Wanted to post this after reading it on the BBC, but you beat me to it

Theoretically it will work buh I doubt if those stranded by the backlog would want to come back in at least for now.

Trust Nigerians, they will mop up the forex in anticipation of another round of scarcity until things normalizes.

Hoping the foolish banks would re-enable the Naira dominated cards again because it crippled lots of SMEs and no doubt it resulted in increased insurgencies.

Nice...

I will rather be cautious and watch how things go before commenting. I cannot forget how the yuan deal was praised to high heavens and i almost fell for the sweet talk but today i can't even hear the word yuan again.

Let's hope this will make sense because Naija matter dey defy economic logic.

Pls house, this might sound stupid but I need to ask because I don't know. I have been hearing this " Floating the naira" for about a week now but I don't really know what it is. We are here to learn anyways.
Pls explain it to me.
What does it mean to FLOAT THE NAIRA.

I need candid answers pls, no insults.
Thank you

How do they plan to restrict access to foreign exchange for contraband goods? If these goods are not banned...but you can import it as long as you dont get dollars over the counter, how will this system check them?

Ifesinachi22:
Pls house, this might sound stupid but I need to ask because I don't know. I have been hearing this " Floating the naira" for about a week now but I don't really know what it is. We are here to learn anyways.
Pls explain it to me.
What does it mean to FLOAT THE NAIRA.

I need candid answers pls, no insults.
Thank you

What it means is that the value of the Naira to a Dollar will no longer be fixed by the CBN or government but through the forces of demand and supply. The market (buying and selling) will determine the right exchange rate a Dollar should trade in respect to the Naira. There will be no more black market but one central market for all buyers or sellers of FX.

God bless Godwin Emiefele

Any time I read that we import toothpicks, am always sad.

Dottore:
We are watching. I'm tired of all these pocket economic theories. Though the source of this particular article is a reputable one but the truth remains that the complexity in Nigeria's economic realities have timelessly contradicted all conventional academic economic tales hence the CBN Governor and his crew have resorted to trial and error economics.

It was Buhari peg of the naira at 197 that plunged the country into this mess and not the CBN. There was no trial and error policy here. Buhari unconstitutionally took over the affairs of the Central Bank.

Atmmachine:
Please, I need answers to these questions
Goodluck Jonathan was accused of stealing billions of dollars, he saved no money for the incoming government.

When Buhari got into power, the price of oil went down, the economy went bad, there's no source of income for the government.

Where are all the money this present government spends come from ??

I recommend basic Economics class for you.

Boss13:


All economies in the world are complex. Though some have their peculiarities. The G8 for instances make and influences policies to their advantage. We live in a dynamic world and not one that is static. Hence, policies must be adapted or change to suit challenges as they arise. The United States lowered interest rate to boost productivity, offered incentives to business owners and also made bail out to Banks. The Eurozone has the lowest interest rate and even a negative yield on Government bond.


The CBN, in view of the challenges currently being experienced, has decided to review the policy on FX. This policy made be reviewed or withdrawn if abuses are noticed or the required positive change is not felt. Hence, it is not a trial or error economics, but one to addressed the current challenges and dynamics of our environment.

Bless you my brother

CzarRex:
when did bbc know so much about our economy more than we do?


and the writeup kind of looked like a mockery of the present state of nigeria,well i don't blame them,we have been lead by some useless and greedy leaders who only knows their pockets.

tropical nairalander

Lordjiggs09:
is it only me or is someone else out there feeling optimistic about this floatation stuff? I don't really understand the whole economics gimmicks but certainly I'm seeing a lot positivity in this new policy.

God bless Mr president.

God bless Nigeria.

God bless the good people in it.

It's a very positive move. It will end dollar scarcity and spur production. Also the value of the naira will rise against the dollar at the black market bringing down the cost of goods. Expect inflation to fall

Rubbish, BBC did well to attribute the source of the article.. renowned econmic professors have written the floating off as foolish this zombie is here writing thrash.. again rubbish

Quakertellicus1:


From oil sales,no doubt.Of course....we are not making enough money....and we may even have to borrow more.Perils of a Dutch diseased economy.

Plus....thanks to corruption....we were not able to save far more than we actually did.

Still....it makes no difference.If GEJ saved.....it just means that our economic crisis would have kicked off next year. Oil money....and for that matter.....agric, mining....are not stable forms of revenue.

Stupid people fail to take responsibility. Gej is gone. Let him be. Your senator from you zone and your local govt chairman are the real looters. You need tutorials. You sound like a newspaper stand arguer. "if GEJ saved" remember that before a budget was touched and approved ur uncle had been flying up and down and nass and all other executives were being paid without stress, and you are still calling gej? U propound unfound theories. Calculate the annual salary of the national assembly, couple that with your governors and lga chairmen and you will shut up! You don't know what government is about especially in Nigeria so stop making judgement calls! Anybody can write anything in the newspaper you read. All propaganda to smear opposition, you know nothing about why the country has been hard...and nothing about the length politicians go to make opponents look bad..... You are not an authority in this field, neither are you knowledgeable enough to utter any amount of sense given your comment above. Good morning and stop engaging in mindless propaganda, be a good citizen, take responsibility for your fate and actions and pray for the country. The past is like an ass its behind us, look forward. "if it had been" has never and will never help any country.... Judge your leaders by their actions not by their words of scorn or blame towards opponents.... Nigeria will be corrupt until tomorrow because people like you don't realise it takes more than efcc chasing people arnd like mad dogs to quench corruption....

designking:
We have already experienced the worst the naira can go which is around a price of N375. The CBN allowed all manner of unrestricted trading activities like round tripping, hoarding, pricing fixing etc on the FX market and the worst the market was able to push the naira was N375 to a dollar.

With the current policies, we will experience better volatility and liquidity and Naira should eventually improve over the weeks ahead. The economy will receive a boost from this policy because the market sentiment is currently bullish.

Better days ahead!!

Correct my brother. I am waiting till Wednesday before making any decision

The common man doesn't care about whatever is said. This news is very useless until it has actually come to reality and lasts long enough to heave a proper sigh of relief. Nigerians....smh....all praise speeches.....
And get bamboozled and swooned again and again.... Drama continues part 2.

Oyinbo economic permutation is not Nigeria's economic reality. They have not taken "Nigerian Factor " into consideration.
Hoping for the best though.

Ijaya123:


I recommend basic Economics class for you.

You don't have to scorn people to teach them. You don't know everything oga/madam. Explain to him instead of making it look like if he doesn't know economics he shouldn't be alive or something.
Kudos you understand whatever is going on in the economy but not everybody does, and it doesn't make you more intelligent or better off than them... Good morning oga pompous.

Zedoo:


Stupid people fail to take responsibility. Gej is gone. Let him be. Your senator from you zone and your local govt chairman are the real looters. You need tutorials. You sound like a newspaper stand arguer. "if GEJ saved" remember that before a budget was touched and approved ur uncle had been flying up and down and nass and all other executives were being paid without stress, and you are still calling gej? U propound unfound theories. Calculate the annual salary of the national assembly, couple that with your governors and lga chairmen and you will shut up! You don't know what government is about especially in Nigeria so stop making judgement calls! Anybody can write anything in the newspaper you read. All propaganda to smear opposition, you know nothing about why the country has been hard...and nothing about the length politicians go to make opponents look bad..... You are not an authority in this field, neither are you knowledgeable enough to utter any amount of sense given your comment above. Good morning and stop engaging in mindless propaganda, be a good citizen, take responsibility for your fate and actions and pray for the country. The past is like an ass its behind us, look forward. "if it had been" has never and will never help any country.... Judge your leaders by their actions not by their words of scorn or blame towards opponents.... Nigeria will be corrupt until tomorrow because people like you don't realise it takes more than efcc chasing people arnd like mad dogs to quench corruption....

I am afraid that you misunderstood me.

We are an oil dependent economy. And the amount we earn from oil is not enough.

Hence my comment about Gej and savings (which by the way was directed at those who say that Gej failure to save is why we have economic problems)

We have to get off oil......which is why I want to see this govt fight corruption completely and spend more on power and transport. So that we do not have to rely on fluctuations in oil price which is the real reason why we are economically unstable

Boss13:


All economies in the world are complex. Though some have their peculiarities. The G8 for instances make and influences policies to their advantage. We live in a dynamic world and not one that is static. Hence, policies must be adapted or change to suit challenges as they arise. The United States lowered interest rate to boost productivity, offered incentives to business owners and also made bail out to Banks. The Eurozone has the lowest interest rate and even a negative yield on Government bond.

The CBN, in view of the challenges currently being experienced, has decided to review the policy on FX. This policy made be reviewed or withdrawn if abuses are noticed or the required positive change is not felt. Hence, it is not a trial or error economics, but one to addressed the current challenges and dynamics of our environment.

I hope that doesn't happen because it will spell disaster for foreign investment for a long time,
unstable forex policy is the greatest fear of investors.

CzarRex:
when did bbc know so much about our economy more than we do?


and the writeup kind of looked like a mockery of the present state of nigeria,well i don't blame them,we have been lead by some useless and greedy leaders who only knows their pockets.

Did you skip the part that says financial blogger Feyi Fawehinmi?

Quakertellicus1:


I am afraid that you misunderstood me.

We are an oil dependent economy. And the amount we earn from oil is not enough.

Hence my comment about Gej and savings (which by the way was directed at those who say that Gej failure to save is why we have economic problems)

We have to get off oil......which is why I want to see this govt fight corruption completely and spend more on power and transport. So that we do not have to rely on fluctuations in oil price which is the real reason why we are economically unstable

I actually did misunderstand you.
But Nigerians will rather have heaven NOW than later. All the "talk" of diversifying the economy will never fully Flo UNTIL all oil wells /,Pipelines are vandalised and our oil production at 0. It should be obvious by now that Nigerians are afraid of change...especially the ruling class.... They want control. They want to oversee everything....they dread a situation whereby their former employees and middle class people suddenly become the chairmen of the "new" economy.....they love "power". The only Good advice is for every Nigerian to start seeking his own means of income asides paid office job. Because those other options will soon be viable
we should stop waiting for govt to say "oya oil dun finish now its agriculture lets go there" before we start investing in the agric sector. That's our problem. We have refused to look elsewhere, so blinded as a people that we wait for the very people who have looted national money since 1960 to point the way forward in our own personal lives and get ourselves entangled in the propagandist news too much to pay attention to our own lives and future..... Let them keep waiting for oil trade to normalize and naira to "appreciate", like that is actually what puts food on the table..... The reality is the reality all printed and casted news only waste your time and energy and money (data, fuel, nepa) and your time if you soak it up... I regret reading this thread. The man on the street doesn't give a flying cockroach about "floating"....can he buy his bread and akara and still pay hos children's fees and buy fuel for his car and not go insane over prices versus his income? That is the "real question". So.while the middle class people are busy dancing around the theories like Swahilis around a camp fire, the rich "know" what is going on and will keep getting richer. Best advice.... Diversify your own pursuit and stop waiting for anybody in power to point the direction because it will be same old story jst a different day. Bless!

Nigeria is just an import oriented, selfish elite, wicked, avaricious & lazy politicians country with docile citizens!! We want the best but we dont want to work for it. We import everything & export nothing. Everybody is fixated on oil to feed 180 million people, we pay lip service to diversification. The North does not want to hear of true Federalism because they feel it will favour others more than them. We keep repeating the same thing & yet expect different result! WHAT A COUNTRY!!!

Atmmachine:
Please, I need answers to these questions
Goodluck Jonathan was accused of stealing billions of dollars, he saved no money for the incoming government.

When Buhari got into power, the price of oil went down, the economy went bad, there's no source of income for the government.

Where are all the money this present government spends come from ??

The one he recovered from your brothers looting na . A wailing wailer spotted

crownprince102:
I wil be very gullible to believe this article's verdict........


First due to it affliation with the western media and second, it suggestion were lame and one-sided.


With our current economic situation, how will a sane fellow encourage importation? Ric prices are high due to lacl of forex, their is no shortage in supply, so why importing rice.


How can we be sure the diseases killing our tomatoes are not spreaded by the importers of tomato paste?


This article I can say is sponsored by importers.

You thoughts walk hand in hand with mine..The Articles verdict on Tomato import actually Spiked my Suspicion..I suspect fowl play..it has not happened before..why now?

Boss13:
Nigeria is allowing its struggling currency, the naira, to trade freely in a move to tackle the financial crisis in Africa's most populous nation. Financial blogger Feyi Fawehinmi looks at how it will affect people's lives.

1. Petrol prices will remain stable
Refined petrol is Nigeria's single biggest import. The story of how an oil exporting nation has to import almost all of its refined products is well told.

According to the National Bureau of Statistics, refined petrol imports in the first three months of 2016 amounted to 226bn naira ($1.1bn, £791m) or 15.6% of the total imports.

Last month, petrol subsidies were removed and a new price band of 130 naira to 145 naira per litre was recommended by the government.

Petrol was in short supply this year until the petrol subsidy was removed last month
This new price assumed an exchange rate of 285 naira to $1, compared to the official rate of 199 naira to $1. Remarkably, Nigerians took this price rise with no more than a shrug and the attempt by labour unions to force a price reversal with strikes flopped spectacularly.

In the short term, the Central Bank of Nigeria (CBN) is likely to continue to be the main supplier of dollars to the market until foreign investors return.

With one eye on the petrol price, it is likely to kick start the market at a rate that keeps petrol prices stable i.e. somewhere below 285 naira to $1.

2. Still no imported tomatoes, rice - or tooth picks
In June last year, the CBN came up with a now infamous list of 41 items that would no longer be eligible for foreign exchange from official sources.

A tomato pest has wiped out much of the local crop and prices have rocketed. Items on the list ranged from Indian incense to private jets. Importing those items were not actually banned so since the list came into effect, anyone who wanted to import them had to source foreign exchange from the black market.

The CBN said last week that those 41 items remain ineligible to access forex at the new interbank market. You can still import toothpicks but you will have to source dollars from the black market to do so. Based on this, prices of those items are unlikely to be affected. This is a shame because Nigeria could do with some tomato imports right now after the tuta absoluta pest devastated harvests in northern Nigeria.

Nigerian palm oil producers have benefitted from the importation restrictions. Allowing rice imports wouldn't be a bad idea either given how rice prices have spiked in recent times. Rice importation has always worked on a quota system - those with political connections usually getting the right to import it. The current policy restricting the imports is tied to goals of national pride in achieving self-sufficiency. Given this, it is unlikely to be lifted.

Not everyone is unhappy about this list, though. The Nigerian palm oil producing company, Okomu Oil, posted a 98% increase in profits for 2015. Palm is of course on the list of 41 ineligible items.

3. Inflation should eventually fall
Latest figures from the National Bureau of Statistics show that inflation is rising steadily in Nigeria. Given how Nigeria is dependent on imports for a lot of basic items, a floating currency is likely to further increase prices, at least in the short-term.

In reality, however, the policy of rationing foreign exchange in the last one year meant that those who needed it the most hardly ever got it. President Muhammadu Buhari took office last year with a promise to boost employment. As such, even as the official rate remained stable at 199 naira to $1, prices of imported everyday goods have been reflecting black market exchange rates for a while now.

Nigerians have already endured the equivalent of a gut punch from soaring prices and are unlikely to be in the mood for any more. Further price increases might just force consumers to eliminate demand for some products altogether. A more stable and open foreign exchange regime should also eliminate a lot of the uncertainty that has been pushing up prices.

Given what has already happened in the last year, a floating naira, somewhat counter-intuitively, can be expected to start bringing down inflation.

4. Bad news for banks and businesses with forex loans
The CBN says that 10.1% of all the loans in Nigeria's banking system have gone bad. A lot of these loans are foreign currency loans extended to local oil and gas companies when crude oil prices were $100 per barrel. Between 2012 and 2014, an estimated $10bn was lent to local oil companies to purchase assets from foreign oil majors.

The oil and gas industry is Nigeria's main foreign exchange earner. Once the naira starts to float, banks will have to adjust the value of these loans on their books. In turn, the increased burden on the borrowers is likely to push more of them into bad loan territory. A couple of weeks ago, the Nigerian government bizarrely asked banks to stop sacking workers. More bad loans will almost certainly trigger more sackings.

It remains to be seen how the government will react to more sackings if and when they happen. Or perhaps the banks will use it as a bargaining tool to extract another round of bailouts from the government.

5. Foreign airlines will be back in business
Another effect of rationing foreign currency in the past year is that it has allowed a backlog of unmet demand for forex to steadily build up.
The CBN says this backlog is now at $4bn and will take four weeks to clear. Others say the backlog is at least double that amount.

Nigeria's elite has been forced to travel less because it has been difficult to get forex. Included in that backlog is the $600m owed to foreign airlines which has caused a number of them to either stop serving Nigeria entirely or put the route under review. If nothing else, this has been embarrassing for Nigeria and has drawn unflattering comparisons with Venezuela. Once that backlog is cleared, foreign airlines should continue their business as normal.

Of course, trapped funds are not their only worry - the economic situation has done its bit to dampen demand for foreign travel by Nigerians. Still, solving one of two problems is not a bad deal.

The verdict?
Ultimately, Nigerians have reason to hope that the worst of the last year is now over.
With a floating exchange rate, foreign investors can have more confidence in the country and Nigeria should see an uptick in the foreign investments it so desperately needs.

http://www.bbc.com/news/world-africa-36561237

Abeg, is this naira-floating thing a good news for yahoo boys or nah?

crownprince102:
I wil be very gullible to believe this article's verdict........


First due to it affliation with the western media and second, it suggestion were lame and one-sided.


With our current economic situation, how will a sane fellow encourage importation? Ric prices are high due to lacl of forex, their is no shortage in supply, so why importing rice.


How can we be sure the diseases killing our tomatoes are not spreaded by the importers of tomato paste?


This article I can say is sponsored by importers.

Nigeria has a population of over 170million therefore if importation is to be totally banned, it will not take us more than one month to consume all food items in the market and not more than six months to consume non food items.
Nigeria is barely industrialised and cannot produce enough goods we need to survive, so if that should happen Nigerian's will die of hunger and the surviving ones will be wearing rags by the time industries will be set up to take care of our needs.
No country is self sufficient,even the worlds most developed countries imports one thing or the other. The idea is to bring down the imports to only inevitable commodities.

All countries are inter-dependent.
What Nigeria needs to do is to provide basic ammenities and make good policies that will encourage local production thereby making imported items more expensive and less attractive.
It is a long term thing and can never be done in a short while as PMB is trying to do, hence the agony and hunger in d land.

CzarRex:
when did bbc know so much about our economy more than we do?


and the writeup kind of looked like a mockery of the present state of nigeria,well i don't blame them,we have been lead by some useless and greedy leaders who only knows their pockets.

BBC copied this report from a Nigerian blog.

Dottore:
We are watching. I'm tired of all these pocket economic theories. Though the source of this particular article is a reputable one but the truth remains that the complexity in Nigeria's economic realities have timelessly contradicted all conventional academic economic tales hence the CBN Governor and his crew have resorted to trial and error economics.

Academic tales are not meant to be static. New experiences and percularties begets lacunas that begs for research to either prove existing ones right or wrong or add to it.

Anything, a white man says' - is what a blackman, without brains, with all the education they profess to have, roots for!!! Now that we still don't manufacture - would the floating exchange rate encourage local manufacturing?

Would a floating exchange help structural adjustment and local manufacturing and manufacturers, when all you need to do is import a cheaper item of superior quality "so to speak"?

A few nigerians, who have vested interests, in forex would be happy now* that they acquired dollars and pounds at N160/$1 and are going to be able to sell at N360/$1 -