I engaged one of our professors in finance, and below was his honest analysis of the present economy situation

"As I see it,...the present situation was decades in the making and is due to a whole range of issues, some of which you have identified.

1. Demand (legitimate and speculative) for dollar far exceeds supply (earnings from oil and other exports, FDI, FPI, grants, etc). The greater this gap, the greater the price of the commodity relative to the Naira.

2. Rather than tackle the underlying supply problem, which has been in place for decades, and became a major issue in 1973/74 / 78 /83, through the diversification of the economy, import substitution, and other ways of lowering import dependence and hence dollar requirement, the government (corruptly, because successive governments and their agencies knew where this would lead us), continued to ignore the problem. Rather, they put in place multiple exchange rate regimes, foreign exchange controls, and import licencimg regimes to control the demand side while continuing to ignore the supply side. All these efforts were doomed to fail because not only were they fundamentally flawed, but they were fraught with corruption.

3. As import and dollar demand continued to outstrip supply at an aggressive pace, another poor policy choice was to manage demand by rationing the declining supply while still ignoring the worsening supply situation. Multiple exchange rate regimes were introduced for government allocation, private sector allocation, and artificial settings of rates. Dollar was being subsidised for one sector of the economy at the expense of others. The result of this was aggressive arbitrage and so-called round-tripping. Buying at official rates and selling at the unofficial markets. This was essentially a licence for speculators to speculate with the Naira and for cheap money to be made with the active conievance of corrupt elements in the CBN, FGN, and Banks, across all successive regimes.

4. In times of earnings boom, no effort was made to build sustained external reserves. Rather, profligate spending and embezzlement was the order of the day, with no investment in the economy that would support sustained economic growth, diversification, increased capacity to earn dollars, and limit import dependence. Every successive government did this, with each successive government being worse than the last. (Some will argue that the obasanjo 1999 - 2007 was a slight improvement, but...)

5. The gradual and systematic devaluation of the Naira from about N0.6 / $1 in 1983 to N750/ $1 in mid 2023 (40 years) was a consistent and glaring evidence of this deepening crisis. But by this time, the extremely corrupt cabals that were making easy money at the expense of the system were too deeply entrenched and impossible to dislodge. Not that anyone was trying to anyway. Every successive government was essentially in the game to game the system. Bear in mind that while all this was going on, the meagre earning capacity from oil was also declining due to the actions of oil theft, sabotage, etc. Nigeria was being decimated from all sides. Politicians were feathering their nests , same as civil Servants, while the fundamentals of the economy was in decay, power, road, education, health, security, etc.

6. In the face of declining revenues and massive diversion of the meagre revenues due to corruption and leakages, successive governments have resorted to borrowings to fund the growing government deficits. And most of these dollar denominated loans, are used to fund growing recurrent expenditures which are essentially pipelines into corrupt pockets, leaving very little for capital projects that can improve the fundamental income generating capacity of the economy.

7. To create the impression of normalcy, different services were being subsidised, eg, petroleum products, power, etc, with arrangements that were also corruptly enriching a few at the expense of many.

8. We will become comfortable with N2750 -N3000 /$1, and we will again allow the illusion of normalcy to blind us to the problems we are facing down the road. In a few years, we will again face this existential crisis..we, we saw it in the 70s , 80s, 90s , and 20s up to this point.

All has never been well with Nigeria.

So, we are exactly where we are supposed to be. At some point, something has to give. Now is just a day of reckoning.

Would another government have done any better. I doubt it. The best would have been to kick the can further down the road.

What is the solution?

No quick fix or silver bullet. The solution is clear to everyone from the analysis. Improve supply, reduce demand, stop leakage, and improve the fundamentals. It is not rocket science. But it has to be a consistent long-term effort and an extremely painful journey for decades to come. We are at the periphery of the periphery of that journey. Unfortunately, we are not all on the same page as a nation. Entrenched corrupt interests, real and perceived grievances, disenfranchisement, marginalisation, and displacement of different groups. And a class of leaders who cannot lead by example.

I am not convinced anyone can fix this with the current sociopolitical structure of Nigeria.

I hate to sound pessimistic, but I am a realist. We have been thriving on the illusion of the progress of a few at the expense of the masses. At some point, that disequilibrium will selfcorrect, explosively. it is almost inevitable.

I may be wrong, and I hope I am. But I am not in doubt."

enemyofprogress:
I engaged one of our professors in finance, and below was his honest analysis of the present economy situation

"As I see it,...the present situation was decades in the making and is due to a whole range of issues, some of which you have identified.

1. Demand (legitimate and speculative) for dollar far exceeds supply (earnings from oil and other exports, FDI, FPI, grants, etc). The greater this gap, the greater the price of the commodity relative to the Naira.

2. Rather than tackle the underlying supply problem, which has been in place for decades, and became a major issue in 1973/74 / 78 /83, through the diversification of the economy, import substitution, and other ways of lowering import dependence and hence dollar requirement, the government (corruptly, because successive governments and their agencies knew where this would lead us), continued to ignore the problem. Rather, they put in place multiple exchange rate regimes, foreign exchange controls, and import licencimg regimes to control the demand side while continuing to ignore the supply side. All these efforts were doomed to fail because not only were they fundamentally flawed, but they were fraught with corruption.

3. As import and dollar demand continued to outstrip supply at an aggressive pace, another poor policy choice was to manage demand by rationing the declining supply while still ignoring the worsening supply situation. Multiple exchange rate regimes were introduced for government allocation, private sector allocation, and artificial settings of rates. Dollar was being subsidised for one sector of the economy at the expense of others. The result of this was aggressive arbitrage and so-called round-tripping. Buying at official rates and selling at the unofficial markets. This was essentially a licence for speculators to speculate with the Naira and for cheap money to be made with the active conievance of corrupt elements in the CBN, FGN, and Banks, across all successive regimes.

4. In times of earnings boom, no effort was made to build sustained external reserves. Rather, profligate spending and embezzlement was the order of the day, with no investment in the economy that would support sustained economic growth, diversification, increased capacity to earn dollars, and limit import dependence. Every successive government did this, with each successive government being worse than the last. (Some will argue that the obasanjo 1999 - 2007 was a slight improvement, but...)

5. The gradual and systematic devaluation of the Naira from about N0.6 / $1 in 1983 to N750/ $1 in mid 2023 (40 years) was a consistent and glaring evidence of this deepening crisis. But by this time, the extremely corrupt cabals that were making easy money at the expense of the system were too deeply entrenched and impossible to dislodge. Not that anyone was trying to anyway. Every successive government was essentially in the game to game the system. Bear in mind that while all this was going on, the meagre earning capacity from oil was also declining due to the actions of oil theft, sabotage, etc. Nigeria was being decimated from all sides. Politicians were feathering their nests , same as civil Servants, while the fundamentals of the economy was in decay, power, road, education, health, security, etc.

6. In the face of declining revenues and massive diversion of the meagre revenues due to corruption and leakages, successive governments have resorted to borrowings to fund the growing government deficits. And most of these dollar denominated loans, are used to fund growing recurrent expenditures which are essentially pipelines into corrupt pockets, leaving very little for capital projects that can improve the fundamental income generating capacity of the economy.

7. To create the impression of normalcy, different services were being subsidised, eg, petroleum products, power, etc, with arrangements that were also corruptly enriching a few at the expense of many.

8. We will become comfortable with N2750 -N3000 /$1, and we will again allow the illusion of normalcy to blind us to the problems we are facing down the road. In a few years, we will again face this existential crisis..we, we saw it in the 70s , 80s, 90s , and 20s up to this point.

All has never been well with Nigeria.

So, we are exactly where we are supposed to be. At some point, something has to give. Now is just a day of reckoning.

Would another government have done any better. I doubt it. The best would have been to kick the can further down the road.

What is the solution?

No quick fix or silver bullet. The solution is clear to everyone from the analysis. Improve supply, reduce demand, stop leakage, and improve the fundamentals. It is not rocket science. But it has to be a consistent long-term effort and an extremely painful journey for decades to come. We are at the periphery of the periphery of that journey. Unfortunately, we are not all on the same page as a nation. Entrenched corrupt interests, real and perceived grievances, disenfranchisement, marginalisation, and displacement of different groups. And a class of leaders who cannot lead by example.

I am not convinced anyone can fix this with the current sociopolitical structure of Nigeria.

I hate to sound pessimistic, but I am a realist. We have been thriving on the illusion of the progress of a few at the expense of the masses. At some point, that disequilibrium will selfcorrect, explosively. it is almost inevitable.

I may be wrong, and I hope I am. But I am not in doubt."

I am surprised that many Nigerians don't know this. Well, maybe because many are not good with macroeconomics. I have since started looking doe ways the downward economy will favour me and when I must have become tired, I will Japa.

It is just starting, Nigerians should brace up for the worst.

Ask your professor friend if he has ever rig election for any of these incompetent clowns pretending to be leaders?
If yes, then he is also the problem that we are facing today. Most of these people were rig in by professors.

Nothing can stick on the brain of cocaine sniffing Bola Ahmed