ) SIMPLE !!!

Charlesmud:

Nigeria will come to be the worst country in the world if Nigerians don't act. Investors are already moving out of Nigeria to Europe where there is sensible way of development and stability in growth.

This is not true and probably misleading. Investors are moving money out of Nigeria to meet cash calls back home in their respective countries. Simply put, they should not have invested these monies in Nigeria or any other place in the first place because they realy never had the money to invest in the first place. They were simply driven by the astronomical returns of the Nigerian markets and borrowed the monies they invested. The monies in question were backed by inflated equities that have sudenly deflated and their lenders now want their money back to shore up their crumbling balance sheets.
Fact: Europe has had a negative growth for the past several years with increasing social  services  needed to sustain an aging population and no rational investor will be moving money to such an environment.

Charlesmud:


Mr "RevMallam" and Mrs "Pennywise"  I can see both of you are wise and smart, But u didnt tell the rest of the class how you could be able to talk to us easily,fast and direct, U didnt tell us how come you where able to write English for all of us to understand what you are saying, U didnt tell us how come Soludo knows about economy and management.

Ok, I don't understand what you mean, but I try to write in simple English devoid of economic jargons and I assumed everyone understood my mode of writing. But I clearly don't understand what you mean.

Soludo; love or hate him is one of the smartest economists out there today and even the so-called "world bank" agrees. He was a professor of Economics at the University of Nigeria Nsuka. He has long argued for the scapping of the current global financial system and made similar calls as recent as 2 months ago.
I am proud he is a Nigerian, but we will not value him till he joins the "World bank" next year and starts working for them, then we will again have lost another, but then again, there are other brilliant Nigerian economists from Nsukka, Ile Ife, Ibadan, Lagos. If we look inside, we will clearly see that all these half educated expartriates are not needed.

Charlesmud:

  Since you said Europe and America crashed the world (if not them I don't know what African leaders would have done to this world when after 100.000 years they are still sleeping under tree and Europeans came to Africa to start the development, in just 50,000 years see where we are )

Well, are you saying they did not?? They actually did. The problem is global becuase global financial system is dollar based and with a declining and negative growth in the US and Europe, the world is forced to actaually "participate" in their problem.

Charlesmud:

If we were not colonised maybe we would still be eaten uncooked vegetablle and living in a mud house which will distroy our race,

Ahhh, this assertion is a racist myth perpetuated by  racist Western media,  bbc, cnn, etc.
Fact is, Africa has done ok, but should have done better, Nigeria being a good example. But even at that, do a regression analysis using the time of independence as a starting point.
You will be amazed at what the trend lines will look like. You will be amazed that things are not as bad as we make it out to be, but should be better.
The bigest problem facing Africa is bad leadership and sustained Negative media.

Personally, I am of the opinion, that Nigeria produces someof brightest minds out there, but we have not figured out a way to employ them, but hope is not lost. Perhaps the current crisis may be the awakening.
Revmallam

RevMallam:

This is not true and probably misleading. Investors are moving money out of Nigeria to meet cash calls back home in their respective countries. Simply put, they should not have invested these monies in Nigeria or any other place in the first place because they realy never had the money to invest in the first place. They were simply driven by the astronomical returns of the Nigerian markets and borrowed the monies they invested. The monies in question were backed by inflated equities that have sudenly deflated and their lenders now want their money back to shore up their crumbling balance sheets.
Fact: Europe has had a negative growth for the past several years with increasing social  services  needed to sustain an aging population and no rational investor will be moving money to such an environment.

OK that is from your point of view thinking Nigeria is growing but am sure you didnt check the Global market 2007/2008 and also didnt see the way Nigeria is making so much exports with no sign of development or improvement in Nigeria's economy. Nigeria now wants to join a union (WAMZ) to start up with the same currency (ECO) zone by december 2009 all due to be able to stabilies the economy (This single currency idea has already being done in Europe since 1995,  I think).
Europe has being the most successful and stable region and continent in the world, U also know everybody follows their idea, they don't fight for fast growth like America or China but mentain a constant way of development (brilliant system). As you also see everybody uses Europe forms of idea which is the best so far since 15th century.

RevMallam:

Ok, I don't understand what you mean, but I try to write in simple English devoid of economic jargons and I assumed everyone understood my mode of writing. But I clearly don't understand what you mean.

You said both the European and America have being the crash of the present economical problem, But why don't you talk from the wonderful things and inventions they have done through-out the world. They have created economy, created things that makes the world now, they made you know english and u can see its very easy for everybody to communicate easily and good. So far they have done us more good than harm so you should appreciate that and stop saying the little errors they cursed (since 1960 what has Nigerian leaders done for u ?), If not the European,  would we know what crude oil is or whats its for? after all we have being in Africa (Nigeria) since 10th century or even more

RevMallam:

Ahhh, this assertion is a racist myth perpetuated by  racist Western media,  bbc, cnn, etc.
Fact is, Africa has done ok, but should have done better, Nigeria being a good example. But even at that, do a regression analysis using the time of independence as a starting point.
You will be amazed at what the trend lines will look like. You will be amazed that things are not as bad as we make it out to be, but should be better.
The bigest problem facing Africa is bad leadership and sustained Negative media.

Personally, I am of the opinion, that Nigeria produces someof brightest minds out there, but we have not figured out a way to employ them, but hope is not lost. Perhaps the current crisis may be the awakening.
Revmallam

My friend, This is not racist at all cus in-fact I am a pure and full member of fight against racism here in Europe and I don't take bulshits from any white bastards. I just want you to understand somethings and not mix them up due to your dislikes or hatred to the Europeans and Americans cus they have done us more good than harm which is so clear, Yes they say bulshits on the media ok, why can't Africa create or form something or is anybody stopping them? Even AIT in Nigeria is not doing anything positive in Nigeria let alone in Africa, Its a free world. U can tell Nigeria can't survive alone without them but they survive and created things without Africa or can't you SEEEEEEEEEEEEEE? Why can't Africa create or atleast Nigeria to do something, so far you can see how our politicians are messing-up in the government. (that shows what ?)    hahaha

Their is nothing special to expect than for Africans to be better and that wont be our generation, Yes Nigerians are extra-ordinarily good and I know and admit that. So why are Nigerians not promoting their own cus it is even the same white white you hate that his helping them grow and making their talent known.

I love Nigeria and am in support 100% but we should also say and admit the truth that we have gain from this so called white people and they have helped us in so many ways (If not them how will Nigeria be rich with the oil), I am proud and always will be a Nigerian. (Black)