₦airaland Forum

Buhari's primary failing is in economics, specifically the fixed exchange policy. Osinbajo is unlikely to be worse except in one regard. I have noticed a tendency for many in government to express the belief that the economy needs stimulus in the form of increased government spending and lower interest rates. If this is followed through, the economic crisis would get worse.

At the heart of an exchange rate crisis is that the local currency is in abundant supply relative to forex. Increasing the supply of the local currency, which is what you get in a stimulus, will worsen the crisis.

vislabraye:
Not really. The governors are still looting. In fact, looting is more hi tech and clandestine than the past administration. How many people have been arrested and charged to court for stealing or looting? None

Don't mind him. He doesn't understand that having different exchange rates allows looting on a scale unimaginable. Lots of highly connected people can buy dollars at N305 at the official rate and sell it in the black market for N500.

People are profiting from the hardship of Nigerians and the blue font guy is busy trying to save face as a long standing supporter of Buhari.

TheGoodJoe:


We were already in recession because Ngozi Okonjo-Iweala lied to us that we were prepared for the slide in Crude Oil prices when we were not. Quit shouting Nonsensical and get the point.

She agreed there was Doom Looming. She agreed. That Doom was recession. Get that.

She said we were prepared for it. That was a bold faced lie because we had squandered our resources.

So anyone saying exchange rate, devaluation, including you should explain how were were to cope with the Doom looming when we squandered our resources and did not diversify the economy.

Answer that before telling me exchange rate. With time, it is clear those critics were talking babash and did not understand their left from their right.

You are incredibly mendacious. Lets dwell on facts. The Buhari government's NBS stated that the recession started in the first quarter of 2016, not 2015. Yes, there had been a big slowdown in GDP growth from the 2nd half of 2014 which is what you would expect.

But the spectacular collapse in the economy and the exchange rate started in 2016 - bear in mind that the Naira's collapse is on the same scale as war-torn Ukraine's.

This nonsense about the economy not being diversified is also hilarious. The economy is already diversified as the oil sector is less than 20% of GDP. The vast majority of Nigerians don't make a living from oil but from agriculture and the service industry. My previous post alluded to the collapse by 60% of non-oil export revenue within a year and the collapse of investment inflows to $5bn in 2016 from $21bn in 2014. Doesn't your benighted brain grasp that there is a general loss of confidence in this regime's ability to manage the economy?

progress69:
Look here Mr. Ain't get time for kindergarten lame arguments. It's obvious u don't even know the correlation between the value of dollar and oil, not to talk about our drop in oil price will affect Naira plus any mono economy country. I reverted to the the question asked, if u are not ok.with it. U can go to blazes.
And for your info. Ya'radua sold oil well above $140/ barrel that was why he was able to grow the reserves from $42bn to about $64bn in a short while, which was in turn used to defend the economy and naira when their oil price fell. Over $30bn was used to defend the economy then, which is $1bn above what ur hero left when leaving office. Hope u have a little education now?

Why did non-oil exports fall by 60% within one year and investment inflow fall by more than 75% as my earlier post highlighted? Is this also down to oil prices?

The loss in the Naira's value isn't simply an oil story: it also reflects a loss of confidence in the present regime and this explains why foreign investors are not responding positively to the removal of the previous corrupt regime.

TheGoodJoe:

Despite what some have termed the looming doom hovering over the nation's horizon as a result of the crash in oil price, Co-ordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, on Thursday assured of Nigeria's readiness to weather the storm, should the price slide further at the international market.

Brent crude oil futures fell below $74 per barrel on Thursday after the group decided not to cut production, despite global oversupply.

Nov. 2014,at $74 Per barrel, we were in trouble. Okonjo-Iweala was talking of austerity measures because we wasted our resources.

With a fixed exchange rate, the dollar rose against the Naira. With a semi-flexible exchange rate, the price soured even higher.

Those blaming the economy on fixed exchange rate are being economical with the truth. If Crude Price rises to over a $100, we can defend the naira with a fixed exchange rate or flexible exchange rate.

It is absolutely not true blaming the collapse on Buhari. Most experts screamed devaluation but that would not stop the dollar from rising.

A fixed rate would have reduced the rate but it would still go up. However, our reserves would be in shambles by now.

Our problem is not exchange rate but the terrible state of our production industry. Unfortunately, during the boom, GEJ and co wasted our resources.

Again, you are being nonsensical. Of course a fall in oil prices should mean tightening our belts as NOI warned but a fall in oil prices should not lead to a collapse in investment and non-oil export inflows. Note the following:

Represented by the Director, Development Finance of the CBN, Dr Mudashiru Olaitan, Emefiele blamed the decline of non oil revenue on the low level of loans to exporters which invariably contributed to the decline in non oil export revenue receipts from $10.53billion in 2014 to $4.39billion in 2015.

Source: http://www.vanguardngr.com/2016/01/cbn-blames-declining-non-oil-revenue-on-low-export-loans/

For instance, figures obtained by the National Bureau of Statistics stated that as of 2013, the country had a total investment inflow of $21.32bn (N4.2tn). This figure, according to an analysis of the report, declined to $20.72bn (N4.08tn) and $9.64bn (N1.89tn) in the 2014 and 2015 fiscal periods respectively.

Source: http://investadvocate.com.ng/2016/03/07/investment-inflow-nigeria-drops-n2-3tn/

The Nigerian economy recorded its worst investment inflow in 10 years with the country attracting a total investment of $5.12bn in the 2016 fiscal period.

Source: http://investorsking.com/investment-inflow-nigeria-drops-10-year-low/

The reason for the above collapse is that with a fixed exchange rate regime, you have to think twice about investing forex into the Nigerian economy. Those who are making the argument that Buhari is just an unfortunate victim of the oil price collapse are engaging in an act of treachery against fellow Nigerians.

obailala:
The amount pumped in by investors is a drop of water compared to the ocean coming in from oil export. Oil price is purely the reason behind the drop in value of the naira because Nigeria depends on oil sales for over 90% of its forex. Of course, jonathanians would rather die than accept this simple fact.

With oil prices averaging $100 for Jonathan's tenure, there was high inflow of forex and the CBN then kept spending billions of dollars monthly to maintain the value of the naira at N160; thats is exactly what kept the value steady. But as soon as oil price dropped even under Jonathan's nose with his 'world class' crack economic team, naira dipped from 160 to 230 in the blackmarket, and this was despite the fact that the CBN then blasted $10billion within 6 months (Nov 14 - May 15) to struggle and keep the naira steady.

And yeah, talking about investors running away, nobody, not even the early morning akara seller takes their wares to a poor neighbourhood. Nigerias exinomy is a function of oil price, as soon as oul prices began to crash, and it was clear the econony was going to go down, investors started packing their bags.JP Morgan gave their first warning to delist Nigeria as early as February 2015, that was before anyone even dreamt that buhari was going to win elections. But then again, emotional Jonathanians would rather die than accept these facts.

This narrative is such a silly cop-out. Yes, oil prices are crucial but Buhari's fixed exchange rate regime has made it economically unwise to bring in forex into Nigeria, except for remittances. This is the primary explanation for the collapse in non-oil sources of forex inflow which I noted in an earlier post:

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This is not true: We do not earn all our forex from crude oil exports. Remittances, capital inflow and non-oil exports contribute to forex inflows:

1) The World Bank has disclosed that Nigeria received a total of $21 billion from its citizens living abroad as home remittance in 2014 saying that growth of remittance is expected to slow this year.

Source: http://www.vanguardngr.com/2015/04/nigerians-living-abroad-remitted-21bn-in-2014-world-bank/

2) Represented by the Director, Development Finance of the CBN, Dr Mudashiru Olaitan, Emefiele blamed the decline of non oil revenue on the low level of loans to exporters which invariably contributed to the decline in non oil export revenue receipts from $10.53billion in 2014 to $4.39billion in 2015.

Source: http://www.vanguardngr.com/2016/01/cbn-blames-declining-non-oil-revenue-on-low-export-loans/

3) For instance, figures obtained by the National Bureau of Statistics stated that as of 2013, the country had a total investment inflow of $21.32bn (N4.2tn). This figure, according to an analysis of the report, declined to $20.72bn (N4.08tn) and $9.64bn (N1.89tn) in the 2014 and 2015 fiscal periods respectively.*

Source: http://investadvocate.com.ng/2016/03/07/investment-inflow-nigeria-drops-n2-3tn/

From the above 3, non-oil sources of forex in 2014 totalled $52bn -$21bn in remittances, $10.5bn in non-oil exports and $20.7bn in investment inflows. So all the Nigerian government needed to do was make sure the 3 non-oil sources of forex inflow continued to grow to offset the reduction in oil export income. Instead, by displaying a disinterest in setting a clear policy direction and implementing the boneheaded fixed exchange rate policy; 2) and 3) above declined very fast making things even worse than they ordinarily would have been.

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* Investment inflow was down to $5bn in 2016. Worst figures in 10 years. See here:[url] http://investorsking.com/investment-inflow-nigeria-drops-10-year-low/[/url]

TheGoodJoe:
The Policies are just stunts to save an economy destroyed by the wastage of the past administration. The harm was done when we did not diversify the economy and save for a rainy day.

Writing in blue fonts does not make what you are writing less nonsensical.

Lets remember that according to our government, the Nigerian recession started in the first quarter of 2016. However, much of the collapse in oil prices largely happened in the 2nd half of 2014.* By December 2014, oil prices were below $60, and given Boko Haram on rampage and uncertainty due to the impending elections, a recession should easily have occurred in the first half of 2015 if GEJ's policies were the primary cause of the 2016 recession.

Yes, the economy was under pressure due to the oil price collapse but the spectacular nature of the Naira's collapse and the recession of 2016 can be traced back to 2 things: Buhari's stubborn insistence on a fixed exchange regime and the general lack of policy reform to address the economy's structural weaknesses.

Today, oil prices are above $50 and there is little sign of improvement. I have noticed the propagandists are hard at work highlighting the increase in forex reserves as a result forgetting that under Abacha's lootacracy, forex reserves also went from $500m to $9bn. An economy's health is measured by wage growth/improvement in living standards arising from GDP growth. Buhari has been a comprehensive economic failure and this was completely and utterly predictable as I highlighted in my 7th May 2015 post:

4Play:
I think GEJ was the least bad of 2 crap options. GEJ was a spineless buffoon who aided and abetted corruption but he didn't, unlike Buhari, have an affinity for economically illiterate policies.

Unlike most people, I believe that inept economic policies are a bigger vice than corruption. Buhari's first tenure was an ode to economic ineptitude. Corruption will still carry on regardless, at best to a lesser degree, but the avalanche of daft policies will be his greatest undoing.

*I say this because a price collapse from $100 p/b to $60 p/b (a loss in earnings of $40 p/b) is more painful than a loss from $60 to $50.

2kaybiel:
dat was great, but i think dey ar all regreting now 4 supporting him den

That is not how human beings work. If you invested emotionally in a cause, you will convince yourself that you were right all along, despite all evidence to the contrary.

I doubt that any of those guys will come out today and say they erred. The most they will say is that Buhari has made some errors before seguing to: GEJ was worse anyway!

Justice Debra James subsequently granted the defendant’s motion to dismiss the case, saying the matter should be resolved in a Nigerian court.

Seems a straightforward jurisdictional point. You will think from the headline a ruling was made on the accuracy of the report.

Apart from the way the OP has spun the story, there is nothing revelatory about saying that Nigeria faced economic hardship during Buhari's first tenure worsened partly by his policies. This is basic history.

Of course, it is false to say that Buhari increased foreign debt from $2bn to $23bn - the increase happened over a decade - or that inflation hit 500%. But the basic narrative of a hapless incompetent government was as true then as it is now.

Nbote:
OP why una like attention? How did Google ban fake sites carrying Buhari's death rumors last year(2016) when d rumors only came about dis month (2017)? Is ur brain paining U?

So you haven't heard of time travel?

The obvious reason to realise that the president is not dead or comatose in London is that if it were true, this would have been picked up by UK journalists. There is no way the president of a country will die or fall gravely ill in the UK and the media here won't broadcast it.

obailala:
The last time there was a sharp drop in oil prices was in 2008. The drop lasted barely over 6 months and it cost Nigeria $20billion of its reserves to ensure that the economy wasnt affected. The current drop in oil prices has lasted close to 3 years, I wonder how much of savings would have really saved us. On the contrary, I think aggressive investments in key infrastructure, specifically power infrastructure and refineries is what would have made a lot of difference.

I think the savings issue has become a political football divorced from reality. It's also crucial to distinguish between 2 types of savings: fiscal savings by states/FG and forex reserves by the CBN.

Regarding fiscal savings, no amount of such saving would have saved us from a prolonged oil slump. You are talking of tens of billions - perhaps at least $100bn - for a sustained period. That would have been impossible without removing fuel subsidy and reversing the big increases in public sector wages (remember minimum wage increased from N5k to N18k). There was no appetite for that.

Forex reserves could have been accumulated - Sanusi has escaped scrutiny in this regard as it was his preference, followed by Emefiele, to maintain stable exchange rates at the expense of forex reserves. About $100bn was used to defend the Naira by the CBN.

To appreciate the folly of what the CBN did; remember that money is what it can buy. So if the CBN seeks to ensure that the Naira is stable to the dollar at N160 to $1, this is problematic if inflation in Nigeria is running at circa 10% but 0% in the US (I've used these inflation rates for illustrative purposes but they were close to actual rates between 2010 and 2014). At 10% inflation rate per year, you will need N234 in year 4 to buy what one can buy with N160 in year 1. By using forex inflows to defend the value at N160 despite inflation, you are effectively subsidising importation. This is unsustainable if the forex inflow is sourced, to a significant degree, from a volatile commodity such as oil.

Had the Naira been allowed to fall earlier, we would most likely be going into the oil slump with a weaker exchange rate but a more sustainable consumption/import profile backed up by more sizeable forex reserves. We ran too fast initially and are now catching our breath; or effectively suffocating. Economic development is like a marathon, it's about pacing yourself for the long run.

The alternate policy path I am advocating, which is something I advocated at the time, is hard for Nigerians to fathom because policy debates is dominated by elite obsession with stable exchange rates. Nigerians hooked on imports - politicians who love whizzing in and out of foreign abodes on shopping trips - prefer a stable exchange rate at all costs. It is this mindset which is I suspect is propelling our jetsetting president to insist that the Naira is not devalued even at a time any barely literate person in economics now recognises that the Naira fixed rate policy isn't working.

ivandragon:
this regime's so called anti corruption fight cannot make head way because;

1. it exaggerates the alleged crime so much that it is easy for the accused to put gaping holes in the accusation.

2. following from (1) above, the reality of the crime is usually far less weighty & so far removed from what was alleged that the actual crime pales in significance to the bogus accusations & therefore takes on the appearance of a 'negligible offence'.

3. the quick resort to media trials without providing corresponding concrete proof or proper investigations gives room for counter refutations & creates doubts about the allegations.

4. the obvious attempt to exclude/protect the cronies of this regime makes a mockery of the whole anti corruption exercise because in an attempt to exonerate APC members & their cronies, key evidences will be suppressed (a la Sahara Energy) & this gives room for the accused to circumvent the trial process.

Deziani certainly enriched her coffers with while in government, but the senseless & bogus accusations have given her the impetus to claim otherwise.

This is absolutely my view on this: it's not that Diezani is not a thief but that the inclination to sensationalise (by adding a few zeroes to the amount stolen) coupled with the desire to suppress key pieces of evidence implicating people close to the current regime give thieves like Diezani wriggle room to discredit the investigation against them.

Prior to May 2015, the claim that $20bn went missing in a spate of 18 months was all the rage. One would think that we would hear more about this heist now. Instead, it's been swept under the carpet for titillating new stories about multi-million dollar loot. You don't prove that someone stole Dom Perignon by pointing to evidence of stolen Lacasera.

pinkcottoncandy:
Your explanation is the other way round!

Hoarding the dollar will only make it scarce and hence appreciate the dollar agains NGN even more.

When china or switzerland wants to bring down the dollar, they sell more dollars, flooding the market with dollar thereby driving the price down.

Dont forget that the major players trading USDNGN are not on the global platform but in our own black market hence hoarding the dollar makes no sense,

That imposing restrictions on access to dollars increases the value of dollars is a common sense proposition that you wonder why anyone is contesting this. Making something scarce makes it more valuable.

Because the CBN restricts access to dollars, people are less likely to voluntarily bring in dollars - nonoil exporters and foreign investors - thus increasing our dependence on oil exports for forex inflow. This is not just a theoretical argument but what we have seen in the last 2 years. Nonoil exports fell from $10bn in 2014 to $4bn in 2015. The CBN's policy is making us more oil-dependent.

9jakohai:
Largely because we still need more money in the treasury...something like at least $100bn and above.

Oil is not a sustainable way of getting more forex.

The fixed exchange rate policy has increased our dependence on oil exports as it has reduced the incentives to bring in forex into Nigeria.

There has been a big drop in non-oil exports and foreign investment flows.

Building up forex reserves is fine if due to market forces: in such an environment, the Naira will appreciate. But like an employer who "saves" the equivalent of 12 months wages by not paying his worker for 12 months, building up reserves at the back of dire economic conditions driven by a fixed exchange regime is going back to Abachanomics.

PS: Abacha increased reserves from $500m in 1993 to $9.6bn in by mid-1997.

It's about institutional checks and balances developed over centuries of trial and error. If Biden was a Nigerian senator, he would quite happily enrich himself as there is little repercussion for stealing.

We need to concentrate on building strong institutions that make it difficult to steal or to get away with theft. It is also why it is crucial, in the Nigerian context, to remove government intervention in markets: subsidies, regulations, e.t.c allow the political class to choose winners and losers.

this school was known as Dick Organ Primary School and currently the school has been renamed Green Street Primary School.

What kind of school name is Dick Organ? This guy's brain was warped from childhood after attending this school. He had no hope!

doctokwus:
But how did winning a National mathematics competition translate to topping d world in mathematics?

It's like baseball World series.

Soyinka is a great man, one of Nigeria's rare gems. However, as I have pointed out before, his son was (still is?) health commissioner in Ogun state so criticising the APC government too stridently would make for a very awkward father-son relationship.

This, in my view, largely explains why his public persona has turned from someone who previously spoke truth to power, no matter who is in government, to a tendentious commenter whose criticisms is in the form of soft balls at the present government and vitriol for the previous government.

So, no I don't think he is a "wailer" as he will continue to couch any criticisms of the government in the most mildest of forms.

Nigerian police has no credibility. It's difficult to believe anything they say.

He's a dunce copying what others have done. For instance, see article about Candyman here:

He hosts lavish parties at a sprawling $3.7 million riverside property on the Gold Coast, where here lives with his wife Taesha - who he was pictured leading around on a leash - and his four children.

http://www.dailymail.co.uk/news/article-3086227/It-s-degrading-disgusting-Grandparents-wife-Australian-Hugh-Hefner-dubbed-Candyman-slam-picture-granddaughter-led-leash-fear-CHILDREN-growing-party-mansion.html

It's typical Naija idiotic copycat mentality though I am not sure what law he breaches. It's more dangerous to misuse law enforcement than to engage in degrading, if consenting, conduct.

Was free speech ever alive? The media were also subject to intimidation by government officials during GEJ's era. There are numerous stories of journalists receiving threats or being picked up by security officials for questioning.

Also, much of what appears in the media is proxy for battles between political factions. Sowore is probably a victim of conflict within APC.

This is good news and you have to be pleased to hear the town's residents are able to reclaim what is left of their lives.

However, you have to laugh at how this is parlayed into propagandist ends: Baga was recaptured in February 2015. Neither GEJ nor PMB supporters should claim credit for this, that town should never have fallen to Boko Haram in the first place.

4:52PM GMT 21 Feb 2015
Nigeria's military claims to have retaken the town of Baga from Boko Haram, where hundreds are feared to have been killed by the Islamist militants

http://www.telegraph.co.uk/news/worldnews/africaandindianocean/nigeria/11427006/Nigerian-military-claims-recapture-of-Baga-from-Boko-Haram.html

Ovamboland:
Not all investment is about profit and declaring yearly dividend. Strategic thinking will help you identify industry that is must have. A country that depends on others for all its steel, energy and ammunition is not really independent

A poor country is also dependent. You cannot become independent by wasting scarce resources on unprofitable ventures. Do you know that Nigerians in the North East, IDPs, receive foreign aid to stave off starvation?

If you concentrate on improving the business climate, then investors will see cause to invest in these "strategic" sectors. Simply pouring government money will enrich politicians while leaving you with hope and wishful thinking to feast on.

The figure is lower than 2015 despite exchange rate depreciation which is masking how badly revenue has dropped. Mind you, 2015 had a corrupt and lame duck government in charge for the first 5 months.

See also 2014 figures:

The Nigeria Customs Service (NCS) generated about N977.09 billion revenues in 2014 from its target of N1.2 trillion for the year.

https://www.google.co.uk/amp/www.informationng.com/2015/01/customs-generates-n977-09bn-revenue-in-2014.html/amp?client=ms-android-samsung

Nalikedis:
why compete with anybody sef? We are talking about producing our own steel for own roads rail machinery instead of shipping scarce money to china and ukraine for imported steel. If China is producing cheap steel why cant we produce our own cheap steel? Meanwhile most of our imported steel billets are imported from ukraine and not china. China glut is in reference to the US... Not to the world in General...thanks to Havard economists that believe US should close down their coal mine and steel plant because china is shipping in cheap steel... All this will likely reduce under Trump. Countries like india, Ukraine and russia are not complaiing about china glut

If there was a business case to produce steel in Nigeria, the private sector would have invested in this already. If the private sector don't see such a venture as viable, what makes you think our government possesses the expertise to invest wisely in this project? This country is 57 years old this year: can you name one single government run/funded business venture that has proved profitable - NITEL, Nigeria Airways, NEPA, the refineries, e.t.c.

The staggering thing about discussion with Nigerians is the triumph hope over evidence. No matter the weight of contradictory evidence, Nigerians continue to invest futile hope on government officials.

omohayek:
Finally, here's a challenge for you and all the other obstinate defenders of this ridiculous black-hole of a project: seeing as Ajaokuta has never functioned properly in 40 years, let alone managed to make a profit, why do you think it will be different this time?

It's telling how none of the obdurate masochists on this thread who continue to support flushing money down the toilet in the name of the resuscitation of this steel project rose up to this challenge. No one can explain why FG funding, yet again, for this project which has failed to live up to expectations will produce different results.

They say a feature of madness is doing the same thing repeatedly and expecting a different result. This debate, in its exemplification of a bone-handed refusal to learn from history, illustrates why the political class will always have the upper hand.

Kx:
Must we eat everything we kill

Thank God people are asking this question. Killing and eating animals in this manner is how we Africans became the primary vector of HIV (may also be the explanation for ebola).

hungryboy:
provision of new facilities at Offa Grammar School, Kwara State(N2 billion)
Can you imagine this,
2billion on provision of facilities for a secondary school,
Money were fit build and equip 10 new secondary schools
All this change scam going on,
Make una remember say DiarisGodu

If this story is true, this may be his way of strenghtening his relationship with the Senate president. Emefiele was one of GEJ's worst appointees: a spineless governor who is more adept at political games.

DropShot:
A childish approach to label anyone who doesn't agree with you as a paid propagandist. It makes you look sore.

How are you different from the loquacious FFK who brings religious/ethnic coloration to every discussion?

You were perhaps still in secondary school when I campaigned tirelessly for the IB to be made president in 2010. I guess I was driven by religion and ethnicity then too. Kiddo!

If you "campaigned tirelessly" for GEJ, what it illustrates is that you are consistently wrong as there was nothing from his past - in Bayelsa state or as vice-president - that remotely suggested he would make a good president. This is what I said of GEJ in 2010:

4Play:
Good response from Mikeansy. It's the triumph of politics and corruption over the national interest. This man will turn out to be the worst President we've had since Shagari. Because he's taken over in extra-ordinary circumstances, his power base is not strong which means he feels he needs to bribe his way to gain loyalty.

https://www.nairaland.com/508968/jonathan-blew-away-27-billion#6701023

A typical Nairaland partisan poster is usually an ethno-religious internet warrior or one paid to post, often both. What marks them out, particularly the paid poster, is their ubiquitous appearance on multitudes of threads to post in support of a politician/party. Often contradicting themselves from one policy position to the next. This feature describes you aptly.