Welcome, Guest: Register On Nairaland / LOGIN! / Trending / Recent / NewStats: 3,194,700 members, 7,955,639 topics. Date: Sunday, 22 September 2024 at 11:42 AM |
Nairaland Forum / Nairaland / General / Politics / Deja-vu: Does This 2013 Venezuelan News Report Look Familliar? [PIC] (3433 Views)
New Year Speech: Buhari Was Not Accurately Quoted In News Report - APC Reacts / Lagos-ibadan Rail Project To Start This Month — News Report. / Venezuelan Government And Economy On Brink Of Total Collapse (2) (3) (4)
Re: Deja-vu: Does This 2013 Venezuelan News Report Look Familliar? [PIC] by omenka(m): 6:47am On Aug 27, 2016 |
Quakertellicus1:It appears you are new around here. Stop wasting your time trying to reason with some people. Even if their being logical is all it takes for you, say, to get a miraculous recovery from a death stroke, they'd rather you die than imagine not blaming Buhari and APC for every misery in their little lives. Just move on, your point is registered and you've made a good one. 2 Likes |
Re: Deja-vu: Does This 2013 Venezuelan News Report Look Familliar? [PIC] by menxer: 8:31am On Aug 27, 2016 |
Some enlightened posts in the house today, but then Nigeria is a place where principles and practices that worked elsewhere don't fly. How do one explain a situation where Nigeria is suffering from Dutch disease but non oil export was booming? As someone above pointed out, majority of us are averse to "thinking" out a solution especially when we stand to gain nothing (personally) in the short, medium or long term. |
Re: Deja-vu: Does This 2013 Venezuelan News Report Look Familliar? [PIC] by AnodaIT(m): 8:46am On Aug 27, 2016 |
Quakertellicus1: I agree with you on most part but oil at $100 was considered abnormal by global economists and could have led to another global recession. Considering the matrix of production, the real price of oil is $50. Government should just stop waiting for oil to rise. This was why anything above $60 was considered excess crude revenue but how we came to think that the "excess" crude price will remain forever baffles me 1 Like |
Re: Deja-vu: Does This 2013 Venezuelan News Report Look Familliar? [PIC] by Nobody: 9:06am On Aug 27, 2016 |
4Play: Actually, I don't.I merely point out that Nigeria and Venezuela are alike in the sense that they are hooked up to oil Also, you seem to be mistaken. I never said Nigeria's economy has not collapsed.It has collapsed / being in a bad state for a very long time. As I will explain shortly. I will make a few other points. Yes, Nigeria has a certain oil dependency which arises in 2 respects - oil is the main source of government revenues and, more importantly, the main source of forex. However, the oil price slump alone does not explain the scale of the naira's and the economy's collapse. Look at the naira's performance in 2016 alone - at a time when other commodity-dependent emerging market currencies have rallied against the dollar. In reality, what we are seeing is the result of major policy missteps or inaction (the main culprit being the decision to maintain a fixed exchange rate which has now, thankfully, been largely reversed). My main bugbear is that people who beat this oil drum relentlessly are either uninformed or being disingenous - they are trying to mask what has been at heart an exemplar of economic mismanagement. By doing this, they inhibit the capacity of Nigerians to learn valuable lessons for the future. Actually,the reason why other oil dependent currencies have not collapsed is two fold 1.They have enough money saved to buffer their currency . Saudi Arabia had $724 bn in its savings at the start of the oil drop. The riyal is strong because the Saudis have spent billions buffering it up. $124bn by the end of 2015 to be exact. Nigeria....even if GEJ saved would have at best reached $100bn.And all that would have been gone by 2017. 2.They are strong industrial powers/sectors like Russia and Norway. Oil is not their only busienss Also I did support our fixed currency regime because quite simply we do not have enough dollars to support it....and because prices would have massively gone up, fueling inflation,and depressing our very limited manufacturing sector.But...it is inevitable that we would eventually have had to end the pretense and let the naira float. Which is why I am saying Nigeria does not need oil money. This brings me to the issue of the Dutch disease. The essence of it is the tendency for an oil/commodity boom to cause an appreciation in real exchange rates (i.e., inflation-adjusted)rendering the non-oil/commodity export sector largely uncompetitive. I will use a simplified illustration: Dutch disease is not just limited to oil by they way. I set up a cocoa farm to export cocoa. At the point of inception, the naira exchanges for 197 naira to $1. If the costs (fuel, labour, fertiliser, e.t.c) of running the farm is circa N180 million and I sell $1 million worth of cocoa in the first period, I should get N197 million for a profit margin of N37 million before tax. Supposing the government decides to fix the exchange rate at N197 to $1 whilst inflation is running rampant. If my costs increase due to inflation from N180 million to N198 million (assuming just 10% inflation), my margin will be squeezed to the point where, unless I find a way of cutting costs, my business is no longer viable. It was an issue in the sense that Nigeria, even with increase in non-oil exports (which was not much of an increase, we were still dependent on oil by 80%)...was still depending on exporting non-oil agric products whose prices were controlled elsewhere. Where is the international price of cocoa set? In London,not in Lagos. And the fact is.....all those fuel etc costs could have been limited if we had fixed our refinereis and built five more. Source: http://www.vanguardngr.com/2016/01/cbn-blames-declining-non-oil-revenue-on-low-export-loans/ 1.Again,our non oil revenues came from things whose prices we did not control. Plus....FDI has not come to Nigeria asmuch as it should because we do not deal with things like corruption, insecurity, our poor power sector,and so on. Not because of forex rate. Again, restrictions in forex rate,while ''wrong'' are meant to prevent us from losing forex. We are an over-importing naiton,and it is depressing our manufacturing sector..meaning we cannot export things whose prices we can control.......which is how Dutch disease works actually..... If we lose forex.....and there is no chance that FDI would bring in more forex....especially as there is such a high cost of doing business in Nigeria...we would have unsustainable inflation....and end up in a Zimbabwe situation. In reality, what we are experiencing in Nigeria is that policy ineptitude has made what would have been a difficult but manageable growth slowdown, arising from the oil slump, into a painful economic rout. Even if Nigeria was not an oil producing state, an attempt to fight a currency adjustment via a fixed exchange regime would have still produced an economic rout (arguably more so as we would likely have had a larger stock of foreign capital). By simply mouthing off about oil dependency, you are helping mask the government's culpability and doing a disservice to Nigerians for whom economic hardship can be a matter of life and death. By singing about oil dependency.....I am criticizing our past government's failure to invest in power and education....and also putting pressure on our current government to do these things....so that we can industrialize and have a competitive economy, an economy that brings in forex, and brings in the jobs. It will take time....but that must be our goal as a nation.It is how China went from being behind Sierra Leone in 1973...to being a powerhouse today.....and that is the road we must follow. P.S Your problem is with the fixed currency system. Whatever we do with our currency,it won't change anything....so long as we sell things whose prices we do not control.Whether agric, mining or oil. |
Re: Deja-vu: Does This 2013 Venezuelan News Report Look Familliar? [PIC] by Nobody: 9:10am On Aug 27, 2016 |
menxer: Think about Dutch disease as being dependence on exporting raw materials(Not just oil by the way) whose prices are controlled elsewhere , and using the revenue from the exports to import stuff we are already making at home. Add the fact that Nigeria's industrial sector is not innovative enough....we do not have the tools to compete with the imports because we have an educations system that produces clerks,not thinkers....and you have an economy that cannot export things whose prices we can set....and is dependent on the rise and fall of our raw materials whose prices we do not control Dutch disease. |
Re: Deja-vu: Does This 2013 Venezuelan News Report Look Familliar? [PIC] by menxer: 9:17am On Aug 27, 2016 |
Quakertellicus1: So technically, it is not the economy that is diseased but the people, because economy does not think but people do. It is like "we" are paralyzed by the mere thought of a cure for the Dutch disease. |
Re: Deja-vu: Does This 2013 Venezuelan News Report Look Familliar? [PIC] by Nobody: 9:22am On Aug 27, 2016 |
menxer: There is a cure....it involves us spending more on fixing the lights, and fixing education, and ending corruption. We have an opportunity....and the solution is not selling more things whose prices we cannot control. The problem is....it is going to take a long time. Frankly speaking, I hope our government is interested in doing this. We cannot rely on oil again. 2 Likes |
Re: Deja-vu: Does This 2013 Venezuelan News Report Look Familliar? [PIC] by menxer: 9:40am On Aug 27, 2016 |
Quakertellicus1: I never said there is no cure, from the enlightened posts here, but "we" always see things through party and ethnic lenses. I agree with you, how do you think it can be done without some group crying "persecution" in the fight against corruption? That is why I said thinking of a long lasting solution without overbearing personal, party or tribal interest won't be easy. |
Biafra: Danjuma’s Statement Confirms Buhari Is Dead – Nnamdi Kanu / TINUBU Replies Chris NGIGE, After Bashing Him In The House Of Representatives / ESN: All Public Servants In Biafraland Have 3 Choices To Make - Nnamdi Kanu
(Go Up)
Sections: politics (1) business autos (1) jobs (1) career education (1) romance computers phones travel sports fashion health religion celebs tv-movies music-radio literature webmasters programming techmarket Links: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Nairaland - Copyright © 2005 - 2024 Oluwaseun Osewa. All rights reserved. See How To Advertise. 64 |