₦airaland Forum

afube: My brother,naija's case is a sad story of squandering of riches.....algeria has a foreign currency reserve of 230 billion dollars,nigeria's dollar reserves is just about 50 billion dollars.......flashback to 2004, both nations were at par in respect to foreign reserves.

Algeria has gone on to increase their reserves,while our politicians have managed to squander ours on properties abroad,private jets and estates in banana republic or is it banana island.

Brethren I sincerely believe that God's hand of judgement is about to descend on this nation and its looting class....

We don't have Algeria's smaller population. This is what I object to in all these comparisons with other oil producing states as by misdiagnosing our problems we will never solve them.

Because we know our country is corrupt, we assume that we can have the same financial resources as other oil rich nations and that corruption is the sole stumbling block.

We simply cannot afford the military armaments that Algeria can afford.

We certainly need more air assets - helicopter gunships & war planes - as this will enable rapid reaction. Because our troops are lightly spread, Boko Haram are able to concentrate forces on isolated army units. This is where air assets comes in handy.

We could also consider recruiting more soldiers, though the personnel costs could prove prohibitive.

It's odd that with this war raging on, most Nigerians are carrying on blithely as if this is a minor disturbance.

Very few things as funny as criminal acts which flounder under the weight of its idiocy. Please see below:

[quote]A bank robber who kicked down a security screen at Barclays flagship London branch to steal almost £1,000 in cash was caught after packets of red dye exploded as he made his getaway.

Teslim Adedibu, 34, fled from the bank in Piccadilly shouting “robbery, robbery, ha ha ha, I’ve got all the money” moments before he was engulfed in red smoke as he ran down Shaftesbury Avenue with a rucksack stuffed with banknotes.

Earlier on May 12, jobless Adedibu had been told he was not allowed to withdraw any money because he was thousands of pounds in debt.

He returned five minutes later demanding £10,000 before smashing through the security screen and grabbed £910 from the Regent Street branch.

But the hapless thief had inadvertently put dye packets into his bag which exploded as he tried to make his escape.

Detectives were able to trace him the following day from details he had entered into a card reader during the original failed transaction.


[url]http://www.standard.co.uk/news/crime/barclays-piccadilly-robbery-cash-red-dye-paint-robber-laughed-ha-ha-ha-ive-got-all-the-money-teslim-adedibu-9603886.html [/url]

There is a trend of escalating violence which has no causal link to the state of emergency.

I am always bemused by discussions about the Israel/Palestinian situation which frequently dovetail into a simplistic narrative, viz, the Jews have taken Palestinian land and this is unfair. If by taking land, we are referring to settlements in the West Bank, this is a valid point to debate but stating that the establishment of the state of Israel is unfair is a pointless debate. It is pointless because Israel is irreversible, a fact on the ground, and a failure to accept this does no one any good, particularly the Palestinians.

It's as if because the state of Israel was established ''unfairly'' in 1948, 3 Jews can be kidnapped and killed today without the perpetrators or their protectors being punished. Where would this line of reasoning lead us, perhaps Native Americans in the US can attack whites, blacks and latinos because these people are effectively trespassers on their land. If you think of it, this line of reasoning is often used by racists in Europe to justify their attacks on foreigners.

caseless: we import oil too.

We import refined fuel because our refineries don't work, not oil.

It's funny people are asking for evidence when US oil importation, particularly from Nigeria, has reduced. See extract from link below:

http://businessdayonline.com/2014/06/drop-in-us-oil-import-from-nigeria-valued-at-2-7bn-in-q1/#.U7o8aPVwYuo

Nigeria’s revenues from crude oil have been declining in recent times, due to large-scale oil theft and the rise of shale oil production in the US, resulting in sustained cutbacks in US imports of Nigerian crude and moving the world’s biggest oil-consuming country closer to energy independence.

This news is causing a lot of people headache as this puts paid to a lot of their conspiracy theories and understanding of the world.

For those asking why the US continues to import: that is because the US domestic consumption far surpasses what it produces. If Nigerian living standards was at western levels, we too would be importing oil.

Much of economic growth is driven by demographics, same applies to Nigeria's. So when NOI boasts of strong growth, it's growth despite of the Govt not because of this Govt. So, yes, Nigeria can become an economic giant despite our inept leaders.

I have always felt that Nigeria requires someone with an economics PHD at the helm of the CBN. It's okay to have a diversity of educational backgrounds at board level but the CBN governor should be a top notch economist.

israel007: They should just scratch it. Policy is too unfriendly.

Shocks me when I read people here say this is good for us now as it would create jobs. 'Tokumbo' car saless generate more jobs. How many people would be selling the small qty of cars they would assemble? How many people would th plants employ? Better still: how mmany illiterates would be employ.

This policy is just not it. May be good but its not coming at the right time

It's a daft import substitution policy, i.e, trying to replace an imported product with a domestically produced product by making access to the former more difficult. It will only benefit a few rentiers who start car assembly plants in Nigeria or highly connected importers that circumvent the tariffs. In return, the rest of Nigeria gets overly expensive cars.

Nigeria has not reached the economic level where its car plants can compete with foreign car plants on price or efficiency. These sort of polices work where there is a genuine prospect that the cossetted Nigerian car manufacturers can make significant inroads in the automobile market abroad via exports from Nigeria. If you simply put up prices where you have no chance of becoming export competitive, you get a captive domestic market that simply pays higher prices whilst the country gets nothing in return by way of higher exports.

adeekoademola: I am actually the person behind the @OccupyNaija handle on Twitter... Its such a pity that the so called Nigerian youths are the pillars behind our problems in this country... When i thought all other well meaning youths will follow me in the bid to ask more questions from the minister, its such a pity that same youths turn around to chastise the only person who dared to ask questions! Most found the name calling by the minister funny while others believed that i deserved what i got.. just a few reasonable ones appreciated my effort in making the minister accountable for the ministry which she heads... We are being swayed by her grammar and sense of appealing to the sentiments of ignorant Nigerians that we have forgotten that the destiny of a country is determined by it's economic strength... She is the coordinating minister for economy so therefore her actions and inactions directly or indirectly affects each and every on of us... Instead of us to join me in asking valid questions, we are busy tearing ourselves down... The sooner we realize which side of the divide we are, the better for us... This fight is we against the government and not we against ourselves... We pay public officers a very high amount in terms of salaries and allowances, they fail to perform then we still make excuses for their failures.. little wonder they always fail us and still seek our support for the ineptitude and incompetent attitude... i really don't talk much on forums like this that are dominated by tribalists,ethnic bigots and political jingoists.. Rather,you can engage me directly on Twitter.. I remain @OccupyNaija .... thanks!

I think you are part of the country's problem. People think this country's problems are solely or mainly on account of a corrupt and inept political class but the political class are not an alien breed foisted on the populace but a product and embodiment of the attitudes and aptitude of the populace. To illustrate this, I will take one example in respect of which Occupy Nigeria is associated with, fuel subsidy.

In none of the great economic development stories of the 20th century - Singapore, Taiwan, China, South Korea - did economic growth come about by spending bucket loads of money subsidising consumption as we do with fuel. The country spends a trillion Naira on fuel, more than its entire health and education budgets combined. In other words, we value cheap fuel more than health and education. In respect of the former, we have one of the world's highest rates of infant mortality (850, 000 dead a year) and in respect of the latter, one of the world's highest rates of illiteracy. Yet, to the extent that we mobilise, we only mobilise to keep fuel cheap. Because fuel consumption is higher amongst the middle and upper class - people like my mum who own 2 fuel guzzling SUVs and generators - subsidising it is a regressive policy and it helps explain why there is little fuel subsidy protests outside urban sprawls.

Nigeria is bedevilled by corruption but I would submit that a history of boneheaded policies like subsidising fuel, maintaining over bloated public sector payrolls, large state participation in the economy, not sterilising foreign exchange inflow and thereby incurring the Dutch disease, e.t.c, all contributed an arguably higher quota to Nigeria's present state than corruption.

A nation can be underdeveloped through corruption and inept policies but whilst the former may prove a surmountable obstacle, I would say that inept policies are an insurmountable obstacle. Occupy Nigeria represents to me the banner boys of policy ineptitude in Nigeria.

@hercules

That was an interesting write up but it symptomises the triumph of hope over reality. Buhari's economic policies were failures because they were impractical, a point Sanusi tries to circumnavigate by alluding to the "dark conspiratorial forces" aligned against Buhari. Polices must be judged by their practical consequences not the intent behind them. To hold otherwise would undermine our ability to assess the efficacy of a policy.

I find the disingenuous posturing here laughable. The simple truth is that cutting recurrent expenditure will require huge cuts in the public sector headcount/pay and in fuel subsidies none of which is popular with those bemoaning the high recurrent spending ratio. Remember that the fuel subsidy spending is not even reflected in the ratio so our recurrent spending is even higher than is acknowledged.

There is a lot of mealy mouthed talk of cutting corruption and waste. Of course, these objectives are inherently good, however, in the context of the debate make little sense to me. Remember we are talking of ratios and proportions. Why would cutting corruption affect ratios? Is corruption more endemic via recurrent expenses than capital expenses? Some of the greatest heists in this country have been perpetrated through capital spending: Ajaokuta Steel, OBJ's power projects, Oduah's airport refurbishments, Abacha's railway projects, e.t.c. I would say that it's easier to steal money through capital projects than through ghost workers.

This debate is a phantom debate because no one actually wants to cut the ratio of recurrent expenditure.

A nation of savages with an army that adopts the tactics of savages.

Cutting recurrent expenditure is something everyone claims they will like to do but no one actually does. The main component of recurrent expenditure is personnel costs it seems. Every union strike, be it ASUU or medical doctors, is supported by populists. How can you be against high recurrent expenditure but in favour of public sector wage hikes which benefit the few at the expense of the many? Aso Rock food budget and the plane purchases should be scrapped but these barely make a dent.

In the US, the opposition will propose a rival budget which will give people an idea of how they intend to actualise their stance. Nothing is proposed here as an alternative other than vacuous point scoring.

[quote author=X-factoria]Hey bro, your argument is one sided. You were spot on on the risk of external debt being unfavourable movement in exchange rates. However, when you hinted on the crowding out effect of government local borrowing, you trivialized or refused to succinctly consider the argument against the government resorting to raising funds locally. The thing is, the economy would be worse off if the government crowds out other local debtors to the detriment of the private sector. By crowding out, I mean the government competing directly with local businessmen for loans. In normal climes, government poses the least credit risk because it is a continuum, so banks would be more inclined to lend to government (even at cheaper rates) than to private businesses and individuals. The resultant effect of this would be gradual collapse of the real sector - businesses would be crippled, national productivity would reduce, unemployment will worsen and we would be in a recession before you know it.[/quote]There is no evidence of a crowding out effect in Nigeria. The best evidence will be a spike in the cost of credit, as reflected in bond yields, as the demand for credit by both Govt and the private sector overwhelms its supply. If loading up on foreign debt is better, no country with the choice of foreign or internal debt will plump for the latter. Nigeria is the only country I know that people argue with a straight face that it is unfortunate that their country has not piled up more external debt.

So when you weigh the pros and cons of seeking external financing through debt, the country is better off with external debt despite the exchange rate risk which can be managed (the CBN applies a portion of the external reserve to cushion the effect of unfavourable exchange rate movement).

This is a glib comment. Our foreign reserves won't survive a run on the Naira. Where was the CBN as the Naira has gone from 60 Kobo to 160 Naira to a dollar? In the last 5 years alone, we have gone from 100 Naira to 160 Naira to a dollar and that is even with low external debt. With higher external debt as you recommend, things will definitely be a lot worse. The fact that we are not building up our external reserves considerably enough at a time of relatively high oil prices with the CBN having to use reserves to fight off a depreciation in the Naira clearly shows that we have less room to incur more external debt.

Doesn't the insistence that we borrow abroad imply that the economy is sound enough that foreign investors will readily lend us money at desirable rates? If it is so sound, then they should be giving the Govt a round of applause.

Passing Shot: Some of my favourites:

Why should our internal debts continue to represent more than two-thirds of Nigeria’s external debt profile, when the cost of servicing domestic debts is ridiculously far more expensive than servicing external debts? Why should government continue to borrow internally when in
so doing results in insufficient funds, skyrockets the cost of borrowing and above all, crowds out the real sector from the money market? Shouldn’t the high cost of domestic borrowing override whatever are the assumed benefits? Since both London Interbank Offer Rates (LIBOR) and the US Treasury Bonds rates offer far better interest rates for sovereign borrowings, why have we continued not to take advantage of cheaper interest rates?

I find this interesting as it implies that external debt is superior to internal debt, that is to say, that it is better that the Nigerian Govt owes money denominated in foreign currency to foreign creditors than owe money denominated in Naira to domestic creditors.

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.

The high interest rates the Govt pays when it borrows in Naira is supposed to compensate for the higher rate of inflation in Nigeria but the flip side of high inflation is that the real value of Naira denominated debt is eroded over time than if the debt is denominated in a foreign currency. Remember that in the bond market, if the Govt borrows 100bn Naira for a term of 10 years at yields of 14% per year, it will merely pay the yield per year and redeem or pay back the 100bn Naira at expiration of the 10 year period. 100bn Naira in 2007 and at an inflation rate of 9% per year will mean that in the 10th year, the Govt will pay back the equivalent of 39bn Naira in 2017. In contrast to US dollars which erodes value at a slower rate, the redemption of Naira debt will be a lot cheaper than dollar debt.

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.

59 billion for ex-militants, what are we getting for all this money as disruption of oil supplies still continues apace.

373.4 billion for education, does that factor in the recent agreement with ASUU?

Some of the questions defy logic and are symptomatic of economic illiteracy but they play well with a benighted populace.

Is Mukina alive? Someone needs to check she's still alrite

I'm worried for Mukina. Someone call suicide hotline, Arsenal's season is about to implode

It will be stating the obvious to say that NNPC and the FG are corrupt. However, I think this claim by Sanusi smacks of turf war and not, as interpreted, whistle blowing about actual theft. This is simply because the amount involved defies basic numeracy and a passing knowledge of how oil proceeds are split.

To paraphrase, they are 2 cheeks of the same bu-tt. The difference is that people of different ethnicities see each party as a path to regaining or retaining national influence.

Many in the West of Nigeria and the far North see APC as their path, whilst many in the East and the Middle-Belt see PDP as theirs.

The figure might look exaggerated but it requires explanation from the NNPC.

Olugbenger: Where did he get that 1.5 million dollars from?

Without doing any research on it, things like book deals and movie rights should be more than enough to get to that figure.

HNosegbe: Quite unsurprisingly, no mention was made of how many jobs were created by this expanding economy. How then are Nigerians themselves to benefit?

We don't have good stats so can't keep track of job creation or losses. However, I don't see any evidence of contraction in household consumption in Nigeria,i.e., no evidence that sale of basic consumer goods such as detergents, soap, drinks et al., are dropping. I think the evidence suggests that the economy is growing but not benefiting people at the lower end of the income spectrum.

Boll2010: I understand your point....but if you say she's poor and we should allow her continue with stealing.......don't you think she will graduate to another stage? How do you expect her to train her children?in what manners? They will later turn the real looters of tomorrow.....but I'm definitely sure with what this lady experience! She will keep telling are unborn kids from kin to kin never to steal!......those people she stole from also have kids they feed with the money they gain from pepper selling bro!

Theft is wrong because it infringes on the victim's property rights. Mob justice is wrong because it infringes on the victim's right of a fair hearing, besides being disproportionate. 2 wrongs don't make a right is a trite saying but is very apt here. The problem in Nigeria is that we need to create a culture that values doing things in the correct manner. Merely addressing wrongdoing with wrongdoing perpetuates a lawless society which is what have become.

Another thing is that you can't separate these incidents from reality: we have always used mob violence to deal with petty thieves but theft has not gone down. So not only is mob violence wrong morally, it is practically ineffective.

Boll2010: I'm not bin'ladin.....see it is just the way this life was structured.......don't trust,don't love,don't pity.......always watch your back......and only stand for yourself......I'm no hater.

You see as it merely adopting a zero tolerance approach to theft but it isn't what this story is about. This is about Nigerians' callous attitude to the poor. If Tinubu, Oduah or your local yahoo yahoo guy walks down the street, mob violence would not occur despite everyone knowing that these are thieves.

Aigbofa: The IMF is not like any mechanic my my friend. More like a loan shark who gave you a loan with high interest rate and make you pay several times the original amount.
And when you are finally broke, they come in and ask you why you and your family are still having three meals a day.
Then they help you reduce it to one and a half so you can continue to pay.
If you make the mistake of going back that you are still having a difficulty, they will ask you to sell your house and rent a cheaper apartment.
They won't stop until you have nothing left.

IMF loans carry interest rates that are less than market rates. Even if your analogy is correct, why would any country borrow from the IMF if they're not broke already? The IMF lends money only to countries that are so broke, they have no other way of raising money. The reason Nigeria took IMF loans in the first place is that we had no other creditor willing to lend us money. When you seek credit from the IMF, the IMF will impose conditionalities to ensure that they get their money back and that you don't suffer the same problem again.

The story that Nigeria's economic problems stemmed from the IMF is a story that is damaging not merely because it's inaccurate, but by misdiagnosing our problem, we risk having a re-run of the same problem in future.

Aigbofa: Our economy if growing because we got out of the shackles of IMF/ World bank debt and their weird prescriptions which was only geared towards taking the little resources we had.
Gone are the days of SAP and other voodoo economics.

Have you ever asked yourself why we asked the IMF for loans despite the conditionalities that such loans attract? The IMF is like a car mechanic, they fix your vehicle when its broken down and you can't solve the problem by yourself. You can say they did a bad repair job, but if things didn't break down in the first place, the IMF would never have been called for assistance.

Uyo doesn't need a major airport. Consumer demand should drive airport construction and there is no unmet demand, certainly not of a significant scale, that justifies the financial costs of this airport.

The Govt should have used that money to invest in schools, water and health facilities. Things that benefit the greatest number of people. This problem of spending more money on the relatively well off, instead of the poorest segments of society is a problem that plagues the country as a whole. In Nigeria, the poor have no voice.