₦airaland Forum

neocortex:
I hope that doesn't happen because it will spell disaster for foreign investment for a long time,
unstable forex policy is the greatest fear of investors.

Nope. Policy withdrawal or reversal is a common thing. Nigeria is not the only country in this mess. Many Oil dependent countries are facing similar issues.

Russia, Angola, Venzuela, Saudi Arabia etc. Venzuela is even finding it more difficult. They have a mad president.

Adeoba10:
Aswear to God, ano understand anything, i just dey read comments based on likes... Floating n devalue just like dy/dx

Continue to read. You meant learn something

tbaba1234:
It is currently at 257.. Let's see how the day ends... There is pent-up demand so it could end around 280 today... But it will still stabilize at around 250..

I think the spike is due to demand surge and backlog transactions.

@ N253 that's an instant loss to those who have procure via black market. I was estimating N290. Well, let's see how the close of business today will fare.

I think it might fall to N250 because a lot of people will want to dump their dollars.

Dottore:
We are watching. I'm tired of all these pocket economic theories. Though the source of this particular article is a reputable one but the truth remains that the complexity in Nigeria's economic realities have timelessly contradicted all conventional academic economic tales hence the CBN Governor and his crew have resorted to trial and error economics.

All economies in the world are complex. Though some have their peculiarities. The G8 for instances make and influences policies to their advantage. We live in a dynamic world and not one that is static. Hence, policies must be adapted or change to suit challenges as they arise. The United States lowered interest rate to boost productivity, offered incentives to business owners and also made bail out to Banks. The Eurozone has the lowest interest rate and even a negative yield on Government bond.

The CBN, in view of the challenges currently being experienced, has decided to review the policy on FX. This policy made be reviewed or withdrawn if abuses are noticed or the required positive change is not felt. Hence, it is not a trial or error economics, but one to addressed the current challenges and dynamics of our environment.

Nigeria is allowing its struggling currency, the naira, to trade freely in a move to tackle the financial crisis in Africa's most populous nation. Financial blogger Feyi Fawehinmi looks at how it will affect people's lives.

1. Petrol prices will remain stable
Refined petrol is Nigeria's single biggest import. The story of how an oil exporting nation has to import almost all of its refined products is well told.

According to the National Bureau of Statistics, refined petrol imports in the first three months of 2016 amounted to 226bn naira ($1.1bn, £791m) or 15.6% of the total imports.

Last month, petrol subsidies were removed and a new price band of 130 naira to 145 naira per litre was recommended by the government.

Petrol was in short supply this year until the petrol subsidy was removed last month
This new price assumed an exchange rate of 285 naira to $1, compared to the official rate of 199 naira to $1. Remarkably, Nigerians took this price rise with no more than a shrug and the attempt by labour unions to force a price reversal with strikes flopped spectacularly.

In the short term, the Central Bank of Nigeria (CBN) is likely to continue to be the main supplier of dollars to the market until foreign investors return.

With one eye on the petrol price, it is likely to kick start the market at a rate that keeps petrol prices stable i.e. somewhere below 285 naira to $1.

2. Still no imported tomatoes, rice - or tooth picks
In June last year, the CBN came up with a now infamous list of 41 items that would no longer be eligible for foreign exchange from official sources.

A tomato pest has wiped out much of the local crop and prices have rocketed. Items on the list ranged from Indian incense to private jets. Importing those items were not actually banned so since the list came into effect, anyone who wanted to import them had to source foreign exchange from the black market.

The CBN said last week that those 41 items remain ineligible to access forex at the new interbank market. You can still import toothpicks but you will have to source dollars from the black market to do so. Based on this, prices of those items are unlikely to be affected. This is a shame because Nigeria could do with some tomato imports right now after the tuta absoluta pest devastated harvests in northern Nigeria.

Nigerian palm oil producers have benefitted from the importation restrictions. Allowing rice imports wouldn't be a bad idea either given how rice prices have spiked in recent times. Rice importation has always worked on a quota system - those with political connections usually getting the right to import it. The current policy restricting the imports is tied to goals of national pride in achieving self-sufficiency. Given this, it is unlikely to be lifted.

Not everyone is unhappy about this list, though. The Nigerian palm oil producing company, Okomu Oil, posted a 98% increase in profits for 2015. Palm is of course on the list of 41 ineligible items.

3. Inflation should eventually fall
Latest figures from the National Bureau of Statistics show that inflation is rising steadily in Nigeria. Given how Nigeria is dependent on imports for a lot of basic items, a floating currency is likely to further increase prices, at least in the short-term.

In reality, however, the policy of rationing foreign exchange in the last one year meant that those who needed it the most hardly ever got it. President Muhammadu Buhari took office last year with a promise to boost employment. As such, even as the official rate remained stable at 199 naira to $1, prices of imported everyday goods have been reflecting black market exchange rates for a while now.

Nigerians have already endured the equivalent of a gut punch from soaring prices and are unlikely to be in the mood for any more. Further price increases might just force consumers to eliminate demand for some products altogether. A more stable and open foreign exchange regime should also eliminate a lot of the uncertainty that has been pushing up prices.

Given what has already happened in the last year, a floating naira, somewhat counter-intuitively, can be expected to start bringing down inflation.

4. Bad news for banks and businesses with forex loans
The CBN says that 10.1% of all the loans in Nigeria's banking system have gone bad. A lot of these loans are foreign currency loans extended to local oil and gas companies when crude oil prices were $100 per barrel. Between 2012 and 2014, an estimated $10bn was lent to local oil companies to purchase assets from foreign oil majors.

The oil and gas industry is Nigeria's main foreign exchange earner. Once the naira starts to float, banks will have to adjust the value of these loans on their books. In turn, the increased burden on the borrowers is likely to push more of them into bad loan territory. A couple of weeks ago, the Nigerian government bizarrely asked banks to stop sacking workers. More bad loans will almost certainly trigger more sackings.

It remains to be seen how the government will react to more sackings if and when they happen. Or perhaps the banks will use it as a bargaining tool to extract another round of bailouts from the government.

5. Foreign airlines will be back in business
Another effect of rationing foreign currency in the past year is that it has allowed a backlog of unmet demand for forex to steadily build up.
The CBN says this backlog is now at $4bn and will take four weeks to clear. Others say the backlog is at least double that amount.

Nigeria's elite has been forced to travel less because it has been difficult to get forex. Included in that backlog is the $600m owed to foreign airlines which has caused a number of them to either stop serving Nigeria entirely or put the route under review. If nothing else, this has been embarrassing for Nigeria and has drawn unflattering comparisons with Venezuela. Once that backlog is cleared, foreign airlines should continue their business as normal.

Of course, trapped funds are not their only worry - the economic situation has done its bit to dampen demand for foreign travel by Nigerians. Still, solving one of two problems is not a bad deal.

The verdict?
Ultimately, Nigerians have reason to hope that the worst of the last year is now over.
With a floating exchange rate, foreign investors can have more confidence in the country and Nigeria should see an uptick in the foreign investments it so desperately needs.

http://www.bbc.com/news/world-africa-36561237

The President is human. He can fall ill just like normal human beings and given his present age it is no doubt that he may be struggling with one form of illness. However, there is a good reason why his health condition is being kept secret.

Hence, the PDP should hold itself to shame if it doesn't know how to play opposition politics other than informing the public that the President is critically ill as if to make a mockery of the number 1 citizen of the country. If the President is ill, then he needs our prayers and not condamnation.

Chief stop promoting this man. If this is how he eats, then I can do the same. The newspapers are good sources of where he gets his information

Organized religion continue with their propaganda to spread information why you need to be in church rather than why you need to be a good person. Hence, the increase correlation between increased immoralities and increased patronage in churches

Now this is one very funny story. I think the Chinese man is not forthcoming with the truth, however, we will allow the police do their job.

On the other hand, I hope the juju the Chinese man procure is effective enough to stop beating in Nigerian prison, because the prisoners may not buy his story.

Good luck to him.

herbie27:
I don't discuss men of God and their policies.

To you 1m is too big to give as tithe or sacrifice bt God is too big for that, and those who understand kingdom giving, can give their last penny.

Man shut the Bleep up. There is economic recession in the country. Anybody giving N1million away whether in abundance or in scarcity is a fool.

tumababa:
Wish it will be that easy. what if the bank keeps telling u no dollars come tomorrow and they keep supplying the ab-oki-s? We are patiently waiting

Certainly you have not been reading the news. The new FX policy will eradicate Abokis because you can easily get dollars from your respective Banks as long as your transaction is genuine. Except you trade on the banned products, then Abokis may be relevant to you at an expensive.

Joagbaje:
Healing school is going on in lagos . Just simply take a sick person there and find out for yourself not by other men story. I have 3 people there . One has complete miracle already without pastor chris praying for them yet. Just by the teaching in the classes and prayers of faith . The other who's husband had stroke and mental challenge for 2 years called yesterday . His mind is restored already . He's beginning to walk far better . Pastor chris has not laid hands on them yet . Many are healed .

Why do men like you continue to deceive the vulnerable and the weak at heart? Surely, God will visit you, if not this life, definitely in the next

Strange. Why don't you guy just wait till next week when you can easily walk to your Bank and get FOREX at the prevailing inter-bank rate rather than get rip off or duped by conmen

Kgdavid:
of a truth he should have been open with her from the start but some girls too are not very sensible. Aside from the money aspect of it, come on mann it's a date, why should your friends come along?? If i wanted to hang out in a group, don't i have friends of my own to invite?

Where else in the world is this done apart from Nigeria? Been to a lot of places mann including other African countries and i can tell you honestly no one thinks like this except for Nigerian girls, which shows that to them we men are merely tools at first sight.

It can be disheartening.

Sincerely only in Nigeria, that is why South African and Kenya ladies even Ghana ladies can kill for a Nigerian man because it is strange to them. Oyinbo ladies will politely warn you, if you continue paying, they will stop hanging out with you. You have to inform them that you are going to pay prior notice.

Naija gals, everything they want for free. Well it stops when they get married.

lekkycee:
Those of you calling 12k, I don't know where u got that from, it's 3k for she n her friends ....a thousand for each of them...m not in d habit of taking my friends out on dates but most men are becoming more irresponsible by d day....if u think women should start paying their bills I don't have a problem with that but plz let's make it even....Don't expect me to pay my bills yet do d cooking when I come to ur house, do ur laundry,even carry babies for you....Women are no slaves,just show them love for their sacrifices

Whilst I understand where you are coming from, please go and read the story again.

I will also advise that you change your orientation if you truly want to get and stay married. Else, it is a free world.

mrkay101:
Summary of the whole thing, the girl is selfish period.

If that's her way of testing guys to see if they are worth it. Then she'll be single her entire life

Let's be honest, she never really liked the guy. If she truly likes the guy, she will never go with her friends, for the fear of them snatching him away.

schumastic:
Mr man shut up there, is people like u that make the ladies to continue acting this way.

1.it was there first date.
2.they already agreed that is the both of them going to watch the movie, so y did she call back to tell him her friends r coming, don't they know the way.
3.she is making a fuse about how cheap the money is yet she n her friends couldn't over look it.
4.if he didn't act that way, she will do it another time.

she probably don't know what a first date means then

She truly doesn't know what a first date is and likewise many Nigerian ladies. I am shocked at her and the fact she keeps referring to the money. It is not about the money, but her irresponsibility to include her friends on a date where she is expected to get to know the guy.

She is in fact ridiculous. Good, she has embarrassed herself. My own pity is her friends who shared out of the irresponsibility of their friend.

Feranchek:
Lol. I know guys will enjoy this story. Buh I think the guy in this story is quite a jerk!! For heaven's sake she mentioned that she'll be coming with her 2 friends, and the pomo gut Said YES! Since you know you weren't financially buoyant to cater for all of them, why agree to let her come with her friends? I'm sure she'd have still come if you told her not to come with her friends. Let's be unsentimental and say the truth biko. The level of immaturity in some guys in quite annoying


(Oya Bashirus!!! Ngwanu, coman bash me!! I dey wait!! I know Y'all! So I won't be surprised )

I think you are wrong here. She would be coming with her friends does not mean he should be responsible for them all. Please, it is a date where they (She and her male date) are expected to get to know each other and not the guy getting to know her friends. If she wants the guy to meet her friends, she should arrange that later.

Ask me again even in my dreams, she embarrassed herself and her friends. She needs schooling on dating etiquette and many Nigerian ladies lack such. It is not about the money, it is about the irresponsibility on the part of the lady who intend to come with her wolves-pack to a first date. Later, she would start wailing she has not seen a husband.

If she is sincere with herself she would know she acted wrongly and if she doesn't, let her ask matured female friends. She is just a child.

Israel5:
Perfect! Guys ar manning up now. No more i wan go piss tinz

OMG who are you? I laughed so hard. Still laughing sef

The US Ambassador has finished these lawmakers. At least when you look at them you will remember the grabbing of hotel keeper and asking car parker attendants to arrange girls for them.

I believe the story. It is a normal thing for them in Abuja. You love your wife indeed.

Beautiful analysis. The writer, Feyi Fawehinmi, did a wonderful job in breaking it down.

psucc:
If you know the cost inputs that those products incur on their way to the retail shops you wouldn't have post this.

The only cost that should affect it is transportation/logistics cost. Dollars has nothing to do with the production of Garri locally, except it is a big manufacturing company which imports manufacturing equipment (laughs) which I doubt seriously.

JohnNgene:
Boss13, Answerbank has tried to explain the new CBN policy to the layman. Don't just attack him. Why not go a step further to explain the whole "floating of the naira" in simple language to us? Thanks in advance.

That is not a layman's explanation. It is in entirety, a different explanation and more of a confusion. I have made explanations on thread as at yesterday when the news first broke. What we should wait for is the official rate and spread based on the meeting that will be held by the association of FX dealers.

However, the implication is that the CBN has officially devalued the naira, however, it went some steps further by reducing its interference on fixing the rate and the introduction of FX futures. What this means holistically, is that Nigerian export products will be cheaper and importation of finished goods will be more expensive. However, from indications that exchange rate may kick off at N260 - 290 per dollar, comparing it with the present rate of N315; it is cheaper. Hopefully, in the long run, the rates may go down but will depend on other economic policies that the government will and should implement in view of the recession, but if these policies are not introduced, such as streamlining interest rates, and policy on lending to SMEs; the exchange rate will fluctuate within the range I indicated without wide variations due to the FX futures introduced, regulations on FX, access into the FX market by non-oil exporters.

The FX futures will hedge against FX fluctuation. Hedging means preventing risk. Instead of the usual speculation involving FX, traders can now enter in FX futures, an illustration is - a trader can request from either the CBN or primary FX dealer some certain amount of FX on behalf of its customers in the future at a certain exchange rate. This exchange rate will be predominantly influenced by the spot rate or current exchange rate. Spot rate means current or present exchange rate at the moment. This will prevent Speculation, Arbitrage and Rent-Seeking (all these means, trying to make huge abnormal profits like Black marketers are currently doing).

Another implication is that manufacturing activities which were at comatose due to FX scarcity will kick off. Consequently, the job losses being experienced will reduce and will not be influenced by the recession. Banks will now be able to lend to the customers and also engage with their regular FX tradings. Prices of food commodities may not go down in the short run, but huge spikes will not occur. Hence, inflation is expected to remain stable in the short run with anticipation of future reduction.

Also, there will be a steady supply of fuel in the country and with the removal of subsidy; fuel scarcity should not happen due to ample supply of FX. However, in this country, anything can happen.

Furthermore, foreign capitalists who took out their funds will return and this will further increase FX supply in the country.

With the CBN announcement, Nigeria just rebooted and has admitted reality. It is good to see a change of heart from the President.

989900:
This was an adjunct from the CBN later last night.

It is from the Cable; I can't post the link, because each time I post any link on NL since some 3 days now, I automatically get a 1 day ban.

You can search about it too.

However, what this article is essentially saying is, trading would probably kickoff from the N260-N270 band, from whence it could either go south or north from there, dependent on demand and supply.

Thanks for the clarification. I will contact insider source to confirm. On the other hand, if you cannot get the link, you can type the source. This will add credibility to your information.

Thanks again.

modelmike7:
Yeeeessss! I have been waiting for this, they must return all our yams.

Honestly, this is the news I have been longing to read. I hope it is authentic.

wolfofallstreet:
Thanks for explaining, because i hv been lost since i read about d new policy... over to iur mods FP material

Please don't take what the OP wrote. It is pure jargons.

First, inflation in this country is driven primarily by two factors - prices of food commodity and fuel prices, which indirectly affect prices of food commodity.

The initial scarcity of fuel was predominately due to scarcity of FX to import fuel. Oil marketers wanted FX supply at CBN rate. The CBN was unwillingly to sell due to fear of abitrage or round tripping. Now, this policy sorts out the supply of FX to geninue transactions. Hence there will continuous supply of fuel and thank God to subsidy removal.

The OP certainly do not understand what a budget is and made a whole lot of jargons that I, myself cannot even relate with. A budget is a predetermined plan of expenditures and revenue. It is not actual spending, but a plan based on estimates. The best I can explain is that a budget is like a proposal. A proposal to do something based on future receipts and planned expenditures.

May I remind the OP that the exchange rate on foreign receipts included in the budget was based on CBN official rate and also Oil prices, which has even gone down. It is what the government is expected to get and not what it will get. That is why it is a budget. Hence, your deduction on money illusion is actually an illusion made by you.

OP, there is nothing as "Fiduciary Revenue". If you mean fiscal, fair enough, but fiducial means "Trust" or "based on trust" or alternatively "Reference". Also, if you truly know the dynamics of how FX works, you would certainly know that there is no connection with it to wage demands or fixing wages like you have said.

My advice to you, OP, if you are a student, there is still time. Dump the books you are currently reading and rush to see your lecturers for guidance. On the other hand, if you are not a student, please stop smoking what you are currently smoking.

MadamExcellency:
A Government on auto pilot, driven by media pressure and talk-show economists.

Empty brains, implementing the obvious when the sick is six feet beneath the ground.

If a government is driven by media pressure it depicts that the government is a listening one. The media is the conscience of the people. Hence, I don't get your point. The CBN is trying to solve a problem, the least you can do is support.

I don't know who you are referring to as empty brains, but certainly not the CBN. However, I can deduce your brain cells are filled more with water based on this comment you just posted. Please prove me otherwise by posting something more meaningful and intelligent.

When I read the story I knew it was false. Knowing how greedy the Chinese are, they will even open to ghosts. Hence, I didn't need to bother much.

The news might have been disseminated by a disgruntled competitor.

@OP I find your information very confusing and unbelievable. The association of Fx marketers are yet to meet to discuss on the rate and spread/margin. Whilst I may agree with the rate you indicated, I do not understand how clearing house in Marina responsible for locally dominated transactions be responsible in buying FX.

Please note the CBN has said there will be primary and non-primary Fx dealers. The primary dealers will comprises mainly of 10 financial institutions based on liquidity, capital, amount of Fx transactions it has undertaken in the past.

Hence, it is unwise to spread and distort information, especially when the main players are yet to decided.

Be guided!

omonla555:
Majority of people from the South South and South East are criminals. They are so backward and lawless. How can one imagine that governors will be negotiating pardon for criminals and corrupt people that stole Nigeria blind. It is my prayer that, they continue bombing the pipelines and let us see who will suffer it most. Irrespective of what they planned against Nigeria, the country will be more stronger and they will all have themselves to blame.

You are a racist and I pity what this will do to your young mind in the future.

duality:
Would you be given a degree certificate after, maybe 5 years in the University, if the exams and records discovered that you didn't have the requisite entry qualification?

That's for an academic environment that is expected to uphold standards. Will they say, the person have passed his/her courses hence, the required entry qualifications be overlooked?


You are not honest enough

I really cannot articulate what you wrote.