₦airaland Forum

Vanquay:
I am propably tripping on weed or something but i dont know about yall Niggas///Where the fvck is the offivce?

Sony are just ready to make losses apparently. Davido is wack, all Nigerian artists are wack except 2face(And that nigga be singing lame songs) and maybe, just maybe wizkid

Easy pal. Asa has more international value than nearly every Nigerian music artist I know of.

wirinet:
I say it is not as simple as that. During soludo time what was the average price of crude? what was our import bill? what was our expenditure (especially recurrent). During soludo, the OBJ government was able to pay our debt to the paris club, meet the dollar demands of Nigeria at the bi-weekly dollar dutch auction sales and save enough money in our foreign reserve and sovereign wealth fund. He even had the luxury of hosting two expensive world events - Commonwealth Games and Commonwealth Heads of Governments. So because the OBJ government was relatively "prudent", soludo had enough dollars to bridge the gap between the parallel and official markets.

But now the situation has reversed. Crude is selling at $27 per barrel, our taste for imported products has skyrocketed, our recurrent expenditure has ballooned, and there are loan obligations to pay. Dont forget that corruption within the government agencies has also risen. So where do you want Emefiele to get the dollars to bridge the Gap between the markets?

All what you wrote is true, but it still doesn't change the fact that if the official exchange rate is devalued, the parallel rate would move towards it with only a possible N10 difference.
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Our situation is not caused by Emefiele. He has only inherited the outcome of years of mismanagement. Yet he has to, somehow, act to prevent it from getting worse.
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Whether we like it or not, there are genuine needs which the CBN has pushed away due to its demand management of Forex. However, as these demand get dollars at the ridiculous exchange rate in the black market, sooner or later, prices of items in the market will begin to reflect these imbalances.

porka:
Enjoying your brilliant analysis on the sideline but have to quickly drop this intervention. 

The earlier we put the blame where it is, the better. This is not the first time CRUDE OIL was selling for less than $30/bl, it sold for $16/bl in 1999 and $8/bl during Shagari's presidency in the early 80s.‎‎

I appreciate your contribution in trying to enrich the discussion. Though I have not quoted your full comment (because of space management), be rest assured I read it fully.
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Though I supported PMB in 2011 and 2015, I have to say that I am somewhat disappointed with his handling of the economy till now. I am most unimpressed with the delay in appointing ministers, the budget controversy and the tight FX policy controls.
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I also want to admit that, in retrospect, it does appear OBJ was the best manager of the economy in the last 16 years. He paid off $12billion debt to the Paris Club, left over $60b in Foreign Reserves and over $20b in Excess Crude Account. The banking consolidation and telecoms revolution all happened during his tenure. All this happened with an average oil price of less than $45 over his 8yr tenure.
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Having said that I think it is completely uncharitable to discredit PMB by comparing the current economic realities with that of OBJ in 1999. Even though oil was $16pb in 1999, do you know what our Federal budget was by then? I'll remind you - it was ~N300b. I admit that the exchange rate was ~N98/$ by then. However, using an inflation rate of 9% over 16yrs, PMB would need oil price at ~$63pb and a meagre budget of N2tn to be on the same economic footing with OBJ in 1999. Sadly, the old man needs to fund a N6tn budget with $28pb oil price. Add that to the fact that our population has grown from 120m to over 170m now, and you will appreciate the weight on the shoulder of the old soldier.
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It is my candid view that, economically, the Jonathan era was the worst in our democratic history. The average oil price during GEJ's 5yr reign was over $90pb, yet the country was left with less than $30b in FR and ~$2b in ECA. One cannot even point to any major economic activity that happened under him. Our power generation stood at less than 4,000MW in 2015, which is about what he inherited in 2011.
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Now, this is not an exercise in blame as that would be an effort in futility, but this is just to offer some perspective to your earlier assertions. As @janellemonae noted earlier, president Obama inherited a collapsed economy from president Bush, yet today, the American economy has witnessed unemployment lower than it has ever been in its recent history (5%). The Stock Market made new all time highs under Obama. President Buhari has a similar situation to turn around the country and write his name in gold. History will not remember what made you fail but simply your success or failure.
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I still firmly believe that, in spite of all his inadequacies, PMB is still a better option to run the economy at this present time. With all the revelations of financial mismanagement, GEJ would simply have been an economic catastrophe with such low oil prices.

bubbleforth:
Does this mean that they would sell to those who go for at the official rate?

Yes boss!

doplove:
@Bevista said the banks buys at higher rate, can i assume it's N185 quoted by @Greene66. To the best of my knowledge the banks never buys above the CBN rates.

Just imagine;
Profit when banks buy in exchange = N199-N185 = N14
Profit when banks sell in exchange = N300 - N199 = N101

This is daylight robbery, and we should all resist this if we can...... protest is one way.

A total potential profit of N115/$. Ridiculous!

DoctorTim:
Good afternoon Bro. U seem to know much about this so I'll have to ask you as you seem to be the most enlightened of the lot making comments here.
Please my sister is in Ohio and I'm tryn to pay her school fees though a part of it. About $4000.
What is the best way to get it paid at the CBN rate because I have one million naira for this purpose but if I pay at the BDC rate of 300 then I'll be a lot short of the 4k dollars but if I can get it at 199, I'll be able to even go beyond 4k dollars.
Please I'm new to this cos she's just gone there about 3 weeks ago. How do I get the best deal via a legit means to get this dollar exchanged at a minimal rate and get this fees sorted out?
Thanks and anticipating your response if you've got the time.

You will need to visit your bank and tell them that you need dollars to pay school fees for your sister overseas. They might ask you for some school documentation as proof. Once they are OK, they'll give you a form to fill and will charge you the official exchange rate of ~N199/$. They will still need to take your form to CBN for approval. Once approved, you are home and dry. Failing that, you might have source dollars elsewhere for that payment.

wirinet:
And you think the gap between the parallel and official rate can be bridged simply by devaluation. The official market has been chasing the parallel market since the early 80's when $1 was N0.5 and till today is yet to catch up. As long as we export everything we consume and export only crude oil, the gap between the parallel and official markets would be determined by the price of crude oil.

I said "narrow". You can take that to mean anything you want. There was a time, during, Soludo when the difference between the official and parallel exchange rate was less than N2.
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Devaluation does not solve the fundamental economic problem of import dependency, but it will prevent a bad situation from getting worse.

onatisi:
I stated in clearly that it is a private public venture. Try and give a business man the right to build a refinery in any state of the nation and tell him to operate it and be the sole marketer for that state ,it is then you will see how many investors will bid for such licenses. If countries can construct pipeline from one country to another ,what is the big deal in making one from Easter Nigeria to the west?.
We keep making mountains of problems out of simple problems which only require simple solutions with enough political will

Do you have any idea how many state governments and private investors currently hold refinery licenses in Nigeria? More than 20. Why are they not building the refineries? That would be a topic for another day. There are fundamental industry issues that need to be addressed to get things to start happening, else we will still be running around in circles.

Flees from Nigeria or flees from Dubai after the signing of extradition treaty? He is going to the wrong destination (US) as Nigeria has existing bilateral agreements there.
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Maybe he should call Akpabio to link him to the unknown island - St. Kitts. The Vice President is his personal friend.

simplycarro:
Olodo
Go to your English dictionary and tell me if there is any word in English as the one in bold.
You must be a polytechnic drop out.
Your parents need a refund.
Olodo, Inview ko, review ni.

Thanks for drawing my attention to that. Used it a couple of times without realizing it's not even a proper English word. But what do you say about what Wikitionary says in the link: https://en.m.wiktionary.org/wiki/bold#Verb

janellemonae:
Buhari needs to step up and look forward, not backward. This is his presidency. His responsibility. After 4/8 years we will judge him based on the decisions he made to right the ship. In 2008, america was losing 700,000 jobs a month and stockmkt crashed to its lowest levels in decades. The highest crash since d 1920's depression. Its 8 years later and d dollar is stronger dn ever, unemployment is at 5% (its lowest levels ever) & d american economy is stronger dn ever. Obamas history will never be written wtout DT turnaround being written. This is an opportunity for buhari.

Brilliant! Couldn't have put it any better. I wish we had more objective people like you who would rather stay on issues rather than throwing juvenile tantrums as their prejudice deem it fit.
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Unfortunately, the US economy depends largely on domestic consumption (~75%), which makes it more resilient to external shocks than most countries. Also, the US economy is largely MARKET driven while that of Nigeria is largely driven by government expenditure. The American citizens are largely enlightened, so they understood that the GFC was instigated by the Sub-prime mortgage situation going parabolic and was exacerbated by the FED handling of the Lehman crisis. Nobody kept calling Bush or Obama.
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In Nigeria, there is very little discussion on the real immediate & remote causes of the crisis. As the administration blames it predecessors and as the opposition blames the administration, there is very little unity of purpose on how to best tackle the economic situation. Sadly, when it rains, it will pour on us all, except the very few that have adequate shelter.

PIPsharingan:
NOTE: When taking a good stop loss always note that your account should not be exposed more than what you are comfortable with. For me its 1% or 1.5%. I call this risk in business: Cost in maintaining the work flow, you can call it payment of salaries. If you dont get contracts to execute in 4 months, will your staff go hungry?: for me its "NO". try and risk less while you ensure you make a good kill.

Hopefully over the weekend I will write about MONEY MANAGEMENT skill and how it makes an average trader look sooo skilfull at the end of the month.

Excellent!

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foriz4u:
what APC president did the PDP had to rely on? was APC on existent as at 1999? u seems to b talking to a child born in d yr 2010 that hasn't read the country politicking. ok na, no problems at all.

thank to god u admit they are inexperience n need a great opposition, but with the electria desolation n re-run as desperation by d APC to govern the whole of the country all because of d power d president exhibit do u think this country will have an existing strong opposition in the coming years? think about it bro.

I want to believe you were trying to mean precedent (just want to ensure we are on the same page). PDP relied on OBJ, while APC is relying on PMB, both former presidents.
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PDP tried to turn Nigeria into a one-party State but they failed. They even boasted that they were going to rule for 60yrs - yet again they failed. There's nothing new in a party in Nigeria trying to "corner" the whole country but be rest assured that if that is the plan of the APC, they will fail too.

foriz4u:
it's not the CBN my brother It's the president that's deciding and taking action but doing it under the umbrella of CBN. have u forgotten that buhari is a military man that is vry stubborn? have u forgotten that he said b4 appointing ministers that ministers are just filling gaps? that's a sign he's the one making all these uncalculated, untrust, bias and ignorant policies and decisions and then later retract only after the damage has been made. (e.g, d N50 stamp charges is another policy that is senseless). this is a sign of inexperience and incompetent by d APC lead government. the nation will continue to see these trend as it will take them yrs of experience to get things right. but we Nigerians don't n won't have such patient.

It has absolutely nothing to do with experience. The PDP had no experience in 1999 when they took power, but only had to rely on the experience of a former president. APC, too, is relying on the experience of a former president since this is their first outing at the Federal level.
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PDP would have been exposed more than whatever we are experiencing now, had they met an economy as devastated as it is now. Do you really understand the implications of $27pb oil? If you had any idea, you would temper your criticism for the administration.
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In any case, as a democracy, it is better to have at least 2 experienced political parties to give citizens options to choose from, so that one party does not always blackmail us to vote for them by playing the experience card.

janellemonae:
The DMB's normally are the ones who raise the LC's for imports. They have naira to buy FX from CBN. The problem is CBN doesn't have enough FX for all these imports cos its not collecting as much dollar from crude sales anymore.

Our problem is the supply of forex has dwindled and CBN is trying to do a balancing act so the naira doesn't completely crash at d weight of imports (demand on d dollar) vis a vis supply.

I fully understand the dynamics at play. I agree, you are correct. Are you a banker?

This is complete bullocks! Why give it a fancy name to make it look unique, when it is nothing more than borrowing by issuing debt instrument (govt bonds).
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I understand macroeconomics enough not to blame this administration for the sad economic realities that are befalling the country. My grouse with them is their response and their communication strategy.
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Now, let's understand the implications of this new borrowing. Let's say it is $3b (N600b), to replace lost revenue from oil sales and other tax revenue. This will take our total borrowing to N2.8tn leading to a budget deficit of 47%. This will also increase our debt servicing expense by ~N60bn.

Goke7:
I suspect the Nigerian banks are in trouble, there were rumors of this late last year but was quickly dispelled, it looks like the banks don't have the liquidity or cash to support some of these transactions any longer, the forex retrictions here and there I suspect are just measures to cover up for the banks who are in trouble, I have asked a cbn guy about this but no one wants to speak up.

If you consider the bad debts that some of these banks have especially when they were naming and shaming their debtors last year, will give an indication to this. It could be that to avoid panic among Nigerians about the banks, that's why we can't have an effective communication from any quarters.

But, is it not the responsibility of CBN to make FX available for importers? I do not think that DMBs are in a position to fund huge import bills like fuel imports using their FX.
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Bank customers (like fuel importers) are supposed to go to their banks to raise LCs for imports. The banks then take those LCs to CBN so that the apex bank can approve and back such transactions.
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I think it is more likely that the CBN is broke on FX. As long as the DMBs have enough Naira to buy FX from CBN, I think they shouldn't have liquidity problems. Just my 2 cents - I'm not a banker.

Vanguard exclusively gathered that the blacklisting of Nigerian oil marketers by the foreign suppliers followed the challenges faced by marketers to access foreign exchange due to stringent rules by the Central Bank of Nigeria, CBN, on foreign exchange transactions.

Now I have to admit that there is something fundamentally wrong with this administration and the CBN.
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I thought we were told that the reason why CBN excluded 41 items from their import list was to ensure that essential items like fuel imports can have access to forex?
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I am aware that crude oil price has tanked below $28pb as at this morning and may likely continue lower. Obviously, this will adversely hurt FX Reserves, going forward. But why is the CBN and the Federal Executives really poor in their policy communication, thereby always leaving room for conjectures, speculations & conspiracy theories.

Born2berich:
...February is another opportunity but don't expect to see some cheap prices again.

Can you kindly explain to me the February logic. This is about the third similar comment I'm reading about February Bear.

Tnx.

Very useful article. Cynics should read again with an open mind. It might not work as perfectly as the OP writes, but his advice works surely in many cases.
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Just an observation: Very few comments till now. I'm sure if it was an article that provided opportunity to either abuse GEJ/PDP or PMB/APC, we would be on page 3 comments by now.

udemzy101:
Why are they moving their funds? I wanna know.

If you go back and read the last paragraph of my earlier comment, then you will notice that I tried to explain part of the reason.

jaybee3:
The fed raising interest rate wasn’t a shock to the market and must have been priced into the market way before the announcement. The dollar as expected did strengthen but any of such knee jerk reaction must have been met with the continual downward pressure created by commodity prices.

What he hasn’t told us is how he intends to close the gap between the official/parallel exchange rate. I strongly believe the imbalance was created largely due to his lack of policy direction.

It depends on your understanding of Shock. Sliding commodity prices is also considered as external shock. It doesn't have to be "sudden" in this context for it to be considered shock.
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My earlier comment wasn't about his policy response but about the reality on ground. I still think the CBN response is subpar.

unite4real:
The pressure is on dollars and not Naira

You could be right, it's all about perspectives. Do you think the pressure is on the US economy or on Nigerian economy?

MrALIVE:
what can be done to please you guys..God forbid!

Give them Obasanjo, Amaechi, Fashola & Tinubu, they will still ask for Zhara, Aisha, Osibanjo and Baba himself. They will never be satisfied. Their sense of reasoning is guided by prejudice, bigotry & hatred.

Abdullahi said, “He (Emefiele) touched on the global economy conditions in which he informed us that we are not immune from external shocks that are currently going on in the world. These shocks include the following: declining commodity prices, geo-political tensions along important trading routes and tightening of monetary policies in the United States of America.

I think the CBN Governor was on point here.
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Most people may not be aware of the Monetary Policy divergence between the US Fed and most other Central Banks in the world. The US Fed just increased its FFR by 25 basis points and is expected to continue doing so in the coming quarters and years. On the other hand, the CBN just reduced its MPR by 200 basis points. Also, the outlook for the US economy looks better while that of Nigeria looks gloomy.
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For those who understand Finance & Investments, you will appreciate that this has increased the Yield on US financial assets while reducing the yield on Nigerian financial assets. Consequently, foreign portfolio investors (FIP) are moving their funds from Nigeria to the US. As they move out, they are converting Naira to dollars adding to the demand for dollars and the pressure on the Naira. These are "external shocks" completely outside the control of the president or the CBN Governor.

Though the issues raised in the previous writeup may be true, the post had one major flaw - it was unbalanced.
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Before you compare the EXPENSE profile of Nigerian residents with their counterparts in other parts of the world, you may need to first compare their INCOME.
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The average minimum wage in many relatively developed countries may be around $7/hr or more. Working 40hrs/week that translates to around $300/week and around $1200/month. In today's exchange rate, that is around N350k/month. And this is for the very least paid job cadre. Now compare that with the official minimum wage of N18k in Nigeria, while also noting that many in the private and informal sector earn much less than that. Professionals in those climes earn as high as $5k/month (~N1.5m/mth) or more, while professionals down here struggle for N200k/mth.
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The OP of that writeup should also have told us if public officials in those climes are as irresponsible and reckless with public finances the way they are in Nigeria, before berating Nigerians for not paying taxes.
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My point, basically, is that the OP of that writeup should have made his comparison in RELATIVE terms rather than in ABSOLUTE terms. And as someone commented earlier on that post, if Nigerians are, indeed, living in PARADISE, why has the OP not relocated back home to join in the jolliment?

Noted. I'm in Uyo currently. If I'm still around by then, I'll sure attend.

Tnx pal.

“The national assembly would therefore have the details as submitted on the 22nd and a copy containing the corrections submitted last week. It appears that this has led to some confusion.

“In this regard, please find attached the corrected version. This is the version the national assembly should work with as my 2016 budget estimates. The draft bill remains the same and there are no changes in any of the figures.”

@ the bolded. Is the Presidency trying to justify their initial show of shame. Very funny.
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And what do they mean by "The draft bill remains the same and there are no changes in any of the figures.". Can someone with better understanding please enlighten me.
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I think I'd better approach this administration with cautious optimism. Quite frankly, I haven't got a clue about the economic direction of the country. The whole leakage blockage ish has become stale. I need more policy vibes.

The circular was addressed to commercial lenders whom it said should immediately start charging 50 naira ($0.2513) on every 1,000 naira deposit or electronic transfer conducted by customers.

N50 on N1000 is 5%.
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You mean to tell me I will loose 5% of my money when I make a transfer? Sounds too outrageous to be true. Let me pretend not to believe this for now.
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So, I run a retail business with a tight Margin of around 15%. Every time I go to deposit the proceeds in the bank, the government takes 5%. Meanwhile I have other expenses like Interest expense, SG&A, etc. And at the end of the day, I'm supposed to pay 30% tax on my profit. They might even increase VAT to 10% soon.
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Now, I'm worried about those managing the economy, if this story is true as is written.

Sunnybobo3:
Is Metuh a prisoner? Who imprisoned him?

I do not necessarily agree with the initial comment you quoted, but if my memory serves me well, he was remanded in Kuje prison by a High Court Judge. And if my eyes also serves me right, I think I am seeing him being escorted to court by Prison officials.

PBundles:
My esteemed Bevista, thanks for the compliment, Im humbled. I have seen your works on here too and im impressed with your depth of knowledge. I teach business at a business school in europe and work in IB at an american bank

On PPP, this will be easier when we get a McDs in Nigeria, simply using the Big Mac index and factor in some other variables.

There is a lot of info on the other two, though the manner its explained is not always clear.

Relative eco strength goes by the principle, if you have a growing economy investors will want to BUY your currency in order to do business. I find this hard to use with exotic currencies that have extreme variances.

The model I used goes on the notion :
interest rate ( what the rate at CBN) minus the actual inflation rate tells me the rate at which the currency is appreciating or deprecating. Hence highlight a common mistake made by consumers when they see high interest rates at banks. If they are giving you say 15% which seems high and the inflation is say 20%,you have actually lost money. The rate of this depreciation is what I used.

I factored in GDP, projected of course and income growth I simply took it at par. Oil is the joker here. Of course you can take other variables into consideration, but didnt see them having that much of an effect.

I will see if I have a PowerPoint somewhere and if I do i will post it.

Truth be told, Im sure (at least i hope) that the CBN has in house folk that can replicate this. I think that the CBNs biggest problem is not analyzing, but the ability to carry out an INDEPENDENT program, void of Politics, thats the problem. Most CBN chiefs are more than capable, no doubt, but when they also have to satisfy the President and his party, it get very very difficult and is a very slippery slope you nor I could walk without falling, hence at times their actions look amateurish. That why all over the world most Government Bank heads are are not allowed to be partisan, only of course in our beloved Nigeria where they say they are not, but are not.

Point at hand, free floating the Naira, everyone in their rightful (economic) mind knows the Naira should free float. They dont have the capacity to continually indirectly subsidize it. I get the feeling though they the CBN has no other choice and will tell the president, sir we need either set the fixed rate much higher ( which is simply a postponement of execution) or free float.

Thanks boss for the lecture. Insightful as always. If the power point you mentioned comes in handy, I'll be looking forward to seeing its contents.

Sorry for responding much later. Best of luck bro.