There is always the constant hammering on the point that the main export of Nigeria is crude oil. Some even go as far as saying the economy is a monoproduct economy and this includes well read people and those in government, when in fact Nigeria can not reap more than 20 billion dollars from oil this year while the GDP is over one trillion dollars a year at Purchasing Power Parity Levels. Such statements betray a lack of interest in the fortune or misfortune of the masses of the nation by those making the statements. It shows that those making the statement never think deeply about the economy even for ten minutes at any time.

Presently, India is the major buyer of Nigerian crude, the USA that used to be the biggest buyer will soon become a crude exporter themselves, flooding the market with crude oil and probably offering India a better deal if possible.

We have oil of which India is the major buyer, kolanuts which Indonesians as well as others come to buy to use in their textile industries. Mali, Niger, Cameroun and etc buy our kolanuts and even export from their countries, bitter kola is exported to Europe. Cocoa, Coffee, cashew, ginger are exported to far flung nations all over the world and are not mainly restricted to India like oil. Even Nollywood productions are forex earners that may be at par with oil if the volume under the control of pirates is added to it. All ingredients of our local dishes are exported to nations with significant Nigerian populations. Subsequently our supermarkets and markets are filled with imported products, largely smuggled and paid for with all these exports. So the story that oil is the highest forex earner may be the official story but it can not be the truth. Exports like cocoa, coffee and cashew together are employing more people than the oil industry and they are more important to the economy than the oil sector. A member of the cocoa association in Nigeria once told me that the world bank disbursed more loans to the Nigerian Cocoa Association than to the Association in Ghana or Cote de Ivoire. Something that is indicative of actual volume of output. The Cocoa industry worldwide supports around 50 million people with up to 70 percent of them in West Africa. It must be appreciated by all that most figures being bandied around in Nigeria for population, forex earnings and etc are totally unreliable, sometimes over, other times under stated.

The only truth is that the country is in a mess yet the people are forging ahead and the economy is actually thriving despite the lack of infrastructure, organisation and etc but it can be stopped in its track all thesame or at least derailed by a government dishing out badly thought out policies like the attempt to manipulate the forex rates against the reality on ground. If too much of your currency is in circulation, then the value will drop, if you try to control it by fiat, a parallel market will come up to fill the gap. As the government, the only dollars you have power over is the one you are given by the people buying crude oil from you. To think a South Korean who raised 200 million dollars to buy cocoa in Cross River or Osun state will hand those dollars over to you at 197 naira each when the rate in the parallel market is 290 is rather naïve and people thinking such will happen really need to resign from their government position. Also, if a business owner is given dollars at 197, why will he do business with it if he can just sell it at 290 in the parallel market?. The South Korean or Indian buying cocoa in West Africa to supply companies in Europe and Asia are using loans, not free money, so they will find ways to bring in their dollars without using Nigerian bank accounts. Who would not? Afterall if the dollars are handed over to the CBN, what next are they going to do than sell it to people who may be posing as business men who will then resell it to real business men at 290? A recipe for the collapse of the economy.

As someone bringing in dollars into Nigeria to buy Nigerian products, you are faced with the dilemma of whether to hand over your dollar at 197 or find a way to change it in the parallel market at 290. We are hearing now of a new measure banning the use of Nigerian ATMs abroad in an obvious bid to trap dollars in Nigerian bank accounts.

It has come to a point that the Nigerian state must realise that it is breaking its own rule of legal tender because the majority of government revenue is in a foreign currency. This disregard of its own legal tender law maybe the underlying reason why inflation is one of the most prevalent attributes of the oil export revenue dependent Nigerian state. It has to stop. No problem can be solved without honesty.

I can't say more than thank you for the write up. This is an intelligent write up. The kind that doesn't make front page because it's not some celebrity showing boobs. The Nigerian government it's getting the situation wrongly. I guess everyone eye is focused on oil and we forget that other sectors bring in forex that are lost in thin air. The government should find a channel were they can capture this forex coming into Nigeria without capturing. I will add more to this topic later.

The government should not focus on capturing forex, that is no concern of government, it should be the concern of importers. Government should focus on raising money through taxes to finance infrastructural and human development.

Nothing sums up the function of government more than the panegyrics of Obatala.

Afun nini gba fun aini
O so enikan di igba eni
Iba o!

Meaning
The one who adds more to the wealthy and redistributes so that no one is in poverty.

The one who changed one man into two hundred men.

I pay homage.

That should be the function of government, definitely not running after forex.

The investor from south korea is not coming with 200 million in cash in boxes to change in black markets if he changes to naira what will do with it . He has to show evidence of investment in nigeria and earning to request dollors from cbn for remittance .example if u bring in 10 million dollor wired into you accounts in nigeria to buy cocoa u cant convert in parralel market expect he chooses to stay in nigeria to enjoy the difference or corrupt bankers to help get forex at regulated prices

You are just not being serious. Look at this scenario. You are the MD of a South Korean commodity trading company and you drew 100 million dollars at prevailing interest rates for the purpose of buying produce in Nigeria to supply companies in Europe. You know that if you transfer the money into Nigerian domiciliary accounts, your dollar will change for 197 naira but if you drop it in Niger, Cameroun or Benin republic and smuggle it into Nigeria you change it for 295 in the black market. Considering the fact that the money is a loan and the conmmodity market is not predictable meaning any profit margin is not all that guaranteed, what will you do? Will you transfer the money into Nigerian banks or smuggle cash into Nigeria?

U dont have indepth analysis which serious company will carry hundred of millions of dollar cash, to niger togo or chad do u know the risk of robbery money lundary u think u can withdraw 100 million dollar from the uk in bags to niger or chad .if u even succed convert it to naira at 290 and buy raw material for export this what we want cos we will be an export country based economy but if he leave with 29 billion naira what will he do with it naira is only spent in nigeria i hope u are educated now

You refuse to answer the simple question and are raising irrelevant questions. You don't carry cash to those countries obviously, what you are likely to do is wire the money there and collect your cash which you then smuggle into Nigeria to change in the parallel market.

Somebody buying produce in Nigeria will use the money to buy produce not keep the naira, people selling produce are collecting naira. He wants nothing to do with your filthy currency other than buy your produce with it. He leaves with produce, leaving you to sort out yourselves. What do you mean by what will he do with 29 billion naira? I hope you are educated now?

U wire 100 million dollar to chad or benin then withdraw 100 million dollar who told u it work that way u withdraw cefas from benin or chadians bank even if fly the dollars in private jets bribe your way into najia covert to naira in black market buy produce raw material from najia this is the advantages of devalution its attracts foriegn money which spur up local economy . Thats why japan and china devalued it currency to spur export hp u are enlighted devalution is also a strategy

Wire to nigerian banks or smuggled in to change in black market it double edge advantage any inflow help the economy imagine buy cocoa with it it help the local farmer cos they need naira to buy food medcine and school fee not dollars or how fund get to nigeria

Go and do futher readings on currency wars why china govt keeps rmb low against dollars

Whether a currency has a high value or not is immaterial sir. What is important is that it should not be volatile 200 to the dollar today and 230 tomorrow. Changing at 197 at the CBN and changing 300 in the black market. That is rubbish. Money should be dependable to some extents as a store of value. Inflation should be related to the GDP growth. Not that GDP will be growing at 6 percent while inflation is 15 percent and government is taking the excess. Government should collect money frontally and not through the backdoor.

Maybe you are a debtor who wants the dollar value of your debts to be eroded but that is selfishness. Ask yourself why business men in nations where sanity reigns are doing better than you. Something wrong may seem ok to you because you think you are benefitting but the actual fact is something wrong is never beneficial on the overall and to anyone. You will do better in a properly run economy.

lawani:
Whether a currency has a high value or not is immaterial sir. What is important is that it should not be volatile 200 to the dollar today and 230 tomorrow. Changing at 197 at the CBN and changing 300 in the black market. That is rubbish. Money should be dependable to some extents as a store of value. Inflation should be related to the GDP growth. Not that GDP will be growing at 6 percent while inflation is 15 percent and government is taking the excess. Government should collect money frontally and not through the backdoor.

Maybe you are a debtor who wants the dollar value of your debts to be eroded but that is selfishness. Ask yourself why business men in nations where sanity reigns are doing better than you. Something wrong may seem ok to you because you think you are benefitting but the actual fact is something wrong is never beneficial on the overall and to anyone. You will do better in a properly run economy.

let me educate you further. currency having high or low values against major currencies like us dollars, pounds are very material to the well being of an economy
import dependent countries like Nigeria that import even tooth pick are affected by price swings if our naira is devaluated it causes a price hike In in goods we purchase in the market hence diminishes our purchase power this are the disadvantage

export dependent nation like Germany ,japan china a strong rmb make goods made in china more expensive hence Chinese manufacturers will lose their competitive advantage example a chinko phone made in china sell for 24000 naira while an apple phone sell for 25000 naira which will u buy : but a weak rmb will make the chinko phone sell for 8 k while the I phone 25000.pricing is among the most powerful tools in marketing even in usa the chinko phone will sell cause of low price

volatility of the naira is caused by the speculative attacks by Nigerian citizens go and read punch today a guy was arrested with 870 atm in kano en route Dubai what this group do is to fund the naira account in Nigeria withdraw in Dubai speculate on it this act of disservice to a nation can only be done by Nigerian against their country
how about bankers that denies legitimate forex request but round trip the dollar to the black-markets
how about Nigerian politician and elite that have dollarized the economy
where in the world do u seek person hawking dollars like bread on street
Nigerians don't like Nigeria and the nation economy is bleeding and Nigerians are facing the music

Maybe to a certain extent you are right but it is not the value of the currency that determines the cost of production and wages but rather production techniques and whether or not wages are regulated. So devaluing your currency does not in actual fact reduce the cost of production. What can reduce the cost of production is a superior technology.

The Japanese have their yen at around thesame value of the naira but their minimum wage will be over 300 thousand naira when converted to naira. So they are just wasting paper by devaluing their currency. They should redecimalize. No need to be counting big figures. 3000 yen instead of 300,000. Do you think it makes any difference sir?

lawani:
Maybe to a certain extent you are right but it is not the value of the currency that determines the cost of production and wages but rather production techniques and whether or not wages are regulated. So devaluing your currency does not in actual fact reduce the cost of production. What can reduce the cost of production is a superior technology.

The Japanese have their yen at around thesame value of the naira but their minimum wage will be over 300 thousand naira when converted to naira. So they are just wasting paper by devaluing their currency. They should redecimalize. No need to be counting big figures. 3000 yen instead of 300,000. Do you think it makes any difference sir?

you are expanding the frontier of the debate unnecessarily cost of sale is different from cost of production which are all combination of several factors this what we call management economics the final price of a commodity depend on cost of sales(salaries rents carriage inward etc) plus cost of production(raw materials shipping duties taxes) so look at this component critically the value of your currency is affected by A .Raw materials you source internationally b Shipping equipment's ect example if I run a refinery in Holland I have to buy crude from international markets hence a depreciation of the euro against the the dollar increases my cost of raw material which I can only recoup via increase retail prices of petrols

the Japanese not wasting paper printing the yen they are using the bow man strategy used in the cooperate world YOUR COMPETITIVE ADVANTAGE it give u an edge over other example is several beautiful ladies on a street why will a successful single man pick u for marriage what's your competitive advantage over others the answer can be ur are taller ur can employed from a rich home or Zahra buhari (I don't mind)

so the Japanese export Toyotas Hondas Yamaha to American markets why will an American not buy the Chevrolets made in America but buy Toyota that the answer to question the Japanese target the middle class American with quality affordable fuel pocket friendly car that their target market which is guaranteed by a components of factor among which is a weak yen u either devise strategy to survive capitalism and world trade organization or u remain in penury and perpetual state of confusion like Nigeria and it people

I understand your point which is that if currency is inflated, it will lead to increased spending since more of the money has been printed. All nations inflate and a nation like Japan used to inflate faster than normal, reducing the value of their currency but then wages are adjusted up and the excess monies do not end up looted by politicians. The inflation is so that the burden of national investments can be redistributed but they do not do it in such a way that the value of the yen will go down by more than 50 percent in 7 months and I believe they are no longer doing it in excess nowadays. The yen is stable. The corporations in Japan are extremely wealthy with enormous cash deposited in banks while there are still suffering Japanese. Compare that to Norway where a 4.5 million population have almost a trillion dollars stashed in a trust fund, not owned by corporations but by the nation. So who did Japanese inflation profit? Japanese inflation was to assist local manufacturers by passing their liabilities to the general public, then the masses are hinged up by minimum wage adjustments. Overall, the country is a good country. You can't compare such to what obtains in Nigeria. Also, now that Japanese companies have so much cash, they are doing whatever they like with it. The Japanese hold the largest foreign component of US debts.


The main determinant of value of the currency is the Central bank. This should not be disputed because they print the money anytime they want. If no money is printed at all for 10 years except to replace old ones, what will happen is that the prices of goods will come down and the currency will become stronger. If you produce everything you need in a country (an impossibility), then your currency will become stronger as there will be little or no demand for forex. What is happening in Nigeria is a mockery of nation building. All nations should organise to make production and manufacturing easy, then even if they don't have the tech, foreigners will compete to set up plants since the infrastructure is there, then you will have your fair share of jobs and corporations. Nations should stop issuing banking licenses, such licenses should be held only by governments. Interests on loans should augment government revenue and there should be thinking towards stopping the public trading of shares. Maybe corporations modelled like Cooperative societies will be better for all.

If government will be free to pump new money into the system anyhow they like, then the new monies should be shared at random to all, maybe through a ballot or simply shared. Government taking everything is like sharing meat with your mouth, whatever you cut inside, no matter the size, is yours and this is not fair.

If you want to reduce your cost of production by outsourcing, no one goes to Japan, the target countries are nations with good infrastructure and low wages.

lawani:
I understand your point which is that if currency is inflated, it will lead to increased spending since more of the money has been printed. All nations inflate and a nation like Japan used to inflate faster than normal, reducing the value of their currency but then wages are adjusted up and the excess monies do not end up looted by politicians. The inflation is so that the burden of national investments can be redistributed but they do it in such a way that the value of the yen will go down by more than 50 percent in 7 months and I believe they are no longer doing it in excess nowadays. The yen is stable. The corporations in Japan are extremely wealthy with enormous cash deposited in banks while there are still suffering Japanese. Compare that to Norway where a 4.5 million population have almost a trillion dollars stashed in a trust fund, not owned by corporations but by the nation. So who did Japanese inflation profit? Japanese inflation was to assist local manufacturers by passing their liabilities to the general public, then the masses are hinged up by minimum wage adjustments. Overall, the country is a good country. You can't compare such to what obtains in Nigeria. Also, now that Japanese companies have so much cash, they are doing whatever they like with it. The Japanese hold their largest foreign component of US debts.


The main determinant of value of the currency is the Central bank. This should not be disputed because they print the money anytime they want. If no money is printed at all for 10 years except to replace old ones, what will happen is that the prices of goods will come down and the currency will become stronger. If you produce everything you need in a country (an impossibility), then your currency will become stronger as there will be little or no demand for forex. What is happening in Nigeria is a mockery of nation building. All nations should organise to make production and manufacturing easy, then even if they don't have the tech, foreigners will compete to set up plants since the infrastructure is there, then you will have your fair share of jobs and corporations. Nations should stop issuing banking licenses, such licenses should be held only by governments. Interests on loans should augment government revenue and there should be thinking towards stopping the public trading of shares. Maybe corporations modelled like Cooperative societies will be better for all.

If government will be free to pump new money into the system anyhow they like, then the new monies should be shared at random to all, maybe through a ballot or simply shared. Government taking everything is like sharing meat with your mouth, whatever you cut inside, no matter the size, is yours and this is not fair.

this is in a fantasy world the world of capitalism can operate in this principle co s capitalism and human greed are intertwined the more money u have in your name some else is starving the resources of nation cant go round so it survival of fitess

Why do you think the idea is fantastic? In the past, there were more or less no unemployed people, yet there were very wealthy people. Why do you think it is impossible to return the global society to such an arrangement?