duni04:

Not true. If we devalue, foreign portfolio investors will stop selling their equities enmass like they're doing now. As things stand now, any entrant into the Nigerian investment space will purchase Naira at maybe N220 to a dollar. If he wants to take his profits out of Nigeria, the CBN will sell to him at N199 to a dollar, a loss of 10.5%. No sensible investor will make that kind of loss. As it stands now the only people gaining from devaluation are the round trippers. Nobody else is gaining!

Its true devaluation favours Foreign Investor but will this improve the situation for the ordinary man the street in a country where we import everything ? No, absolutely not.

Neo-cons want to further exploit us under the guise of investment and PMB says "no, I will rather diversify the economy and tackle corruption." Your average Foreign investor don't care about the local economy...that's where the conflict lies.

We have nothing to export except, soon-to-be- worthless crude, devaluation will damage the average Nigerian. That's fact.

ValerianSteel:


www.economist.com/news/middle-east-and-africa/21695065-how-make-hard-currency-shortage-worse-can-you-spare-dollar?fsrc=scn/tw/te/pe/ed/canyouspareadollar

the same economist where the ones recommending Buhari now they change mouth.


Economist will never have nigerias best interest

sweetilicious:
In my opinion, your analysis is accepted. Nigeria has just been a country existing without a tangible means for long. Nothing to export and can't even produce much for her comfort. The system has never worked. Part of the reasons i wanted the country to be divided. Although, the country could benefit so much if together, there are no plans for development. In contest to the your comment, i do not support the devaluation of naira because it is not a long term plan for development. The only problem i have is that improving local production might not even work in 10 years time because of our leaders non challant attitude towards improved development. Maybe the so called change might be positive. if so, it is welcomed. The country might not really produce everything but shouldn't import everything. Even the imported goods were over priced and our pricing commission could not revert it because imported goods still incurs much expenses in terms of duties. We have been paying more for some substandard goods. If we devalue, things will be officially more expensive for an average Nigerian.If this country truely wants to change things for the future, local production should be encouraged, quality goods should be produced, our pricing system should live up to its role, by this, employment will be created for the growing population, we will be able to export some goods to atleast African countries and watching our goods being craved for from other continents. If the country truely wishes to grow o. If not, i will wish for Biafra the more.

Let me first of all appreciate your intelligent take on the matter.

Like you rightly said "local production should be encouraged, quality goods should be produced, our pricing system should live up to its role, by this, employment will be created for the growing population, we will be able to export some goods to atleast African countries"

My fear though is that the current fierce need to criticize and ridicule rather than proffer real solutions is what will eventually lead to the collapse of our economy. Our politicians have turned governance into a cult. It's either you are with us or you are against us! That kind of thinking is what got us here in the first place.

We as youths need to step up and start producing quality standardised goods or if we cannot because of financial reasons, buy goods produced in Nigeria.

We need to invest massively in Onitsha and Aba, fund the tech guys in Lagos, encourage the agricultural spirit in the West and let the North be stimulated to keep growing cash crops in large numbers.

We may not always see eye to eye on political issues but on this one, we all need to think about Nigeria first, not what some old greedy men want us to think

.

engrsoma:
Someone must be somewhere giving him a bad advice, Even I an undergraduate don't know much about financial economics talk less of a man without certificate.

One thing I remember for economics in secondary school is comparative advantage, and then we had examples using groundnut etc, but Nigeria is a monoeconomy naa.

There you go again overrating the paper they gave you in form of certificate...mtchew..graduate dey naija?

tuale4u:
devaluation will only make import easy for importers. d current system will promote local production in d long run. All d people asking for official devaluation is to make import of luxury and import of products we want to make locally cheaper. This will kill local production. We are currently importing luxury and other non essential product at 320 naira to a dollar. If we devalue to say 250 and free forex, we start importing them at 250 naira to a dollar. This will kill d motivation 4 local production.

we must bear dis initial difficulties to achieve local production.

i support PMB rigidity on this. Any attempt tp go flexible we will return to where we have been and Nigeria wont progress.

This is the only commentor that is enlightened and whose comments makes sense so far.....Others before him are just plain daft and short sighted....

stevecantrell:


Its true devaluation favours Foreign Investor but will this improve the situation for the ordinary man the street in a country where we import everything ? No, absolutely not.

Neo-cons want to further exploit us under the guise of investment and PMB says "no, I will rather diversify the economy and tackle corruption." Your average Foreign investor don't care about the local economy...that's where the conflict lies.

We have nothing to export except, soon-to-be- worthless crude, devaluation will damage the average Nigerian. That's fact.

Bros understand the fundamentals. The only people gaining right now from devaluation are the bankers that buy at N199 from the CBN and sell at N320 on the black market. Nobody else is gaining! The inflation that the CBN is trying to curtail by not devaluing has already crept in. Headline inflation is already 11% And will rise further. So as it stands today, there is absolutely no one gaining from not devaluing, except the crooks in the banks and CBN that are round tripping.

tuale4u:
devaluation will only make import easy for importers. d current system will promote local production in d long run. All d people asking for official devaluation is to make import of luxury and import of products we want to make locally cheaper. This will kill local production. We are currently importing luxury and other non essential product at 320 naira to a dollar. If we devalue to say 250 and free forex, we start importing them at 250 naira to a dollar. This will kill d motivation 4 local production.

we must bear dis initial difficulties to achieve local production.

i support PMB rigidity on this. Any attempt tp go flexible we will return to where we have been and Nigeria wont progress.

Very false. If we devalue to N250 and still leave the parallel market starved of CBN dollars, the amount of money round trippers are stealing from the CBN will reduce drastically. What importers have done is to shift their demand for dollars from the CBN to the parallel market which has been shut off from CBN dollars. That is why inflationn is rising!

Melkizedek:

Is that the true story? That the local manufacturers closed shop because Nigerians "developed too much taste for foreign products".... When the government couldn't give them power for over 40 years, when the price of petrol kept soaring up...and you turned around to blame the victim? Who do you think you are deceiving? Only the two gullibles that gave you a 'like'

I never said the taste for foreign products is the ONLY reason why local industries shut down. Among the reasons is power a mojor one. However, the thread is about forex and imports so the one related in this case is the fact that Nigerians love anything foreign.

I am not blaming the victim especially the middle class to poor. These are the majority of Nigerians and the group who cant afford the luxury foreign products they import. The blame goes to the elite who are the same people who put Nigeria in the disadvantage.

Dahveydson:


Go wail to a wall if you cannot show me where I applauded them for calling GEJ an ineffectual buffon

are you saying you have not been a fanatical supporter of this administration? Are you now ashamed to be associated with this administration? Abi u wan use style wail? No form left, we have even placed a ban on admission of new members into the club

[quote author=Teewhy2 post=44084768]The economist will promote poll that will best suit the world power and the rest not actually that they have the interest of ordinary Nigerians at heart. I feel this policy at the long run if properly implemented will reduce importation and encourages us to look inwards and develop our country. Countries like India were in this situation before banning all importation, and this makes the citizens looks inward and now they produce nearly all that is needed in the country. [/quote

No matter how negative we try to see what the economics are saying,we have to look at the scale of our economy, what are those things that can easily grow our foreign reserve? What has grown it over the years? Is it not natural resource? What most of us fail to understand is that natural resource is not limited to crude oil alone it includes both agricultural products,(palm oil, groundnut oil, cotton, etc) and other natural resource like coal, tin, gold etc.I think it is better will improve on those things that we have better advantage at producing and the economy will naturally improve.

ojuolu:
And you think the Economist with this TRASH is right? If we devalue our naira, what do we have to export apart from oil to justify this devaluation? Dear, don't be fooled by every nonsense these self serving neo colonists vomit out. A weaker naira with nothing to export apart from oil with falling price means we gonna import inflation into the country. IMF, World Bank, etc are agents of the imperial neo colonists.

Throw away that ur neo colonialist jargon.... the Economist disses even western economies.....they are known to be that severe and critical.

When they painted rosy views of Buhari after d election or eulogize Dangote...do u call them neo Colonists?

the point is the economy is in the gallows and we need a solution....Buhari should revise his economic team. if i were him, i wouldnt mind bringing in a brilliant mind or tw
o from d oppositio....you know whom am talking about.

anonimi:


How will you revive a non-existing manufacturing base?
Do we have the COMPETENT engineers, mathematicians, technicians, administrators, accountants, teachers, drivers, mechanics, bricklayers, etc?
No!
Do we even have the raw materials to run the old machines?
No!
Is it not by creating the environment for FOREIGN investors and ensuring that ALL our children are EDUCATED to have a pool of SKILLED labour at different levels?
Now, tell us which stupid foreign investor will bring in her money at N199 but can only repatriate the profit at N325
Do you see how Buhari's confusion simply makes a bad situation to be WORSE

/
So devaluing the naira will achieve the desired result?

If no progress has been made from $1==N1 till $1==N199, I expect nothing different if $1==N500. Inflation will hit the roof and the minimum salary remains N18k/month.
If you build, they must come. Ask China. Ask Nnewi.

No light, bad road network, poor security, poor sanitation, fraudulant masses, confusing policies, and you think devaluation is the magic wand?

There are too many natural resources in Nigeria. The educated ones have no idea what they are beyond what they read in the textbooks. Until oyibo rolls in their bulldozers and create value for these resources, Nigerians will be moping around like educated illiterates. Devaluing the naira will not attract foreign investors. Even if it does, it will not be in a sector that will benefit the masses.
\

stevecantrell:


Its true devaluation favours Foreign Investor but will this improve the situation for the ordinary man the street in a country where we import everything ? No, absolutely not.

Neo-cons want to further exploit us under the guise of investment and PMB says "no, I will rather diversify the economy and tackle corruption." Your average Foreign investor don't care about the local economy...that's where the conflict lies.

We have nothing to export except, soon-to-be- worthless crude, devaluation will damage the average Nigerian. That's fact.

/
Impressive!

Isn't it surprising how some Nigerians are swallowing the bait of IMF without understanding what is at stake? Isn't it shameful that Nigerians are more concerned with foreign investors than local investors? This is exactly why conspiracy theorists believe that education could be a tool of slavery. Every proponent is only vomiting academic thesis and theories.

SMH.
\

Frustratingly, this crunch is one that Nigeria has been through before—under the then youthful Mr Buhari. Then, as now, he refused to let the market set the value of the currency. Instead he shut out imports, causing the legal import trade to fall by almost 50% and killing much of Nigeria’s nascent industry in the process. Between 1980 and 1990, carmaking fell by almost 90%. Today, as in the 1980s, the president is making a bad situation worse.

Tiskified:
DISCLAIMER: This post is a my reflection on a currency devaluation. It is not meant to be a defense of or a rejection of a decision to devalue. Note also that this post is not political in nature. Just my thoughts.

Where a country operates a fixed exchange rate syatem like we do in Nigeria, devaluation as a monetary policy would involve reducing the value of the Naira with respect to those goods, services or other monetary units with which the naira can be exchanged. When we devalue our currency, we officially lower its value versus other currencies in a fixed exchange rate system that is the monetary authority (the CBN) formally sets a new fixed rate with respect to a foreign reference currency (in this case the dollar)

A devaluation means that the value of the Naira falls. Nigerians will find imports and foreign travel more expensive. However domestic exports will benefit from their exports becoming cheaper.

Herein lies the crux of the matter.

A weakened currency is only valuable if we EXPORT!

Advantages of devaluation

1. Exports become cheaper and more competitive to foreign buyers. This provides a boost for domestic demand and could lead to job creation in the export sector.
2. Higher level of exports should in theory lead to an improvement in the current account deficit. This is important if the country has a large current account deficit due to a lack of competitiveness.

3. Higher exports and aggregate demand (AD) can lead to higher rates of economic growth.

Disadvantages of devaluation

1. Is likely to cause inflation because:

Imports more expensive (any imported good or raw material will increase in price)

Aggregate Demand increases causing demand pull inflation.

Firms / exporters have less incentive to cut costs because they can rely on the devaluation to improve competitiveness. The concern is in the long-term devaluation may lead to lower productivity because of the decline in incentives.

2. Reduces the purchasing power of citizens abroad. e.g. more expensive to go on holiday abroad.

3. A large and rapid devaluation may scare off international investors. It makes investors less willing to hold government debt because it is effectively reducing the value of their holdings.

4. If consumers have debts, e.g. mortgages in foreign currency – after a devaluation they will see a sharp rise in the cost of their debt repayments. This occurred in Hungary when many had taken out a mortgage in foreign currency.

In summary devaluation of a currency is not a task to be taken lightly. If we stimulate exports properly then it MAY be beneficial in the long run. But just devaluing for the sake of having the dollar more readily available is a reckless economic endeavour
.

I think the reason why people are talking of devaluation for now is to bridge the gap between the official lending rate and black market rate, because it can be exploited as another channel for corrruption, besides, the whole essence of deluation is to make our export cheap so that we can grow our foreign reserve through export. But in doing that we have to look at our economics of scale, what are those things we are more likely to export to other countries of the world to grow our foreign reserve? Go back to history and see how it was in the 80,s when dollar was at per with naira the magic was on our natural resources. Make no mistake agriculture(cocoa, palm oil, groundnut oil cotton e.t.c.) is part of natural resources not limited to crude oil.The economy will natural improve when those things are considered. Because market Demand and supply will be the determining factor, not when you try to hold exchange rate of naira constant because you want to discourage import to improve local production, you will only end up distroying the economy because apart from those natural things God has given us the grace to produce I don't, see any manufactured thing with the level of our technology we can export to Europe or Asia to grow our foreign reserve. And when our local production is just for our consumption alone I thing we are not there yet, because we are not growing our foreign reserve.

duni04:

Bros understand the fundamentals. The only people gaining right now from devaluation are the bankers that buy at N199 from the CBN and sell at N320 on the black market. Nobody else is gaining! The inflation that the CBN is trying to curtail by not devaluing has already crept in. Headline inflation is already 11% And will rise further. So as it stands today, there is absolutely no one gaining from not devaluing, except the crooks in the banks and CBN that are round tripping.

I've previously written about the activities of round-trippers in both the cbn and commercial banks. I agree, its a problem.
If devaluation is a magic-bullet, you will need to sell it to the common man as a solution to inflation, job losses, shortage of raw material, slump in manufacturing , fuel scarcity, rising unemployment, food shortage etc which they're currently going thru...ok I'm all ears , SELL !

stevecantrell:


I've previously written about the activities of round-trippers in both the cbn and commercial banks. I agree, its a problem.
If devaluation is a magic-bullet, you will need to sell it to the common man as a solution to inflation, job losses, shortage of raw material, slump in manufacturing , fuel scarcity, rising unemployment, food shortage etc which they're currently going thru...ok I'm all ears , SELL !

It's not a magic bullet. We have 2 different issues here. The scarcity of forex and the price of forex. The CBN cannot meet Pre-2014 demand levels for dollars for obvious reason, the fall in oil price. So they've cut down on supplying dollars for non essential imports. Priority is given to special imports or use of forex. This is sold to the banks at N199, documented and sometimes published. Everyone else buys through the black market at N320. Importers who do not qualify for the essential status are forced to the black market at N320. Meaning they import at 60% more than the official price of a dollar. This added cost is transferred to the consumer purchasing the imported product, which in Nigeria's case is a whole lot of imported products from toothpicks to dresses and food. Market prices will definitely sky rocket leading to the increase in headline inflation that was just announced. If we devalue to say N250, importers of "non essentials" will still be locked out of the CBNs forex market but it will reduce the amount of money speculators and round trippers are making from buying at N199 and selling at N320. This will go a log way in discouraging speculation all together.
Also, our exporters that are supossed to benefit from a weakened Naira are not enjoying any such benefit becase they are guided by regulation to sell their dollars at the official N199.
Then foreign portfolio managers cannot come into Nigeria and buy Nairas at N199 to a dollar and when they're leaving sell their nairas at N320. That a loss of about 60%. That's why they're exiting in droves. The Centra bank cannot guaranty that the free movement of capital across our shores. No investor will put his money in that kind of environment. Our central banks needs to guaranty foreign investors that if they come in at N250 to a dollar,they will leave at N250 to a dollar or even less, and that they can leave anytime they want to.
Without these conditions, foreign capital will continue to leave Nigeria in droves.

[size=28pt]so all the wailers agreeing with the economist on devaluation now are the same wailers who wailed when the economis told them the truth that jonathan was an eneffectual buffoon!!!


so you all agree with economist the Jona na eneffectual buffoon.


we are here today because of the eneffectual buffoon.


so cry all you want Naira will not devlue. which kind of Nigerians can hope for devaluation that makes their own buying lower weak? I know which kind----IGBOS.


I am back from a 1 month ban. ban me again if you like.


it is ibgos who want devaluation so they can start importing toothpicks again rather than giving other Nigerian an opportunity to make toothpicks in Aba, in Lagos or in Kano.


SAI BABA till 2023!!!!


NO TO DEVALUATION.



WE ARE HERE TODAY BECAUSE OF ONE EFECFFECTUAL BUFOOON!!![/size]

macopolo:

I think the reason why people are talking of devaluation for now is to bridge the gap between the official lending rate and black market rate, because it can be exploited as another channel for corrruption, besides, the whole essence of deluation is to make our export cheap so that we can grow our foreign reserve through export. But in doing that we have to look at our economics of scale, what are those things we are more likely to export to other countries of the world to grow our foreign reserve? Go back to history and see how it was in the 80,s when dollar was at per with naira the magic was on our natural resources. Make no mistake agriculture(cocoa, palm oil, groundnut oil cotton e.t.c.) is part of natural resources not limited to crude oil.The economy will natural improve when those things are considered. Because market Demand and supply will be the determining factor, not when you try to hold exchange rate of naira constant because you want to discourage import to improve local production, you will only end up distroying the economy because apart from those natural things God has given us the grace to produce I don't, see any manufactured thing with the level of our technology we can export to Europe or Asia to grow our foreign reserve. And when our local production is just for our consumption alone I thing we are not there yet, because we are not growing our foreign reserve.

Well said.

ellechrystal:
And some zombies who know nothing about Economics will come here n type trash, God help us o. This kind president , his policies r killing his citizens,
N he is so non challant about it.
I blame the people who were chanting "CHAINS"
It's not about being victorious after the elections, the real thing is how to maintain the victory
JONATHAN, I no go lie, we miss u
I guess even in defeat, Jonathan is the victor here

Beauty and brain...rare! U are a gem. We go soon march to otuoke to beg Jonathan

ideylaff:


Thank you my brother or sister, they are just running blindly, shouting local production as if it works in isolation , even the one that does not need local production , poultry chicken in Nigeria is more expensive than chicken brought in from outside because they have added costs of running the business to the output.


I have never seen a bunch of promising team like this fail even from the starting blocks.

Osinbajo is a lawyer whether we like it or not he's never ran a business before as much as the constitution says he's the chairman of the economic team that is so flawed, half of them include the same Governors and assistants sitting round a table for two days drinking five alive and eating puff puff while they fly rented jets to Abuja to determine the direction of our own Economy.

The same set of people who cannot generate IGR for their states now are experts on the economy


It's such a huge joke

Real Jokers