₦airaland Forum

President Buhari maintained that while export-driven economies could benefit from devaluation of their currencies, devaluation will only result in further inflation and hardship for the poor and middle classes in Nigeria's import-dependent economy.

Strictly speaking, what the president said is theoretically correct, but I believe he is simply regurgitating what someone else must have recited to him. What he said is only a linear perspective to a multidimensional macroeconomic situation. Is the president smarter than all the other oil exporting countries who have allowed their currencies to adjust to the fall in oil prices?
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Dear Mr President, contrary to your pretentious FX policy, kindly be informed that the Naira has already been devalued to ~N305/$. I take it that you and the CBN Governor are merely subsidizing the exchange rate @ N197/$ to some critical sectors, just the same way you subsidized for Pilgrims @ N160/$. And you say you fear inflation? Alright, just wait till prices of items in the market start reflecting the distorted exchange rate.
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And please, you must desist forthwith from discussing Monetary Policy issues. Whenever you are asked a related question, please refer them to the CBN Governor. The exchange rate will always respond more to economic realities rather than to your personal pride or fiat.

Jusmudi:
Uya try read small na

The problem is not really that it's too long but rather that it's poorly formatted making it uneasy on the eyes.

Mbok, Kindly do a bit of paragraphing.

GenBuhari:
Yet many Americans are homeless and deceiving food stamps.
We need to cut ties with these devils.

@ an average of $125 (~N35k) per household, those food stamps are worth more than some salaries earned in Nigeria. The US unemployment rate is 5%. Their minimum wage is ~$7/hr (~N350k/mth).

Dakad:
OP do you have an ideal of how much is 150tri. [b]I doubt of US budget is that much. Anyway [/b]it is just 150billion. It's a huge some provided it's not relooted like the previous recovery

The 2016 US Budget is ~$4tn, which is nearly N800tn. Their defense budget alone (over $550b) can fund the budget of nearly all African countries. The US defense budget is higher than the defense budget of the next 10 countries (China, France, Germany, Russia, etc) put together. They are not called World Power for nothing!

Minting cost: The cost of printing one N1 note is the same as printing one N100 note.
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Why did the coins disappear? Because the use value was higher than its face value. A blacksmith was willing to pay N3 for a N1 coin, so he can use the coin to smelt into something he could sell for N5. So, our coins failed one of the basic requirements of money (the use value should not be greater than its face value).

jpphilips:
Your submission is applicable to some countries not all, that theory is not sacrosanct for every producer, your source greatly depends on your need, if you have light crude refineries and vice versa, it is difficult to change it over night because your supply has stopped, rather they source for other markets. The conversion technology is not cost efficient either.
Sourcing for other markets outside your comfort zone attracts huge logistics cost and security concerns along delivery routes.

Saudi Arabia is surrounded by producers all of which target nearly the same market (Asia and Europe), faced with similar territorial challenges. Iran was out for years only to bounce back recently with devastating market glut, how did Iran reclaim its market share so soon??

What will make Asian countries buy from American markets on a good day when there is oil in the middle east? what cost does it attract? they may choose to do it in times of crisis , not when the going is good.
When the US peaked an overwhelming 11mbopd, they gave up their Nigerian market share, India took it, as soon as Iran bounced back, India ran to Iran immediately, go and check the distance between Iran and India compared to Nigeria, then you will understand why Nigeria became a forgone alternative. There are so many factors that maintain oil market share, I only highlighted a few.

Noted.

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MathsChic:
Lol. I'm guessing this is Spanish and that these are good words. My knowledge of French tells me
Ella = Elle = she. And that's about all i understand .
Hope you good.

You can't be too sure. I fit dey yab you sef. Make "Google Translate" your side Bobo.

The answer is quite simple. India still subsidizes the price of kerosene for its citizens. The ideal open market price of DPK in India is RS29.91, which translates to N87.7 (@N2.93/RS). The government subsidizes RS12 while the Oil companies subsidizes the balance.
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The current price of N83 in Nigeria is without subsidy which is not too far from the N87 in India.

carpenter:
Bevista you have a follower but I mean well. Stumbled on your post a few days and I knew I had to follow. I also find you calmer than I am, I am all about putting people to shame sometimes when they cross certain bounds so I might benefit from reading your subtle posts.

While checking you out, I saw Mathchic and common...what better way to read interesting posts than to truly follow those the person you are following also follows. Be careful about following those I follow though, I love varieties so some may be a bit outside your area of comfort.

Mathchic,

I sent you a PM some days ago (pardon my manners, I should have asked you first). I was keen to know what your recommendations are regarding someone having a little money to invest. I am still keen...

Thanks buddy you for your kind words. Feel free to follow those you do, as long as they enrich your forum experience and, possibly, your life.
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And you can't go wrong with @MathsChic. I observed she's one of the few around here with a good head on their shoulders. Ella es hermosa , inteligente y madurado . ¡Mujer perfecta!

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Emekamex:
Why waste money on oil production if it is no longer profitable?

Because you need to stay in the business and maintain your market share pending when prices rebound. If you exit now, you loose your customers to other producing countries.
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And as most oil purchase contracts are done upwards of 5yrs, it will be very difficult to come back and win customers if you exit now and prices rebound later.

He called on the federal government to readjust the 2016 budget by reducing recurrent expenditure by 50%, and make capital expenditure to focus mainly on projects that will directly impact on production and export driven initiatives.

“The deficit in the budget must be reduced substantially while the bench mark is brought lower to between $17 & $20 USD.”

They criticize PMB for lacking economic acumen and yet they come up with horrendous economic recommendations.
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(1) How does the president reduce recurrent expenditure by 50%? Is it by sacking 40% of FG employees or by reducing salaries by 40% across board? Oh, so they can wail about job losses and economic hardship under PMB, abi? In any case, what is the implication of knocking off over N1.3tn from government spending in a depressed economy?

(2) According to Okukpe, cost of oil production is around $30pb. If the 2016 budget is predicated on $38pb, it implies that Nigeria was expecting oil revenue of ~N880b from $8pb profit. If we now use an estimate of $20pb as Okukpe advises, we will now be running an estimated loss of $10pb, implying over N1tn being knocked off the budget again.

(3) Is he proposing a total budget of ~N4tn? If so, then kiss any economic growth in 2016 goodbye or infact, expect a Recession. How do we fund the much touted diversification of the economy so as to begin earning revenue from non-politicians sources?
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In fairness to Okukpe, for once he sounded more patriotic and not like the usual broken record.

@jpphilips - just stumbled on this thread again and noticed your banter with the other bloke. You guys seem to be making some interesting economic argument, but unfortunately, it's all getting watered-down by the personal attacks.
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It would be nice to read comments that does not drag the personality of commenter into it. Now, I feel even more justified and vindicated that I did not respond when my earlier comment was quoted.

MathsChic:
Lol 15 years is a lot. I'm still a teeny baby

Really?! So na Engineer dey blow all dis big financial grammar?

Barbaric!

MathsChic:
In my theory, there are generally two ways of making money from money, as opposed to making money from services. I'm not going to talk about the latter, but the former.

In these two general ways, there is a simple thing you are doing. You are buying/creating low and selling high. The difference is the profit you pocket and that's what translates to the money you just made from your money. The first way is what I call the idealistic way where you make money from an obsession or an interest. If you like sewing clothes, designing dresses or making hair, you can put your money into creating goods which you can make low and sell high. The good thing about this is that since you love what you do, the passion can sustain you until you break even or become very successful, which is the goal, isn't it?

Now, not everyone has something they love or want to make money off of. Or they aren't just passionate enough about it to want to engage in it. That's where the second method comes in.

The second way is what I call the measured way of making money from money. What you are still doing is buying low and selling high. This you can do yourself or someone else can do for you. It doesn't require being passionate about what you are buying or selling, neither does it require having huge knowledge about it (if you hire someone, a fund manager, to do it for you, I guess). But it surely requires having a keen eye for when/what to buy and when/what to sell since the variability of prices is exactly what warrants buying low and selling high. So, when is the right time to buy or sell? Two words: bubbles and busts.

Bubbles happen when the price of a commodity has peaked so severely it has to crash for all things to remain equal. Busts arise when prices have become so low that they have to rise for things to remain equal. What do you do then? You sell during bubbles and buy during bust periods. When is a bubble or a bust? 2008 in the United States was a horrible period for US housing figures. There had been a bubble before then which led to a massive bust of such size we had never seen. For some, it was a period of strife. For others, it was a period to actually buy cheap. Now housing prices have climbed much higher since then and anyone selling now will be selling higher.

At this moment, we are witnessing a tremendous bust in the global oil market. Shares of oil companies, oil servicing companies have plummeted; the price of oil itself has crashed. Does this look like a reminder of what happened in 2008? Very much so. Financial forecasts do not see oil appreciating anytime sooner, but will it appreciate? Certainly! Government regulations, human demand and the general law of trading which says nothing can stay low for too long will make that price go up. What do do now? Buy oil. Buy shares of oil companies, buy those of related oil servicers. Buy low, and prepare to sell high. Volumes matter, but one should still be conservative. That's where your 10m comes in, which means you can fund it and not go broke. Shares of oil servicers/producers are particularly attractive because they will also diversify away from oil eventually, so they are a safe bet. Shell, for example, has been going environmental in recent years.

And the interesting thing is, trading can be done by anyone, even students. I had a lot of friends then who were trading for fun at college. The casual experience that fetched them eventually made them attractive recruits for companies like Goldman Sachs and Barclays. But that's for those who develop the interest. As I said earlier, to trade you don't even have to have the interest. Merely having an eye out for what to buy low and sell high is enough.

You've just earned yourself a role as my personal financial advisor (just kidding).
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On a more serious note, I would like to speak with you privately - I could leverage your knowledge & experience. If that's ok, I'll send you a PM.
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Brilliant and insightful analysis!

MathsChic:
Finance management.If you had 10m, I could tell you something though.

I am keen to hear your recommendation.

Epic! Common sense economics.

MathsChic:
Finance management. If you had 10m, I could tell you something though.

Indulge me!

tuniski:
you started like u have good grasp but, quickly went off by the over used lame line of 16yrs of waste. So Russia too had 3r0yrs of waste abi? Stop blame game and come up with solutions. It is actually the problem structurally basing our posterity on oil boom/doom. Apc is here let them solve the part of the problem they can then give way. Govt is a continuum but, apc is an error while the Sai baba chanters today are zombies!

You started off by berating the man for blaming our current economic predicament on 16yrs of wastage, but ended up feeling justified to push the blame on a 7 months old administration. Nothing could be more hypocritical.
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Why not discuss the issues as requested by the OP rather than all the mudslinging. Apparently, every post is merely an opportunity to throw tantrums at our perceived enemies.

“The investigation will seek to, among other things, unravel the remote and immediate circumstances leading to the kidnap of the girls by Boko Haram terrorists as well as the other events, actions and inactions that followed the incident,” the statement read.

Buhari was quoted as saying, “I assure you that I go to bed and wake up every day with the Chibok girls on my mind. “The unfortunate incident happened before this government came into being.

If the level of shallowness and prejudice exhibited on this forum is anything to go by, then I am afraid the future of this country couldn't be more gloomy. Folks read headlines and once it validates their prejudice, they jump to the comments to throw tantrums at their perceived enemies. They do not even bother to read the content to understand what it actually says.
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How does the quoted text in any way show that the president doubts the abduction of the girls. He talks about always thinking of the girls. He says the incident pre-dates his administration meaning he acknowledges that it happened.
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The writer who came up with that misleading headline must be mischievous. Worse are those who jump to comment without reading.

wirinet:
Oboy see phd thesis. I give you huge credit for taking out time and effort to write out such long and detailed argument, it betrays your intellectual and physical depth. I do not have the physical strength and time for a detailed rejoinder and i hope bevista can take on the enormous challenge of a detailed response. Even though i agree with many of your submissions, on the performance of OBJ and Soludo, i disagree vehemently with your conclusion that GEJ performed better than OBJ, that is if GEJ performed at all.


Paying up $12 billion and leaving such huge amounts in our foreign reserve and excess crude accounts is a major feat, giving that crude averaged $40 per barrel during his tenor.
What you fail to put into consideration is that under OBJ, Nigeria was just coming out of economic doldrums. Under Abacha/abdulsalami Nigeria was a pariah nation, nobody was ready to do business or invest in Nigeria, so OBJ spent a lot of time traveling to restore relationships with other nations and invite foreign investors. So to say major sectors under OBJ was stagnant is charitable considering where we were coming from.

I also do not credit OBJ with bring GSM to Nigeria. GSM was a revolution going around the world, so it would have come to Nigeria whoever the president was.

Although i disagreed with the way soludo was sleeping in bed with the banks instead of regulating them, i still think OBJ government did quite well in the financial sector, as you said he reduced inflation rate to 6% before he left, he stabilized the naira, he almost eliminated the gap between the parallel and official exchange markets, he increased the capital base of banks and made them bigger, etc.

Have to go and prepare for work. Might continue later when i have time.

I will not dignify him with a response.
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First of all, he questions my intellect and my decision to support PMB for the Presidency. Secondly, he used the terms "silly", "senile", "dictator", etc when describing the president. Thirdly, he was obviously desperate to defend GEJ, and saw nothing wrong in his "hero".
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He cannot drag my personality into an economic debate just to have some cheap emotional leverage. And calling the president derogatory names does not validate his points or raise his self esteem. I cannot be dragged into such a lowly playground. When he is ready to stick with issues, devoid of personal sentiments & abuses, then, maybe we can have a decent discussion.
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In fairness to him, he raised some sound economic points, which, on another day, I would have been glad to take him on. Most of the issues he raised are valid but many others are complete bullocks and very refutable.

MathsChic:
Thanks buddy!
These guys don't even know that it's an ongoing issue in the developed world, britain, canada, the US, all over the place, as Islam grows into the first world. France banned the niqab already "in public". Canada has not done that. A whole lot of fight raging. But the law should take its course in every instance. And Muslims, if they want to wear the niqab, should use the law to chase their desires. In a sane society, laws create or limit freedoms, not rebuke, hate, insult or vitriol.

Correct, but if the lady in question was at the American embassy and it was required of her to remove her 'veil', would she not comply?
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Apparently, in Nigeria she thinks she deserves special treatment because she is a minister's wife.

MathsChic:
Do i have to repeat myself all over? You see the bolded? It doesn't get to me others take note.

Now to your question. If you read my first comment, you'd learn i said the law should apply in cases like this. But you see, hate and emotion take over the senses of people like you who can't tolerate other people's religious obligations. In your heart of hearts you are driven into using instant rebuke merely because her covering is strange to you and not for other reasons. Grow up mister. Who's the dimwit now?

Your maturity and thick skin is well noted. A rare attribute on this faceless forum.
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Nice to observe you stay on the issue and not let some persons with low self esteem drag you into their playground.

GoldCircle:
Alibaba is too civilized to be writing such in public space. Corruption is evil and must be tackled head on. But a society that does not keep to its own set of laws/rules is an accident waiting to happen. Nigerians have been through this chapter before. If we need to reform our laws for better effectiveness, then So be it.

If a court of law grants bail to a suspect, that doesn't mean the suspect has been set free. For all you know, that very suspect may get a life time sentence at the end of the day.

What Alibaba is saying is that, had the management of your bank stole your money (say, N2m) and shared it among themselves and the president "broke the law" to recover it for you, would you advise him to let go instead of breaking the law? Would you tell the president to either recover every stolen money for everyone or let your case rest? Would you tell the president to ignore the issue and get you a job instead? Would you defend the bank management for their actions?
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What if you lost a loved one because you couldn't access that money to pay for his/her medical bills? What if you missed your final exams because of that stolen money? You think this does not concern you directly? Do you know why you don't have good schools, hospitals, roads, jobs, etc? Or you think there is no correlation between looting of public funds with poor welfare & infrastructure?
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I am not saying that the president should not be criticized, but to blindly support/defend those who have mortgaged our collective future is beyond ridiculous. You want an innocent man to transform the economy, but yet you want those who bastardized it to continue walking free?

Chukzyfcb:
Well I deal with the statistics on ground, in the oil sector there's lots of confusion there based on numbers. During jonathan's era, when talks of subsidy removal arose. Different people were quoting different Figures on how much Oil nigeria produced daily, so coming to a conclusion on numbers is a long thing in the oil sector. However, the agreed and available stats put our demand @ 40m, anything else is just mere opinion/suggestions

You Call the opinion of the NNPC GMD / Minister of Petroleum "mere"?

Chukzyfcb:
That's still a far cry from our demand of 40million litres. And u can agree with me that even with the addition of dangote's refinery, we'll not meet up to the vast demand!

40m litres/day is the figure PPPRA has been quoting for some years now as our daily consumption. However, during the Ministerial screening, Ibe Kachikwu said that he believes the proper number should be closer to 30m than 40m.
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Most industry people believe that the 40m figure was used merely to profit unduly from the subsidy regime.

Chukzyfcb:
I don't think we would even benefit much from the dangote refinery. According to the writeup above, its written we consume daily 40million litres of petrol, our refineries produce a meagre 6.7 million litres,
port harcourt refinery = 4million litres per day kaduna refinery = 1.3million litres
Warri refinery = 1.4million litres
So even with the addition of dangote refinery, we are still short of about 33million litres!!! Even dangote refinery I doubt can yield such daily. We would still have to source for the shortage & mind you, the demand for petrol may increas over the years to come

6.7m litres is the current refining output. At optimal production levels, the combined output of our refineries will be in excess of 10m litres/day.

Vanquay:
Bruh, her net worth and YouTube views completely massacre your argument. Every one keeps saying shes international, I have never heard of one of thowe songs. Even dbanj and wizkid have more intl value

I was actually referring to content and quality, and not popularity. Her voice, lyrics and delivery are world class. Asa will sell more to an international audience while those you mentioned do better among Africans.
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Even Terry G has more popularity than Asa, does that imply anything? Go figure!
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They are all Nigerian artist doing well, so no hating. Just my opinion.

Sounds promising.

Teenaira:
My brother, most of the issues or suggestions you raised above are true but guess what, they are not the reality. Take for instance, I needed to travel recently to UK and all I wanted from my banker is to sell at least £200 to me since they are not ready to sell to me the normal PTA with a ceiling of about £ 4,000 which the CBN aLlows even after showing them all required documents. You know what, they refused, instead they told me to use my master card on getting to UK. I went to 3 big banks and it is the same story. My fair was that if I get to UK and something goes wrong then I am stranded. Invariably when I used the card I realized the exchange is at the prevailing black market rate. My brother, my happiness is that I was not stranded. The truth is that everything about the FX market in Nigeria is a big fraud for which the CBN can not logically claim ignorance.

I do not dispute what you just said about your experience with the banks. However, I wouldn't call it fraud. I just think the CBN is not being very open and honest about the situation. The reality is that, due to falling oil price the FX available for CBN to continue supporting all these foreign transactions is limited. But instead of them to say it the way it is, they keep running around in circles.
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Your experience with the banks is likely not the bank's fault. The banks realized that the CBN was not supplying enough dollars anymore for those qualifying transactions (LCs, BTA, school fees, medical bills, etc) even though the CBN kept telling everyone that it was still supporting them.