Datanet:



You are right. Nigerian products are of lower quality than foreign products. I think that is clear. However, If we dont DELIBERATELY patronise them, they wont get any better. You are not buying Nigerian products because they are the best, you are buying because you know this will create employment opportunity for someone, increase the standard of living of your country men, reduce crime rate, increase tax revenue to government, improve the economy etc (you get my drift). Basically be patriotic even if you think their is little to be Patriotic for.

Anything you buy a foreign product, you create jobs in tht country, you improve the standard of living there and help tht country with its development. Next thing you know, we all want to move to Europe or USA.

You are right with regards the challenges in the textile industry as is the case with all our manufacturing sector. Power, credit facility etc.

You say Nigerian products are of low quality but yet you buy Chinese products?

Reference:
What is more shocking reading through the first page responses is that most folks are surprised, enlightened, and 'eye-opened' by this. What is more saddened is that we are building a country full of people than know next to nothing about what affects them so badly on a day to day basis. Our literacy and information levels are just too low to sustain development.

Poster, once more your topic is heavy on history but very lean on causatives. Thought you will rather dwell on the 'why's' and 'how's' we got to this state so that we can collectively stop digging.

You are absolutely right. This should be basic knowledge for every one. We need to get everyone sound knowledge of Economics, Politics, Budget etc at least to be able to question Government Authority intelligently. Like what BudgIT is doing. We dont have any TV/Radio programme that discusses the technicalities of the Economy (commodities, fuel price, exchange rate, unemployment, inflation, interest rate etc) and how these factors affect our daily lives. The closest i have found is on Smooth FM 98.1 Business Express (6.45am - 7.00am). I have learnt alot on the programme even though its just for 15mins Monday to Friday.

PBundles:
This article is more a patriotic call to arms then it is about economics. Yes some points are valid, ..................but these are not the main reasons why we are seeing the Naira fall. All these things she mentioned, were they not taking place, last year, the year before etc etc. I concur, your knowledge on economics is lacking, but there are valid PATRIOTIC points, not ECONOMIC.

cana882:
well from your comment, I can say you have vast knowledge in economics, probably your specialization. I would like to know why you said this is not the cause because last year we exported oil and oil alone as major export, and same last year, the price dropped.

Hi Cana882, yes I have a broad background in Economics having worked in the banking sector for over 20 years, though my main specialty ( what I lecture|) is strategic management.

Firstly I agree with a lot of what she mentions and she has a very strong point and some of them effect the Naira's decline, but thats not he main reason. let me elaborate. Apologies beforehand for the long write up.

In short there 3 main things that cause a currency to depreciate in the long term: global situation, eco situation and monetarty.

Global, the overall global situation, which we are seeing now with China's growth slowing down, the EU not being able to really get the economic ball moving. Though these are $ based, our biggest connection to the $ is Oil prices, so you see where Im going.

eco situation, simply said when the exports of a country decline (in our case mainly oil), the value of the currency will decline, BASIC ECONOMICS. Also when you have a trade deficit, which we have because as she rightfully pointed out we import everything. Our imports outweigh what we export.

monetary, central bank policies and regulations. You see in Nigeria the CB president is politically appointed, though he shouldn't be. His job is quite clear, protect the value and credence of the national currency. But sadly in our case, their polices are done to support who put them their. Simple example, every economists worth his two cents knows WE NEED TO FREE FLOAT THE NAIRA. What we are doing know is simply subsidizing the fixed rate, which we cant keep up as our dollar reserves are low. But to say such would crush Buhari since he told everyone during the campaign he would bring the exchange rate down (one of the most ludicrous statements I have EVER heard in my life, mind you I have nothing against Buhari and we are better off with him, since if Jonathan were still in power now it would have been worse).

In the short term Economic events and Political issues (ie a new government who is seen as not stable) can also effect the currency. These are playing a smaller role.

We are indeed in a lot of trouble economically and Nigeria is caught in a perfect storm, which will wreck havoc the coming years. I estimated what I thought the rate would be the coming year, which I think will be around 425 :

https://www.nairaland.com/2870351/us-eu-officially-lift-nuclear/6#42090871

if you have any further questions, please dont hesitate to ask.

persius555:
Thank you for making this point. This i believe was the 60-80s, when global economy powers then relied on raw materials like cocoa, tin ore, steel, crude oil etc

Then, there was demand for raw materials that we produced in huge quantities. The US dollar as a global base currency was not as strong as it is now. To get our raw materials which was in high demand, you had to come for our naira currency, so the naira was well sought after.
Let it be known that as at then nigeria imported luxury cars, like citroen, bentleys etc Because our currency was well soughted for we didnt have problem patronizing these goods. The 80s was an era when america unleashed its global capitalist system on the world, they virtually invaded every economy via its banks backed by the call for privatization which many countries bought hook line and sinker. This was an era the american us dollar became a global benchmark currency. Unfortunately, that was an era that we abandoned our agro allied industries and went after petro dollar.
The irony is that the americans did not abandon their own agric industry. Its amazing to know that agro-exports still accounts for the highest forex earner for the american economy. I am sure a lot of nigerians dont know this.

I get ur drift and I quite agree to disagree, there are couple of things that makes a country great, human resources, natural resources, exporting powers, currency strength and so on, these I believe Nigeria had even then, so Nigeria was once great

PBundles:




Hi Cana882, yes I have a broad background in Economics having worked in the banking sector for over 20 years, though my main specialty ( what I lecture|) is strategic management.

Firstly I agree with a lot of what she mentions and she has a very strong point and some of them effect the Naira's decline, but thats not he main reason. let me elaborate. Apologies beforehand for the long write up.

In short there 3 main things that cause a currency to depreciate in the long term: global situation, eco situation and monetarty.

Global, the overall global situation, which we are seeing now with China's growth slowing down, the EU not being able to really get the economic ball moving. Though these are $ based, our biggest connection to the $ is Oil prices, so you see where Im going.

eco situation, simply said when the exports of a country decline (in our case mainly oil), the value of the currency will decline, BASIC ECONOMICS. Also when you have a trade deficit, which we have because as she rightfully pointed out we import everything. Our imports outweigh what we export.

monetary, central bank policies and regulations. You see in Nigeria the CB president is politically appointed, though he shouldn't be. His job is quite clear, protect the value and credence of the national currency. But sadly in our case, their polices are done to support who put them their. Simple example, every economists worth his two cents knows WE NEED TO FREE FLOAT THE NAIRA. What we are doing know is simply subsidizing the fixed rate, which we cant keep up as our dollar reserves are low. But to say such would crush Buhari since he told everyone during the campaign he would bring the exchange rate down (one of the most ludicrous statements I have EVER heard in my life, mind you I have nothing against Buhari and we are better off with him, since if Jonathan were still in power now it would have been worse).

In the short term Economic events and Political issues (ie a new government who is seen as not stable) can also effect the currency. These are playing a smaller role.

We are indeed in a lot of trouble economically and Nigeria is caught in a perfect storm, which will wreck havoc the coming years. I estimated what I thought the rate would be the coming year, which I think will be around 425 :

https://www.nairaland.com/2870351/us-eu-officially-lift-nuclear/6#42090871

if you have any further questions, please dont hesitate to ask.

Your points are well noted. Your 20 years experience should come in handy.

I will only elaborate on the Foreign Exchange and Free Float. The CBN will actually tell you that we run a Free Float Forex System or Hybrid (since the CBN still holds an "official rate" at N199/$1. They will claim that 70% or more of our Forex transactions occur in the parallel market (free float). Most of us that need forex cannot and shouldn't access the N199 rate which is exclusive for some critical projects or needs. (Of course we all know this is not working).

The CBN perspective is this, and they have maintained this since 1986. CBN will provide the dollars at N199 for "Priority/Critical public sector transactions" such as Manufacturing, Debt Servicing, Joint Venture Cash Calls, Infrastructure Development, Embassies/High Commissions etc. This is basically a subsidy to these "priority sectors". Though, in the 1986 CBN policy, the priority sectors were also made to cover BTA, PTA, Medical bills, Mortgage repayment, School fees, Utility bills, Life insurance for those that have transactions abroad. In my opinion, these last segment should buy at open market rate/ parallel. The idea by CBN is that those who access USD at N199 should be few. Majority of Nigerians should buy at parallel market rates.

redcliff:
Lol... nigeria needs a reset..

I concur!
How about the french resolution? Anyone? French resolution........shall we?

persius555:
Thank you for making this point. This i believe was the 60-80s, when global economy powers then relied on raw materials like cocoa, tin ore, steel, crude oil etc

Then, there was demand for raw materials that we produced in huge quantities. The US dollar as a global base currency was not as strong as it is now. To get our raw materials which was in high demand, you had to come for our naira currency, so the naira was well sought after.
Let it be known that as at then nigeria imported luxury cars, like citroen, bentleys etc Because our currency was well soughted for we didnt have problem patronizing these goods. The 80s was an era when america unleashed its global capitalist system on the world, they virtually invaded every economy via its banks backed by the call for privatization which many countries bought hook line and sinker. This was an era the american us dollar became a global benchmark currency. Unfortunately, that was an era that we abandoned our agro allied industries and went after petro dollar.
The irony is that the americans did not abandon their own agric industry. Its amazing to know that agro-exports still accounts for the highest forex earner for the american economy. I am sure a lot of nigerians dont know this.

I get ur drift and I quite agree to disagree, there are couple of things that makes a country great, human resources, natural resources, exporting powers, currency strength and so on, these I believe Nigeria had even then, so Nigeria was once great

banmee:


Sometimes people really need to think objectively. A country can peg it's currency to whatever rate. It doesn't mean it has value. Iraq has been exporting oil in like forever, it doesn't mean it was ever a great country. Just because you export products doesn't mean you are great. If that were the case, every country on earth would probably have that tag of being great.

I get ur drift and I quite agree to disagree, there are couple of things that makes a country great, human resources, natural resources, exporting powers, currency strength and so on, these I believe Nigeria had even then, so Nigeria was once great

Wow very good piece, and that's a very factual criticism. Individuals keep looking for who to put the blame on, without looking inward. From all speculations if the masses don't get oriented the naira value to the dollar would even be a trivial issue.

Bookiemart01:


Source:


http://thenakedconvos.com/plunging-naira-before-you-blame-emefiele-look-at-yourself/

Datanet:



Your points are well noted. Your 20 years experience should come in handy.

I will only elaborate on the Foreign Exchange and Free Float. The CBN will actually tell you that we run a Free Float Forex System or Hybrid (since the CBN still holds an "official rate" at N199/$1. They will claim that 70% or more of our Forex transactions occur in the parallel market (free float). Most of us that need forex cannot and shouldn't access the N199 rate which is exclusive for some critical projects or needs. (Of course we all know this is not working).

The CBN perspective is this, and they have maintained this since 1986. CBN will provide the dollars at N199 for "Priority/Critical public sector transactions" such as Manufacturing, Debt Servicing, Joint Venture Cash Calls, Infrastructure Development, Embassies/High Commissions etc. This is basically a subsidy to these "priority sectors". Though, in the 1986 CBN policy, the priority sectors were also made to cover BTA, PTA, Medical bills, Mortgage repayment, School fees, Utility bills, Life insurance for those that have transactions abroad. In my opinion, these last segment should buy at open market rate/ parallel. The idea by CBN is that those who access USD at N199 should be few. Majority of Nigerians should buy at parallel market rates.

Good points and yes you are correct, however the issue now is the 'fixed rate' which we all know is not market conform.

What you eluded is very correct, the so called official rate could be purchased under conditions you mentioned, however the historic rates will show you that the official rate and the parallel (grey) weren't that far off (with the latter always being slightly more expensive).

What we are seeing now is a fixed rate that is not being allowed to float causing a huge discrepancy between it and the grey market. When you see that happen, the market is simply confirming the obvious. In simple terms, the currency is being subsidized and how long can it do that. Note a small but VERY important issue, its not only the private sector that needs $, but the government, so its also costing them money too.

naira may fall to 1000

hopeforcharles:

Do u know there was a time when the naira was bigger than the dollar? Do u know that there was a time when we export majorly? Read ur history books

The naira was artificially high then, the strength of a currency doesn't really tell about the strength of an economy, Ask south Korea

As for major exporter, naa, not really, the only difference is that then, just as the OP has highlighted, we fit out cost according to our cloth, as opposed to now that everyone wants to spend recklessly.

I hope you get

davide470:
As a Finance Analyst, you should also know Parallel market exists in almost every nation and they occur as a result of adverse macroeconomic factors admists other factors.

Nigeria has a long way to go, but the spread between the Interbank and Parallel rates was not caused by the Government. It was caused by Round Trippers; Profit Seekers, even Banks led the gang. CBN reacted with first closing bank's FX trading window (RDAS) before all these other policies.

My point is: 1000NGN ~ $1 is not feasible and it cannot happen.

I just hope CBN maintains its current stance, if they do, I can assure you we would see some drastic spread rebate between Parallel and Interbank rates and also see some increase patronage in local production.

Throttling the economy

14:

Throttling the economy

In English?

MathsChic:
So true. As a finance analyst, I can't but agree with all of this article. Every country determines to an extent how much its currency exchanges for. Nigeria has a long way to go and there's reason to suspect 1000ngn/$1 is a possibility.

this highlights our problem. a finance analyst that can't change 'sh*t'.sorry for the attack but all this chest thumping
9after all i'm a finance analyst) on top nothing is where our problem lies

davide470:
As a Finance Analyst, you should also know Parallel market exists in almost every nation and they occur as a result of adverse macroeconomic factors admists other factors.

Nigeria has a long way to go, but the spread between the Interbank and Parallel rates was not caused by the Government. It was caused by Round Trippers; Profit Seekers, even Banks led the gang. CBN reacted with first closing bank's FX trading window (RDAS) before all these other policies.

My point is: 1000NGN ~ $1 is not feasible and it cannot happen.

I just hope CBN maintains its current stance, if they do, I can assure you we would see some drastic spread rebate between Parallel and Interbank rates and also see some increase patronage in local production.

First, I didn't say the spread was caused by government.
And second, if you knew a little bit more about finance you'd know that anything is possible as the future of a currency, especially when influenced by economic factors like you have in Nigeria. Economic mismanagements have caused catastrophic outcomes in Ghana and especially Zimbabwe. The Zim dollar started at a 1:1 par with the US dollar in 1980 and only a few decades later was exchanging for ridiculously low, in the order of 1 and several million zeros. Continued imports, budget deficits, less creativity and sluggish development will see a country's currency lose value and it wouldn't appear unreal. If Nigeria continues on this path of economic slugishness, you can be rest assured 1000ngn to $1 is a "possibility". All that will just happen is a redomination. It has happened in Turkey, Brazil, Zimbabwe, Ghana, China and many other places in their times of struggle. There's no reason it can't happen in Nigeria.

diegwu01:
the hugging part

Funny guy

which way patriotic Nigerians?

this is so sad!!!!!

but i believe we can come true if we all focus on the message of the write up.......and do the needful.

which is to start producing goods and services,that solves human probs no matter how small or big.

our problem is half solved if Nigeria is Industralized.
Support made Nigeria Goods...
God Bless Nigeria.

MathsChic:

First, I didn't say the spread was caused by government.
And second, if you knew a little bit more about finance you'd know that anything is possible as the future of a currency, especially when influenced by economic factors like you have in Nigeria. Economic mismanagements have caused catastrophic outcomes in Ghana and especially Zimbabwe. The Zim dollar started at a 1:1 par with the US dollar in 1980 and only a few decades later was exchanging for ridiculously low, in the order of 1 and several million zeros. Continued imports, budget deficits, less creativity and sluggish development will see a country's currency lose value and it wouldn't appear unreal. If Nigeria continues on this path of economic slugishness, you can be rest assured 1000ngn to $1 is a "possibility". All that will just happen is a redomination. It has happened in Turkey, Brazil, Zimbabwe, Ghana, China and many other places in their times of struggle. There's no reason it can't happen in Nigeria.

Cest fini

Wow! Thought provoking

Actually, most if not all items in the world are made in China. The problem with what comes into Nigeria is that we DO NOT HAVE QUALITY CONTROL. Anybody can decide to bring in poor quality items from China

You say Nigerian products are of low quality but yet you buy Chinese products?

holuwerpelume:
#Bubu...i bliv u can read dis hun...dis has bn d change we v bn waiting for...

Lmao. Still think so now?