“GIVE me lucky generals,” Napoleon is supposed to have said, preferring them to talented ones. Muhammadu Buhari, a former general, has not had much luck when it comes to the oil price. Between 1983 and 1985 he was Nigeria’s military ruler. Just before he took over, oil prices began a lengthy collapse; the country’s export earnings fell by more than half. The economy went into a deep recession and Mr Buhari, unable to cope, was overthrown in a coup.

Now he is president again. (He won a fair election last year against a woeful opponent; The Economist endorsed him.) And once again, oil prices have slumped, from $64 a barrel on the day he was sworn in to $32 eight months later. Growth probably fell by half in 2015, from 6.3% to little more than 3% (see article). Oil accounts for 70% of the government’s revenues and 95% of export earnings. The government deficit will widen this year to about 3.5% of GDP. The currency, the naira, is under pressure. The central bank insists on an exchange rate of 197-199 naira to the dollar. On the black market, dollars sell for 300 naira or more.

Instead of letting the naira depreciate to reflect the country’s loss of purchasing power, Mr Buhari’s government is trying to keep it aloft. The central bank has restricted the supply of dollars and banned the import of a long list of goods, from shovels and rice to toothpicks. It hopes that this will maintain reserves and stimulate domestic production.

When the currency is devalued, all imports become more expensive. But under Mr Buhari’s system the restrictions on imports are by government fiat. Factory bosses complain they cannot import raw materials such as chemicals and fret that, if this continues, they may have to shut down. Many have turned to the black market to obtain dollars, and are doubtless smuggling in some of the goods that have been banned.

Nigerians have heard this tune before. Indeed, Mr Buhari tried something similar the last time he was president. Then, as now, he resisted what he called the “bitter pill” of devaluation. When, as a result, foreign currency ran short, he rationed it and slashed imports by more than half. When Nigerians turned to the black market he sealed the country’s borders. When unemployment surged he expelled 700,000 migrants.

Barking orders at markets did not work then, and it will not work now. Mr Buhari is right that devaluation will lead to inflation—as it has in other commodity exporters. But Nigeria’s policy of limiting imports and creating scarcity will be even more inflationary. A weaker currency would spur domestic production more than import bans can and, in the long run, hurt consumers less. The country needs foreign capital to finance its deficits but, under today’s policies, it will struggle to get any. Foreign investors assume that any Nigerian asset they buy in naira now will cost less later, after the currency has devalued. So they wait.

Those who fail to learn from history...
Mr Buhari’s tenure has in some ways been impressive. He has restored a semblance of security to swathes of northern Nigeria that were overrun by schoolgirl-abducting jihadists. He has won some early battles against corruption. Some of his economic policies are sound, too. He has indicated that he will stop subsidising fuel and selling it at below-market prices. This is brave, since the subsidies are popular, even though they have been a disaster (the cheap fuel was often sold abroad and petrol stations frequently ran dry). If Mr Buhari can find the courage to let fuel cost what the market says it should, why not the currency, too? You can forgive the general for being unlucky; but not for failing to learn from past mistakes.


http://www.economist.com/news/leaders/21689544-president-muhammadu-buhari-repeating-economic-error-he-made-dictator-30-years-ago-hope?fsrc=scn/tw/te/pe/ed/hopethenairafalls

Cc lalasticlala mynd44

Political analysts and economists over to you..

Would the devaluation of the Naira help solve some issues the economy is facing.

Or

Govt import ban on items will help.

Greedy op

Only time will tell. Let's keep our fingers crossed.

INTROVERT:
Political analysts and economists over to you..

Would the devaluation of the Naira help solve some issues the economy is facing.

Or

Govt import ban on items will help.

Trust me the Naira is being gradually devalued. If its free fall to real value of around 500 Naira is allowed Nigeria will enter a serious social crisis. Its like someone with cancer and instead of giving therapy to prolong life you suggest killing the person even before cancer does.

When you say Buhari knows nothing, people misunderstand it as insult, but the guy clearly knows nothing. They just tell him "Baba sign here", and he signs without reading because he won't even understand it assuming he reads it.

Yoruba people una well done o! See what you people's collabo have done to Nigeria.
#Proudly5percent

A president with a degree in cattle rearing can't do anything positive. He's been busy touring the whole countries in the world

slap1:
When you say Buhari knows nothing, people misunderstand it as insult, but the guy clearly knows nothing. They just tell him "Baba sign here", and he signs without reading because he won't even understand it assuming he reads it.

Yoruba people una well done o! See what you people have done to Nigeria.

There is no need for names calling.. we are just seeking a way foward and probably someone in authority will hear. Don't forget the pResident has a plethora of ministers and advicers including the CBN governor who should in fact direct him on the way foward. Emefiele came out to say devaluation is not the way foward as it would bring about inflation.

Karlovich:
A president with a degree in cattle rearing can't do anything positive. He's been busy touring the whole countries in the world

He's the president now and we have to deal with it.

The Economist should just mind their business. One thing they don't understand is that the policies what would yield great result in Europe or America won't even see the light of day here in Nigeria

Our environment(people, norm, literacy level) goes a long way in affecting economic policies. The Nigerian economy react to these policies in different way therefore we cannot adopt their approach. The average Nigerian mentality differs.

Now on the devaluation matter, When the value of import is greater than the value of export, devaluation is not advisable. You see, Buhari's decision holds water and is indeed appropriate cos the aim of devaluation is to make to our locally produce commodity cheaper thereby encouraging foreign patronage and earn us foreign exchange, on the long-run, due to these patronage/Demand, the local currency gains its value. Devaluation also makes the local currency weaker thereby discouraging import but looking at the average Nigerian mentality, they would still import with the weak currency if you don't place restrictions

If you devalue now without having commodities worthy of export, my brother, in the next 50years, we go still dey weep.

So Buhari and his Nepa bill got it right this time.

Karlovich:
A president with a degree in cattle rearing can't do anything positive. He's been busy touring the whole countries in the world

ur hero with doctorate degree didnt faired well,with his degree he was swindled,scammed,used like a puppet by peeps like dasuki,tompolo etc etc.

Baba cannot be used like ur clueless hero,so what is now d need of jonah's degree,if he cant even make pple he appointed accountable,nd curb their excess


gej a clueless hero

Buhari refused to devalue the naira in the 80s but Ibb did after sending him packing and we know where we are today. Total collapse of the economy.

Fast forward 2016, the west is asking for another devaluation, where will this lead us to this time around?

Things are getting expensive already even sachet water that's an abundant gift in nigeria. It's better markets keep running after devaluing than it being shut down cos of no raw material

INTROVERT:



There is no need for names calling.. we are just seeking a way foward and probably someone in authority will hear. Don't forget the pResident has a plethora of ministers and advicers including the CBN governor who should in fact direct him on the way foward. Emefiele came out to say devaluation is not the way foward as it would bring about inflation.

I am not calling names (apologies if my earlier post suggests otherwise). I am also seeking for solution because my people say "anya bewa, imi ebewa" (if the eyes cries, the nose also cries).

But under Mr Buhari’s system the restrictions on imports are by government fiat. Factory bosses complain they cannot import raw materials such as chemicals and fret that,

Can someone tell me which raw material is under the items on Cbn restrictions

Devaluation wouldn't help us

Godisnear:
The Economist should just mind their business. One thing they don't understand is that the policies what would yield great result in Europe or America won't even see the light of day here in Nigeria

Our environment(people, norm, literacy level) goes a long way in affecting economic policies. The Nigerian economy react to these policies in different way therefore we cannot adopt their approach. The average Nigerian mentality differs.

Economic theories tell you these and that but overlooking the factors that they are subject to and tell you "all things being equal"

We need great thinkers, time to start breaking rules, yes! those theories are century old and people change, in fact times have changed.

In don't know if Buhari has a plan but i sure stand by him 100% on tossing devaluation aside, its not what we need now.

The Economist should park well, stop giving us poo advise.

After all thr ranting, you did not eventually tell us what we need in the end.

Could you please?

Very funny, theories that have been proven over the years would suddenly not work again because one man from Daura has become the president of Nigeria.

Very soon, you go tell me say law of gravity need to change too...

Abeg, you too park well!

fidellamo:


After all thr ranting, you did not eventually tell us what we need in the end.

Could you please?

Very funny, theories that have been proven over the years would suddenly not work again because one man from Daura has become the president of Nigeria.

Very soon, you go tell me say law of gravity need to change too...

Abeg, you too park well!

lol

Young man, is gravity a function of human behavior? fortunately or unfortunately economic policies are.

Do you homework well before you quote me, until then, don't dare quote me.

Following strictly d economic theories of d classroom does hold water again and cannot save our dwindling economy. This is because d world economy has defyed those theories.

My humble submission is dat our govt should radicaly transform things. They should come up with a policy dat every Nigeria citizen must own and practice farming. A law to balance urban to rural dwellers should be enacted.

Research institute should come alive with recent devt and modern technologies. Our crude crop and natural resources export should be subjected to more refinement b4 export to earn more foreign exchange.

Thank you

Godisnear:


lol

Young man, is gravity a function of human behavior? fortunately or unfortunately economic policies are.

Do you homework well before you quote me, until then, don't dare quote me.

This is your second post and you still have failed to tell us what we need. Its obvious you don't know your onions well.

You should have known I was only being sarcastic when I used the law of gravity in relation to economic policies and laws.

The point is laws and theories (whether economic or otherwise) are not just called "laws" for the fun of it. They are so called because they have been tested and well proven over a period of time and situations.

If you don't want me to quote you, please make some sensible posts.

Austin234:
Following strictly d economic theories of d classroom does hold water again and cannot save our dwindling economy. This is because d world economy has defyed those theories.

Any examples?

Austin234:
My humble submission is dat our govt should radicaly transform things. They should come up with a policy dat every Nigeria citizen must own and practice farming. A law to balance urban to rural dwellers should be enacted.

Research institute should come alive with recent devt and modern technologies. Our crude crop and natural resources export should be subjected to more refinement b4 export to earn more foreign exchange.

Thank you

Thank you sir!

Bottom line is that we need to diversify the economy, which is what have been the cry before now in order to avert this.

We have no business changing economic theories!

Running a mono economy is suicidal.

Whatever happened to agriculture? Where are the groundnut pyramids? Whatever happened to industrialization? Where is the Ajakota Steel company, etc.

Our over dependence on oil has undone us over the years and we seem not to learn from it.

Just my two cents.

fidellamo:


This is your second post and you still have failed to tell us what we need. Its obvious you don't know your onions well.

You should have known I was only being sarcastic when I used the law of gravity in relation to economic policies and laws.

The point is laws and theories (whether economic or otherwise) are not just called "laws" for the fun of it. They are so called because the have been tested and well proven over a period of time and situations.

If you don't want me to quote you, please make some sensible posts.

On the contrary, i have a detailed memo on the most effective cause of action(s). ideas are known to change the world and you don't just dish them out because Fidellamo says you should.

Tell me, what do you know about the Asian Crisis of 1997, Malaysia, Indonesia, Thailand and the IMF. One of them walked a path different from the regular economic theory guideline as you would call them and they are all smiles today. Even you almighty IMF later admitted they were wrong so like i said before, The Economist should mind their business. If you have good knowledge of economic policies and history you wouldn't have mentioned me at all to say poo.

Let me enlighten you, i would be very brief but if you are smart, you would catch up, consider these, Electricity, Labour(human resource), Agriculture/industrialization, export.

Make constant electricity available, cost of production reduces - local prices would crash. focus on agriculture/Industry bearing in mind a commodity that can be exported(reasonable % of demand across the globe). e.g palm oil which Indonesia is the largest exporter, with our available land & labour and e.t.c the govt should aim at making its production cost less than Indonesia with objective of stealing buyers from Indonesia and becoming the largest exporter OR ..........

Young man, i have series of ideas that would work like magic, what you see above is the most simple and understandable, if i go into the complex ones, you would be lost, i mean deeply lost, that i can assure you.

If you have something to say or knowledge to share, kindly do, i don't rant, okay maybe i do when i wear my clown attitude.

Choose your next sentence wisely or i will give you a parting gift which would part you, placing part of you here, part of you there and part of you way over there staining the walls.

Godisnear:


On the contrary, i have a detailed memo on the most effective cause of action(s). ideas are known to change the world and you don't just dish them out because Fidellamo says you should.

Noted but making a vague statement in your first post on an issue says the contrary. First impression, they say, ......

Godisnear:



Tell me, what do you know about the Asian Crisis of 1997, Malaysia, Indonesia, Thailand and the IMF. One of them walked a path different from the regular economic theory guideline as you would call them and they are all smiles today. Even you almighty IMF later admitted they were wrong so like i said before, The Economist should mind their business. If you have good knowledge of economic policies and history you wouldn't have mentioned me at all to say poo.

Please do well to enlighten me on any one of the four that walked a different path from the regular economic theory guideline.

Let me give you a low-down just in case missed it somewhere.

First off China and Japan (who are the Asian giants) had to devalue their currency and embraced technology and the export of its product (the same thing your president is running from). Please tell me where china is in the global economic ranking today and I will tell you where Nigeria will be in the next five years if we did same.

Malaysia, Indonesia and Thailand started manufacturing, industrialization and exportation to get out of their economic crises. Thailand is known for rice, Indonesia is known for palm oil, Malaysia is known as the third largest industrialized economy in southeast Asia.

They all followed already well known economic theories so please always justify your statement with facts.

Godisnear:

Let me enlighten you, i would be very brief but if you are smart, you would catch up, consider these, Electricity, Labour(human resource), Agriculture/industrialization, export.

Make constant electricity available, cost of production reduces - local prices would crash. focus on agriculture/Industry bearing in mind a commodity that can be exported(reasonable % of demand across the globe). e.g palm oil which Indonesia is the largest exporter, with our available land & labour and e.t.c the govt should aim at making its production cost less than Indonesia with objective of stealing buyers from Indonesia and becoming the largest exporter OR ..........

Choi bros! Why you sabi copy copy like this na? You just repeated what I said earlier. There is no need arguing this issue, and I will repeat this again: we don't need to change economic theories; we need to change our current status of industrialization, agriculture, etc. --- all we need is DIVERSIFICATION!

When season changes, a tree does not change its roots, it changes its leaves!

Godisnear:
Young man, i have series of ideas that would work like magic, what you see above is the most simple and understandable, if i go into the complex ones, you would be lost, i mean deeply lost, that i can assure you.

If you have something to say or knowledge to share, kindly do, i don't rant, okay maybe i do when i wear my clown attitude.

Choose your next sentence wisely or i will give you a parting gift which would part you, placing part of you here, part of you there and part of you way over there staining the walls.

Lolz, you have series of ideas that would work like magic but would say cos of FIDELLAMO but want him to share his.

Of what use is a lit bushel under the bed?

I guess your parting gifts would be as empty as your first post LOLZ

fidellamo:


Noted but making a vague statement in your first post on an issue says the contrary. First impression, they say, ......

Na my first post cause the matter? Okay, I go modify am small for harmony sake. kindly review.

Meanwhile, I like you, you've got guts.

fidellamo:


Please do well to enlighten me on any one of the four that walked a different path from the regular economic theory guideline.

Let me give you a low-down just in case missed it somewhere.

First off China and Japan (who are the Asian giants) had to devalue their currency and embraced technology and the export of its product (the same thing your president is running from). Please tell me where china is in the global economic ranking today and I will tell you where Nigeria will be in the next five years if we did same.

Malaysia, Indonesia and Thailand started manufacturing, industrialization and exportation to get out of their economic crises. Thailand is known for rice, Indonesia is known for palm oil, Malaysia is known as the third largest industrialized economy in southeast Asia.

They all followed already well known economic theories so please always justify your statement with facts.

Please study that case scenerio well, I didn't say read, I said study. Articles are all over the internet. Focus on IMF advise on aid, expenditure and so on. Case closed.

From my own personal perspective, I think Sunday Oliseh should still be the coach of our Basketball team.

fidellamo:


Choi bros! Why you sabi copy copy like this na? You just repeated what I said earlier. There is no need arguing this issue, and I will repeat this again: we don't need to change economic theories; we need to change our current status of industrialization, agriculture, etc. --- all we need is DIVERSIFICATION!

When season changes, a tree does not change its roots, it changes its leaves!

Be screaming diversification, If you diversify into what has no value in the international market, how does it help your ministry? You have to diversify into what you have cost advantage over . Learn to read and understand.