₦airaland Forum

FastShipping:
Why some of you thrive in falsehood?

Shameless human beings on this forum. And some kids are there looking up to you while you spread hate and lies in front of them everyday.

It is okay to be against Buhari but it is another thing to knowingly and wishfully spread such lies you and your fellow liars have been spreading all day. Go ahead and label me Buhari's supporter then may be, just maybe you can also check my past posts about my opposition to Buhari's government. One thing I won't do is to spread lies and falsehood like some of you do. You fight Buhari with facts. It is a s simple as that. Today if Buhari is not funding Hillary Clinton campaign, he is busy committing genocide somewhere in the country.

I refuse to align myself with liars who call themselves "opposition group".

SMH!

Lying, or what some call post-truth politics, is a prominent feature of political discourse. I think ethnic/religious animosity explains a lot of the susceptibility to lies: if you oppose Buhari not because of his policy ineptitude but because he's Fulani/Muslim, you will be prone to believe any lies you read/hear about him.

I used to think this pro-Trump nonsense among IPOB supporters was mere online trolling on Nairaland but it seems this cognitive impairment afflicts a wider range of people in Nigeria.

DropShot:
Shame on you boy! I know this kind of news aches your belly and others like you.

On the contrary to your disgusting submission, this is far more significant than those quarters you referenced given the fact that we're battling recession.

If this was capital flight out of Nigeria, you children of anger would celebrate and now that it's capital inflow, you can't hide your pain and frustration.

It must really suck to be you guys.

This post plumbs new depths of crassitude. So we should celebrate these figures because they occurred during a recession that was self-inflicted?

The low capital inflows reflect the government's bone headed decision to maintain a fixed exchange regime: an economically illiterate decision you were a passionate advocate for. Are we supposed to celebrate figures which are an embarrassment for a nation of 180m merely because they are less catastrophic?

You also need to distinguish between gross capital inflows, which these figures represent, and net flows (the difference between gross inflows and gross outflows).

To call you a paid propagandist is a compliment as one cannot fathom the sheer magnitude of imbecility required to subscribe to some of the views you espouse on this forum.

omenka:
Waiting to see how the repugnant enemies of Nigeria arrive here to express their anger and dismay over this news even though it is just a drop in the ocean.

$1.8bn pales in significance to the $2.7bn achieved in Q3 2015 and the $6.5bn achieved in Q3 2014. Capital inflows have fallen significantly since the Buhari regime came into power.

Capital imported into the country in the third quarter of 2014 was recorded at a value of $6.54bn, (N1.08trn) rising by about $738.7m or 12.73 per cent over the $5.8bn imported capital in the preceding quarter of this year.

The report on the imported capital imports value published by the National Bureau of Statistics, NBS, indicated that relative to the $4.42bn worth of capital imported in Q3 of 2013, the Q3 2014 figures reflected a growth of about $2.12bn or 48.06 per cent.

http://nationalmirroronline.net/new/nigeria-records-6-54bn-capital-inflow-in-q3/

I was in the midst of writing a long epistle about this issue but was forced to reconsider the more I thought about it. Firstly, I do not think the FG will be able to secure the external loans it is asking for unless it embarks on deep structural reforms (the sort of structural adjustment programmes demanded by the IMF). This was touched upon in the following FT article:

But Abuja is now facing calls from the IMF and World Bank to push through further reforms. These discussions have held up any agreement on a loan from the bank, said people briefed on the talks.

They added that the World Bank had said it would not be able to disburse any loans until 2017 at the earliest because it “has not yet received the macroeconomic framework” needed for the discussions to progress, though the finance ministry disputes that.

https://www.ft.com/content/4ed37f18-8885-11e6-8cb7-e7ada1d123b1

These loans may be a halfway house between formally requesting for an IMF bailout (with all the associated conditionalities) and maintaining some semblance of autonomy. If this is the case, the loans would be adminstered and monitored by multilateral institutions such as the IMF and the World Bank which would provide some safeguards against corruption.

Beyond this point, I do have an agnostic view towards external loans as my post below made in December 2013 argues (the exchange rate examples used, N160 to $1, are antiquated given today's reality).

4Play:
The pitfalls of external debts should be obvious. It was external debt that birthed SAP and culminated in the erosion of living standards in the 80s which is unprecedented in the country's history. The main problem with external debt is the exchange rate risk as follows:

Supposing you borrow $10bn in 2007, assuming an exchange rate of N100 to $1, giving a debt of N1 trillion when converted to Naira. If exchange rates move against you, say it now takes N160 to buy $1, you suddenly have a debt of 1.6 trillion Naira. Many underestimate how exchange rates can deteriorate quickly. In the 70s to the 80s and I stand to be corrected, we went from 60 Kobo to $1 to in excess 2 Naira to $1 pretty rapidly, that would amount to a multiplication of the debt burden by more than a factor of 3. The funny thing is that the bigger your external debt burden, the quicker the deterioration in exchange rates because money has to leave the country to service the debt. Imagine what that does to the inflation rate and the living standards of Nigerians as much of what we consume is imported. High inflation brings about high interest rates which dampens the supply of credit to the private sector. The negative spiral is relentless and we have witnessed it before.

So, it's actually likely that from issuance to maturity, an internal bond denominated in Naira is cheaper for the Nigerian Govt than an external bond denominated in US dollars for instance. Almost all sovereign debt crisis occurs in countries borrowing in currencies that they do not control - Greece, Portugal, Spain, Zimbabwe, Ireland, e.t.c.

External debt is good in the short term but incredibly dangerous in the long term. The talk about borrowing in Naira crowding out local borrowers assumes that there is strong domestic private sector demand. If there is such strong demand, then the economy is doing well and it undercuts the opposition's argument.

Listening to and reading policy debates in Nigeria, it's almost like the 80s never happened. Those who refuse to learn from history are bound to repeat it.

Source:https://www.nairaland.com/1563336/must-read-reps-50-questions/2

PS: The FG failed to secure the external financing it sought for the 2016 budget which was a "mere" $4.5bn. The likelihood it will be able to secure circa $30bn as planned seem remote.

All this illustrates is that nothing - not even near death experience - would stop a Naija girl from speaking with a fake accent when abroad.

GboyegaD:
If it was as easy as you said then Nigeria should be leading the world and not the other way round.

The difficulty of getting a first class in Nigeria is a reality independent of the quality of Nigerian education. Nigerian universities, particularly the government owned ones, traditionally are miserly with marks. This has no bearing on their quality, which is poor in my view.

On the other hand, UK universities are more likely to award high marks: 1/5th of undergrads end up with a first class and 2/3rds end up with at least a 2.1. This trend of high marks in grades applies at all levels, including secondary schools (look up grade inflation on the net).

The implication is that when you read about a Nigerian getting a first class in the UK, you shouldn't think of it as you would think of a first class at for instance OAU: a rare achievement bestowed on an academic prodigy.

If you guys read the article you will find that the calculation was made on the basis of 2015 and would have used the old official exchange rate. Based on the exchange rate today, the GDP figures calculated in dollar would be different.

It's also funny seeing people who denied that Nigeria was the largest economy in Africa when GEJ was in power desperately latch on to this story to praise the current regime.

The argument for not selling the national assets is the loss of future of cash flow but the alternative proposed - external borrowing - entails the transfer of government revenue to foreign lenders (i.e., the loss of future cash flow).

If the government is not selling, it should not borrow either.

There is a perfectly good reason for why she said what she said. Much of the government's borrowing is not tied to specific projects.

The budget lists items, their costs, the expected revenue and the difference between revenue and costs is met through borrowing. The borrowing isn't necessarily tied to specific projects but represents the difference between total expenditure and government revenue.

The cretinous Shyster at his benighted best. Lets work through the argument, though knowledge is wasted on the vermin.

1) A country in the midst of a currency crisis which is causing a big uptick in inflation cannot afford to cut interest rates. Such a country has to stabilise the currency first. The Shyster's Forbes link notes that Russia first had to stabilise the currency first via aggressive hikes in interest rates. The Shyster fails to note that Russia's interest rates are still 40% higher today than before the recession. For another example of a country dealing with a currency crisis; note the second image below showing the sharp hikes in South Korea's interest rates following the currency crisis of 1997.

2) There is a big distinction between a Western style "demand-side" recession and the Nigerian recession. In a demand-side recession, there is no currency crisis (sometimes like in the US and Japan, the currency strenghtens) and the rate of inflation falls significantly. Note the first image below showing a sharp fall in the US inflation rate following the 2008 financial crisis. A demand-side calls for aggressive rate cuts (monetary easing in general) to stop the economy falling into a deflationary spiral.

3) Guess what? You have already tried your interest rate cuts implemented by the phenomenally hapless Emefiele. The CBN cut rates in November 2015 and within a month, the country plunged into recession and the rate of inflation spiked higher. See third image below:

I will make a few other points: I know you are man of irreprresible imbecility but even you must realise that Nigeria still does not have a floating exchange rate regime. There is no parallel market in a free float so citing the black market exchange rate is a contradiction that even your fecal-brained existence must realise is inconsistent with a floating rate regime.

Finally: you are such a gratuitously mendacious oaf that you have to attribute predictions to me I have never made. What is this incoherent ramble below and please draw my attention to where I predicted currency movements as you claim below:

And your floating policy of an utter weak currency in a dead economy heavily dependent on imported goods that has plunged the naira to an exchange rate of almost N500 to $1 is the answer, yes? I thought you said the naira won't fall beyond £250 to $1. How come it's almost N500 to $1 within three months and it's still falling? You're a circus clown who dwells on throwing useless economic terms around.

FunkyMetahuman:
Lagos is the most indebted state after Nigeria

Stop throwing nonsense stat from your anus around

Yaradua left 3billion debt
Jonathan/ NoI increased it to 47 billion dollars which proves further that noi was a complete failure despite the Hugh amount of crude of sales.

http://www.vanguardngr.com/2015/04/fgs-external-debt-states-debt-profile-on-the-rise/

Nonsense stats indeed - the irony. So Nigeria had only $3billion in debt when Yar'Adua died and it suddenly increased to $47billion under GEJ? A cursory search of the internet will reveal it is nonsense: Nigeria had a total public debt of $21.8 as of December 2009 (see page 17 of the PDF in the link)

[url]http://www.dmo.gov.ng/oci/publications/docs/2010%20Debt%20Sustainability%20Analysis%20(DSA)%20Report.pdf[/url]

You are conflating external loans, which were at circa $3.5bn when GEJ took over and circa $9.5bn when he left, with the total debt stock. I can't tell if you are doing it to mislead or just out of ignorance.

PS: My link doesn't seem to work. You can look up the 2010 Debt Sustainability Analysis released by the Debt Management Office of Nigeria

FunkyMetahuman:
Only adeosun can save this economy destroyed by noi and her zero will to diversify Or save.

She did it in Ogun, she can do it again.

Nigerians are extraordinary Facts are no barrier, a mere inconvenience, to making unfounded assertions. Only in Nigeria would the person who managed a state's finances - Adeosun was finance commissioner from 2011 to 2015 - culminating in it requesting for a bailout be hailed for the manner in which those finances were handled:

ABEOKUTA—Ogun State House of Assembly, yesterday, granted approval to Governor Ibikunle Amosun’s request to obtain N14.16 billion from the Federal Government Budget Support Facility to the States of the Federation. The facility was meant to provide financial support to the States with a view to positioning them to navigate the present economic challenges and meet the obligations of staff, pensioners and other stakeholders.

Read more at: http://www.vanguardngr.com/2016/06/ogun-assembly-approves-n14-1bn-bail-amosun/

Most of these people will quite happily tell you that GEJ mishandled high oil prices (a sentiment I completely agree with), but strangely seem prepared to ignore mishandling at the state government level (bear in mind that state finance commissioners like Adeosun were at the receiving end of FAAC allocations which were at record highs for most of 2011-2015).

It is the mystery of Naija selective outrage! It is like Buhari critics who tell you that he is irresponsible for not dealing with the Fulani herdsmen menace whilst at the same time absolving GEJ of blame for not dealing with the kidnap of the Chibok girls (they even deny it happened!).

From the Nairaland's Motley Crew of Ignoramuses, Bovine intellect and Extreme Crassness: I present to you the Shyster also known as Shymmex. Note the journey of argumentative incoherence:

1) Nigeria is like Russia
2) Nigeria should deal with its currency-crisis-driven recession by cutting interest rates. Though Russia - very much like Naija according to 1) above, dealt with its currency crisis partly by aggressively hiking interest rates from sub-6% to 16.5% (including a hike of 6 percentage points overnight).
3) Floating policy adopted in late June 2016 is disastrous - the corollary, the fixed rate policy which applied from January to June (a period in which the government notes Nigeria plunged into its first recession in 2 decades) is obviously much better!

Here is the Shyster 2 days ago:

Shym3xx:
The Russian economy is very similar to the Nigerian economy albeit there are nuances. Russia is also heavily dependent on gas.

http://uk.businessinsider.com/russia-is-facing-a-full-blown-currency-crisis-2014-11

Here is news of Russia's descent into a recession and currency crisis in 2014:

Panic washed over Russia Tuesday as the value of the ruble dropped as much as 19 percent in one day, with Russians reportedly flooding currency exchange centers and retailers as they tried to swap their cash for anything that might have more value. Russian stocks dropped amid concerns that business leaders would pull deposits from banks and as the cost of imports soared. "The economy is probably in recession and that will accelerate from here, and there are possible risks of a deposit run,” Anton Khmelnitski, director of EC Elbrus Capital Investments in Kiev, told Bloomberg.

http://www.ibtimes.com/russia-ruble-crisis-2014-potential-economic-collapse-panic-over-future-banking-system-1760125

Here is news of Russian interest rate policy response:

After the central bank dramatically raised interest rates by 6.5 percentage points to 17 percent overnight, Russia has given up any pretence that it is not in the grip of a currency crisis.

http://blogs.reuters.com/macroscope/2014/12/16/russian-currency-crisis/

Here is the Shyster implying that the exchange rate policy in Nigeria which applied when Nigeria plunged into recession is better:

Shym3xx:
Lol.
So all the village idiots and voodoo economists who supported the disastrous floating and are in the habit of throwing around vacuous economic terms are back again to support the disastrous high interest rates.

Bunch of clowns.

Here is a graphical representation of the Russian interest rate policy hike (the Shyster lauded the Russians for cutting rates this year not knowing that this was done after the currency crisis was brought under control following the rate hike and that rates are still 4 percentage points higher than before the recession):

jpphilips:
The CBN's interest rate (MPR) is not accessible to you and I and other businesses. we deal with the banks who have doubled the MPR, I got 33% last week.
If you look at it critically, does it not bother you that the banks borrow at 14% and give us at 33%

CBN's lower rates line the pockets of the banks not individuals who actually use the funds to initiate a value chain for the economy that is where I am convinced the CBN is in cohort with the banks.

Nigeria needs to export more to quell her forex shortages, how is it gonna be possible when the private sector that is supposed to make the investment get funds at high interest rates?

You want companies to export on one hand, on the other, they are crippled with high interest rates. Who then will make the investments that will spur export, cash strapped Government?

Remember that even if the Government doesn't earn more forex, trade will balance if we can produce most of the commodities that currently mount pressure on our scarce forex.

Inflation that you referenced was not caused by excess liquidity, that is the lie that proves the incompetence of Emiefele, inflation set in when the goods disappeared due to forex shortages and high import duty.

In the absence of Importation, what other source of goods do you have if not local manufacturing?

inflation works on two parameters, money and goods, so far Emiefele has mopped up enough Liquidity that inflation should drop yet it is going up, the answer lies with the other factor which is goods.

An importer that used to import 40 containers before now import just 20, due to forex shortages and high import duty. That is what is causing this inflation. To make up for the goods we lost, we must use low interest rates to spur manufacturing.
That approach will achieve two results
1 we will have more goods
2 there will be less pressure on our scarce forex.

If Emiefele will acknowledge this, the economy will bounce back.
I love your analysis though. but I strongly disagree with the obvious.

If as you acknowledge the MPR does not reflect the real cost of lending (with banks lending at circa 33% when the MPR is 14%), then you effectively agree with the gist of my post: the CBN cutting the MPR would not improve economic conditions in Nigeria as the reduced rate would lead to the increased money suppy being used for currency speculation/hedging.

What is driving economic deterioration in Nigeria is inflation: banks would not be lending at 33% if inflation was circa 2%. Cutting the MPR will not lower inflation, to the contrary. If inflation is say at 30% (the NBS's inflation stats are probably an underestimate), no bank will lend to you at 14% as their lending rate has to offset the loss of the naira's purchasing power. It will be irresponsible for the banks to lend at rates which are a substantial discount to the rate of inflation - their very survival and that of the economy will be imperilled.

The debate in this thread is somewhat pointless as people are confusing the CBN's benchmark rate with the interest rates charged businesses in Nigeria. The latter is driven by inflation, reducing the former would have little or no effect on the latter. You may have in mind that the government - perhaps the CBN - should regulate or mandate lower lending rates to businesses but as with most government price-fixing diktats, it would backfire spectacularly causing greater scarcity of bank lending.

I understand the connumdrum about a lack of investment in Nigeria, you seem to think that inflation in Nigeria can be curtailed by producing more goods locally. However, underinvestment in Nigeria is a supply-side constraint reflecting the general business environment: poor infrastructure (electricity, transportation,e.t.c), weak human capital, insecurity, inadequate regulatory environment, e.t.c. The CBN's monetary policy tool is a crude and ineffectual instrument to solve a problem of underinvestment which has gone on for decades. As much as I disdain Emefiele, banging on about the MPR as a solution to our long-running problem of weak local manufacturing or investment in general is rather misguided. Improving the investment/manufacturing environment in Nigeria is a long-term project requiring major policy reforms, the CBN's benchmark rates (the MPR) is not the policy instrument that will help.

This discussion also reveals an underappreciation of how markets work; if there was a viable business in lending to businesses at below present market rates, investors/banks would lend at lower rates to gain market share from other banks. Further, if there was a viable business in producing goods locally, money will find its way into the manufacturing sector in Nigeria (bypassing the banking sector if need be).

I am also not sure why people who go on about the cost of lending in Nigeria do not realise that the FG affects the costs of lending. The FG by announcing and proceeding with record borrowing plans in 2016. 2.2 trillion naira at the last count, is driving the costs of lending up. This is because the FG's borrowing - by adding to the demand for credit - increases the cost of credit. When the FG competes for credit with the private sector, the FG wins hands down driving up the cost of credit and "crowding out" the private sector. This is an FG that is embarking on oil exploration near Lake Chad and purportedly spent over a billion on the Change begins with me campaign (not to mention the billions wasted on the presidential fleet or the National Assembly).

For now, we need to curtail inflation which is being driven by our currency crisis. Cutting the MPR would make the currency crisis worse. People are forgetting that the CBN cut the MPR to 11% in November last year. Look what happened below:

jpphilips:
Lower interest rates will lower cost of manufacturing faster than Lower taxes. I am not sure there is any company in Nigeria whose Local tax peaks its recurrent expenditure, Nigerian companies that cook their books, bribe tax authorities?
Perhaps you should ask Ben Bruce why he has been unable to repay the 11 billion naira debt he has with Union bank, cost of funds is not a joke in Nigeria, trust me when i tell you that, even discounting invoice rate in Nigeria is amongst the highest in the world.

"High" interest rates in Nigeria are a product of high inflation. If you reduce interest rates, the increase in the rate of inflation will usually offset the reduced interest rates (in reality, banks will not pass on the reduced interest rates to borrowers).

The reason why I put the term high in inverted comma in the above comment is that a central bank's interest rate is high if the rate is higher than the Wicksellian natural rate (the rate at which inflation growth stabilises). Interest rates in Nigeria are lower than the rate of inflation, i.e., the real rate of interest rates are negative. Hence, the CBN's interest rates are actually stimulative and too low given the rate of inflation.

People keep saying that Nigeria is suffering from a "lack of money" and that we need to inject more money into the system. What Nigeria is actually suffering from is a supply shock (lower forex inflow) which is causing high levels of inflation. The average Nigerian is suffering today from the resulting increase in the costs of living - this is a crucial distinction we need to bear in mind. So increasing the money supply (the supply of Naira without increasing the supply of dollars) in the midst of an inflation spiral will make matters worse! This is why when months ago when people were saying that once the 2016 budget is passed, we will see an improvement in the economy, I thought that was hilarious. Since the budget was passed- injecting more money into the economy - things have gotten worse. Think of it, at the current rate of inflation vis a vis the CBN's interest rates; the manufacturers selling prices are increasing faster than their borrowing costs.The CBN's interest rates is not what is deterring investment, it is the inflation/currency spiral and injecting more money is like a dog chasing its tail. The more you inject, the higher the rate of inflation.

The search for lower interest rates reflects the penchant Nigerians have for looking for shortcuts and easy solutions (a magic bullet). But as economists say, there is no free lunch in economics. What policy makers need to do first is to stop this currency/inflation spiral. In fact, the FG is better off implementing fiscal austerity. I do not know of any country that got out of a currency crisis by lowering interest rates. People are confusing a supply-side shock (as in Nigeria) with a Western-style recession which is a demand-side shock. The difference is that in a demand-side shock, the rate of inflation collapses and the economy faces deflation (price of goods fall). This is what happened following the 2008 financial crisis. To address this, policy makers had to reduce interest rates and when that proved insufficient, they did fiscal stimulus and quantitative easing (arguably still insufficient).

Nigeria has the opposite problem and we should be careful not to further impoverish ourselves: I recommend that people read more about currency crises (google and read about first and second generation currency crises if you have the time)

PS: To summarise: High inflation is driving hardship and this is driven by our currency crisis - disequillibrium between the demand for dollars and the supply of Naira. If you increase the latter (by cutting interest rates for instance), you increase demand for the former. You need to reduce demand for dollars and or increase dollar supply first. Talk about solving our problems by pumping more naira is dangerous wishful thinking.

LoveMachine:
Well said. Their owner is a known bigot. That dirtbag Mike Bloomberg started all kinds of actions that have reduced the quality of living for blacks in NYC. There is a special place in hell for people like him.

This is why we are our own worst enemies. People are suffering in Nigeria as capital flight, including from Nigerians, has picked up. Instead of channelling your rage towards your government, you are busy heaping verbal abuse on media proprietors because the journalists had the temerity to report on our poor economy.

This is the point that we keep emphasising. The suffering of Nigerians is needless and is not simply down to the oil price collapse. Much could have been avoided if the policy responses were better calibrated:

Then came the 2014 oil crash. Foreign investors fled and the economy tanked. Though Nigeria was always going to suffer from a drop in oil prices, it was the government’s bungled response that made it worse, according to Martina Bozadzhieva, an analyst at Frontier Strategy Group.
President Muhammadu Buhari, a military ruler in the 1980s, came to power again last year, this time via the ballot box and on a wave of optimism that he would fight corruption and revive the economy. He took almost six months to form a cabinet and only approved the 2016 budget in May.

He also leaned on central bank Governor Godwin Emefiele to peg the naira, ostensibly to stop prices of food and transport rising. Instead, inflation soared to an 11-year high of 18 percent as businesses struggle to pay foreign suppliers for the machinery and raw materials that aren’t available locally. Since June, when Emefiele gave up trying to support the currency, the naira has plunged 40 percent against the dollar. S&P Global Ratings downgraded Nigeria five levels into junk territory on Sept. 16, saying the economy had performed worse than it expected because of the attacks on oil facilities and Buhari’s foreign-exchange policies.
“The confidence in Buhari is very quickly evaporating,” said Bozadzhieva, whose company advises multinationals like Coca-Cola Co. and General Electric Co. “Firms are close to that point where they say: ‘You know what, this is a disaster.’ It’s okay to have an oil price drop. But there are countries that have managed it much better.”

[url]
http://www.bloomberg.com/news/articles/2016-09-18/blackouts-violence-and-now-recession-nigeria-s-troubles-mount[/url]

In the grand scheme of things, the brouhaha over plagiarism is overblow. Plagiarism is bad in certain settings: academia, novels, e.t.c. But this is a mere political speech.

Given all that is going on in the country, the fact that the president's speechwriters lack the imagination to come up with their own words is hardly a big deal.

seunmsg:
[b]We earn all our forex from crude oil. [/b]Once the forex from crude oil is no longer there, other sectors won't get the required forex to import and expand/maintain their operations. And once these other sectors can no longer maintain their current operating level not to talk of expansion, the economy will not grow, hence, recession. Recession simply means our economy is no longer growing.

The situation of the Naira is also as a result of the shortage of forex. The high $/N exchange rate is seriously pushing inflation to an extreme height which in effect had reduce the purchasing power of Nigerians. It had also reduce the growth capacity of other sectors that contributes to the GDP.

If only Jonathan had not squandered the huge foreign reserve and the excess crude savings he inherited, the current government would have gotten something to fall back to, investors ability to continue to invest won't be eroded, Naira won't be this bad and most importantly, we won't be in a recession today.

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.

You paid propagandists who make this half-witted exculpatory defence of the Buhari regime as merely being the victims of the oil collapse are the worst set of traitors this country has. You are damaging the country by excusing government ineptitude. Another thing that escapes most people's attention is the inconsistency of the narratives that Buhari propagandists offer: if the GEJ government was stealing all our money with reckless abandon, why the hell would a fall in oil prices in itself cause such hardship for Nigerians?

oyegbe:
The person that wrote this trash is an international award winning fu! . seun is not every thing you should post because this is a very big, bad and worst misinformation. TSA is not responsible for the recession, No money is lying dormant in the CBN. TSA is just a chanel instead of having multiple fake FG account. [b]The sudden drop in government revenue with lack of savings is responsible for the wahala, no nation will survive when over 60% of its revenue source is not functioning couple with less savings. [/b]FG is looking for money to pump into the economy but that cash could only be available by concessioning and sales of FG properties and increase in oil output. if The NDA stay calm like this by december we will get positive growt. Listen to minister of national planning on Channels tv today on sunrise daily. all the necessary question needed to be asked were asked and answers were giving acordinly.

This view is popular but quite naive. Most of the drop in oil price occured in the second and first halves of 2014 and 2015 respectively. Most Nigerians will tell you that whilst things were hard then, they have gotten significantly worse today. GDP growth was 3.86% in the first quarter of 2015 (when oil prices had falled 50%) but -0.36% in the first quarter of 2016.

This suggests that the factors explaining the recent plunge in growth are not simply oil related. Nigeria is not the only commodity dependent state in the world (almost all African countries are). But with the exception of countries like Venezuela, which in any case was in recession as far back as 2013, Nigeria stands apart in the speed with which its currency and economy has collapsed.

Another thing I have noticed is the way people conflate the fall in oil prices with the government's spending power. The government depends on oil for 60-70% of its income - a 50% fall in oil prices will equate to 30-35% drop in oil dollar income. But here is what people forget - the Nigerian government's spending is largely on recurrent expenditure and is largely naira denominated and should not be dramatically affected by a loss of dollar income. I will use a much simplified example for illustration:

Supposing the government has oil revenues of $30bn from oil prices of $100 p/b - at N160 to $1, this will equate to N4.8 trillion. If oil prices fall to $40 p/b but the naira depreciates to N400 to $1 - assuming oil revenues of $12bn (i.e., 40% of $30bn), the domestic spending power will be N4.8 trillion. Of course, inflation erodes the actual purchasing power of money but most government spending going back to the GEJ era has been on recurrent expenditure - things like wages and debt servicing - which are largely unaffected by inflation. This government didn't help matters also by fixing the exchange rate but this is self-inflicted misery.

Remember also that the government's budget this year is the largest in Naira terms, fuelled by borrowing. We are also led to believe that the previous government was stealing with reckless abandon which is no longer the case today. All these should have cushioned the effect of the fall in dollar income.

The reality is that those who just mouth off about the government's income falling by 60% are being disingenous.

bettercreature:
Nothing on earth can save this economy until exchange rate is stable!black market rate is 3-4 naira differ from CBN rate and increment in salary

This is what many don't get. Most Nigerians are not affected by the budget directly. The exchange rate on the other hand is another matter. Without stabilising economic expectations and the exchange rate, releasing more money does not help. In fact, releasing money can worsen matters as a lot of that money will be used to buy dollars as a hedge against naira depreciation.

Femich18:
Nice one... All thanks to Buhari

Not really, you are doing a disservice to the soldiers who recaptured Gwoza in March 2015:

The Boko Haram insurgents captured Gwoza, one of the largest towns in Borno State, in August 2014 following heavy attacks.

Gwoza, about 135km from Maiduguri, is surrounded by mountains and it is adjacent to Nigeria's border with the Republic of Cameroon.

After the attack, the insurgents instantaneously proclaimed Gwoza as their caliphate and held it until March 27, 2015 when Nigerian troops routed them and liberated the town

Gwoza was recaptured by the troops less than 24 hours before the 2015 presidential and National Assembly elections but the insurgents only retreated after committing a lot of atrocities in the town.

http://allafrica.com/stories/201504231323.html

seunmsg:
So, what's wrong if wealthy Nigerians offer some of their wealth to help the country get out of recession? We can learn from the patriotism of the South Korean women who supported the government of their country in a period of recession, I don't see anything bad in what he said.

You are being disingenuous. I know a bit about South Korea's reforms following the 1997 financial crisis and it was a comprehensive reform package - supervised by the IMF - which helped them recover from the crisis. It was not by making exhortatory demands to support the government.

The government conducted a radical overhaul of the economy: privatisation of state assets, closed 17 out of 30 merchant banks (their imprudent lending helped cause the crisis), liberalised capital flows towards the stock market and FDI to reduce reliance on debt-financing, tightened financial regulation, required that the major conglomerates reduce their debt to equity ratios to Western levels, e.t.c.

What is not recognised is that to reform an economy requires urgent and comprehensive set of policy initiatives - not desperate attempts at managing perception by shifting blame to the previous government or claiming impotence in the face of oil collapse/NDA.

Until we take these major steps, PR campaigns exhorting Nigerians to change themselves or to emulate Koreans will serve to infuriate. All these is of course wasted on paid propagandists like you.

bashydemy:
Do we spend dollar in Nigeria? if not then why do we convert it what for? Do you convert you naira to dollar before paying your bill?

@ bold should import duties be reduce to 1% because of your brothers?

Supposing you import a product in 2014 with a value of $5k and import duty of 10% - the import duty in Naira would be 80k naira ($500 × 160 naira).

Today in 2016, that import duty will be at least 160k ($500 x 320 naira). So what you are celebrating as "record" revenue is naira depreciation.

jmichlins:
if you can't see the corruption that had way till now then you need to be sorry for yourself. Saudi Arabia saved excess money during the oil boom but what we had here was fake GDP and those fake statistics that doesn't reflect on the life of average nigerians. It's said that about 80million nigerians live below poverty level do you think it just started. Come 2019, I will vote out this administration cause it failed on her promises

I agree that freewheeling corruption was the bane of the GEJ government but I think citing it as a reason for supporting Buhari is like saying you support burning down your house because it has a severe rat infestation. The analogy is a tad bit melodramatic but it's designed to drive home the point - The medicine for a disease should not be worse than the disease.

Buhari had a track record as president of gratuitous economic illiteracy which unleashed severe and needless hardship on Nigerians in the 1980s. In a saner clime, such a record would have eternally banished him from serious contention for consideration to run for president. He, however, benefited from disillusion with the status quo and Nigerians tendency to apply ethnic/religious filter to their reasoning. It also helped him that 85% of Nigerians are under the age of 35 and have no recollection of his first presidency.

To the corruption issue, you have to start with the fundamental: corruption is evil because of the consequence. The consequence of corruption is lower standard of living. The problem with economic illiteracy is that it also leads to the same outcome. My position has always been that Buhari's illiteracy will ofset any potential gains from reduced corruption. This is why I said the following in May 2015:

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.

mrvitalis:
Why will an exporter want to take his money out of Nigeria? ??

You might want to purchase something abroad or diversify your savings to protect against currency risk. Some exporters could even be foreign owned export bizs

The irony of restrictions on capital mobility is that if you impose restrictions on taking money out, people will be reluctant to bring money in. What the government's policies have done is reduce diversification away from oil dependence.

mrvitalis:
I need an economist here to tell me if it is possible for weak local currency to slow export down
From my basic economics... A time like this. . Local manufacturers will prefer to export and make more profit than sale locally... That's why garri is expensive.. . Most people now prefer to export cassava as cassava chips and earn 350 dollars per ton which is is over 120k thanks process to garri and earn 60k to 70k

This report has for me no economics theory backing

Tell me local production has slowed I will say yes. . For those who import raw materials. .. But if u source ur raw materials from Nigeria... Production is too sweet now. ..

If I was in the management team of any company I will say we go to vertical integration
That's the sure way to make much money now

The problem for exporters are varied. If they keep their dollar earnings abroad instead of bringing it back and converting it to naira, they see the naira value rise as the naira falls against the dollar. (So $1m in export earnings would be worth N400m whereas last year it would be N200m).

If they also bring it back, there is no guarantee they will be able to take it out of the country given all the bureaucratic hassle the CBN has imposed. Also, with the divergence between the official and black market prices of the dollar, most exporters would see the latter as the fair market value of their export earnings, but there are all sorts of restrictions that may apply to them. Despite the announcement over floating the currency, the CBN still maintains undue influence over the exchange rate, hence the big divergence between the inter-bank rate and the black market rate.

Dongreat:
You maybe right as I am not seeing any works done by his ministers or economic team to ease the hardships but we all know that the Nigeria government depend lots on oil and now that it's fallen in price, the effect is still a score point for the recession, if not the major score point.

You can read in the article where the Venezuelan president did more to put the country on the success scale in the world economy when the oil price was within and above $100, but now that the oil has fallen, you can see the effect on the government.
NB: I am not excluding bad leadership but focusing on the effect of the oil price drop.

I have addressed this comparison to Venezuela in previous posts. Venezuela was in recession long before the oil price crash:

If there were an award for the messiest year in Latin America, Venezuela would win it by a landslide. Currency problems, drastic shortages and political wars marked a 2013 that began with the death of Comandante Hugo Chávez in early March. Since then, successor and current President Nicolás Maduro has been trying to carry on his legacy at any cost -- and many fear that is bringing the country close to collapse.

Whether Maduro's failing policies or the so-called “economic war” Maduro is accusing his opposition of waging are to blame, Venezuela entered a recession in 2013. GDP suffered a 0.4 percent contraction this year, according to estimates by Trading Economics. This, in a year when Venezuela dealt with 42 percent inflation, and the Venezuelan bolívar dropped 32 percent against the U.S. dollar.

http://www.ibtimes.com/venezuelas-economy-will-continue-suffer-2014-analysts-predict-further-recession-1535334

MARKone:
Of course!! Jonathan has his on fair share of blame, read the article well it said past leaders failed woefully in diversification of the economy. From the Gowon man that once declared that the country is so rich that we do not know what to do with our wealth. To IBB who sadly and unfortunately filtered away revenue $12bil accruing to the country during the Gulf war, wasting 8 solid years!! What did we get S.A.P. To the ota farmer who spent a good number of his time fighting his deputy and scheming for a third, to the fedora hat wearing otuoke man, who wasted!! And nearly depleted our foreign reserve all in the name of seeking reelection, we have been cursed in this country with bad leaders, PMB has no reason being here, as the man and his crew are just at loss on what to do.

I agree about the diversification point but I think people are overemphasising that. Petroleum is a small part of the economy (less than 20% off the top of my head) and its main values are as a source of government revenue and forex. For the latter, capital inflows, remittances and non-oil exports were additional sources of forex. What the decision to fix the naira at 197 to the USD caused was to reduce capital inflows (what good bringing in money at an artificially inflated level when you can't take it out?) and make non-oil exports less viable.

Re oil's dominance of government revenue, allowing the currency to fall earlier would have lifted some of the burden. All things being equal, a 50% fall in oil price would amount to a 25% fall in government oil revenue if the naira depreciated by 50%. As government spending obligation is largely naira denominated - paying workers salary for instance - depreciation would have cushioned the effect of the oil price fall.

Although, some decisions have been partially reversed - including the fixed exchange regime - there has been a precipitous loss of confidence in the economy which might take time to rebuild.

In summary, this government's actions and inactions (coupled with decades of policy ineptitude, including GEJ's government) have made a perfectly manageable situation into a full blown crisis. We need to hold these people accountable as it us who suffer for their inadequacies.

Chinom:
How in the world do we have a recession and rising inflation at the same time?!!. Cement is now being sold at +N2000. A bag of rice is nearly N20,000. Shouldn't there be a slump in prices?.

ONLY IN NIGERIA. Given all the incentives he gets from the FGN, Dangote should reverse that Cement price hike ASAP. It's intolerable.

It's called stagflation or a supply side recession driven by currency crisis. Remember that much of the decline in oil prices from the high of circa $100 per barrel happened in the 2nd half of 2014. We did not technically (2 consecutive quarters of negative growth) have a recession until 2016. This tells you that the policy environment is partly driving the economic weakness. Remember when people were crowing that once the budget is passed, the economy will pick up? What the budget debacle signaled - including the plan to provide fiscal stimulus in the midst of a currency crisis - is that the policy framework is inadequate and that there is a glaring lack of competence at the highest level of government.

That being said, we are probably near the end of the crisis. With the loosening of the fixed exchange regime and the sheer scale of the currency collapse, we may start to see things pick up.