₦airaland Forum

I would have love to see the comparisons, it is one thing to make an assertion, it is more important backing that assertion with figures.

Genius100:
Nice one chief; don't you think the parallel market will benefit from CBN reversing the ban on receiving remittances in foreign currency?

CBN has done that already, like a month ago to be precise.

http://sunnewsonline.com/new/cbn-lifts-ban-on-dollar-deposits-withdrawals/

CBN lifts ban on dollar deposits, withdrawals
…Discontinues forex sales to BDCs

From Isaac Anumihe, Abuja and Blaise Udunze

AS exclusively reported by Daily Sun on Monday, the Central Bank of Nigeria (CBN), yesterday lifted its ban on foreign currency deposits and withdrawals by customers from comercial banks.

This is coming as it also embargoed further foreign currency sales to Bureau de Change (BDC) operators. Daily Sun had on Monday, hinted that the apex bank might relax some of its policies in respect of domiciliary account following constraints Nigerian bank customers are having making foreign currency related transactions from their bank accounts.

The apex bank also decided to provide the available but highly limited foreign ex- change to meet matured letters of credit from commercial banks for importation of petroleum products, critical raw materials, plants, and equipment, and for payments of school fees, BTA, PTA, and related expenses.

Addressing newsmen yesterday, in Abuja, CBN Governor, Godwin Emefiele said it took the decision fol- lowing recent developments in the nation’s foreign ex- change market and to arrest the continued depletion of the reserves.

“We have continued to observe that stakeholders in some of the subsectors have not been helpful in this direction. In particular, we have noted with grave concern that Bureau de Change (BDC) operators have abandoned the original objective for their establishment, which was to serve retail end users who need US$5,000 or less. Instead, they have become wholesale dealers in foreign exchange to the tune of mil- lions of dollars per transaction’’ he said.

Emefiele lamented that the situation has gone so bad that operators of the BDCs now use fake documentations like passport numbers, BVNs, boarding passes, and flight tickets to render weekly re- turns to the CBN.

“Despite the fact that Nigeria is the only country in the world where the Central Bank sells dollars directly to BDCs, operators in this segment have not reciprocated the bank’s gesture to help maintain stability in the market’’, the governor, said.

He noted a situation where the apex bank has continued to sell US Dollars at about N197 per dollar to these operators, and they in turn sell to ordinary Nigerians, at rates as high as N250 per dollar.

According to him, given this rent-seeking behaviour, it is not surprising that since the CBN began to sell foreign ex- change to BDCs, the number of operators have risen from a mere 74 in 2005 to 2,786 BDCs today adding that the CBN receives close to 150 new applications for BDC licences every month.

“Rather than help to achieve the laudable objectives for which they were licensed, the bank has noted the following unintended outcomes: avalanche of rentseeking operators only interested in widening margins and profits from the foreign exchange market, regardless of prevailing official and interbank rates; potential financing of unauthorised transactions with foreign exchange procured from the CBN, gradual dollarization of the Nigerian economy with attendant adverse con- sequences on the conduct of monetary policy and subtle subversion of cashless policy initiative; and Prevailing ownership of several BDCs by the same promoters in order to illegally buy foreign currencies multiple times from the CBN. The governor said that more disturbing, though, is the financial burden being placed on the bank and its limited foreign exchange.

“The CBN sells US$60,000 to each BDC per week. This amount translates to US$167 million per week, and about US$8.6 billion per year. In order to curtail this reserve depletion, we have reduced the amount of weekly sales to US$10,000 per BDC, which translates into US$28.4 million depletion of the foreign reserve per week and US$1.476 billion per annum’’ he said.

He described such operations as a huge hemorrhage on the nation’s scarce foreign ex- change reserves, and cannot continue especially because BDCs have become a conduit for illicit trade and financial flows.

The apex chief noted that in view of the above, the management of the Central Bank of Nigeria has reached the following decision, which take immediate effect: that the Bank would henceforth, discontinue its sales of foreign exchange to BDCs. ‘’Operators in this segment of the market would now need to source their foreign exchange from autonomous source, they must however, note that the CBN would deploy more resources to monitoring these sources to ensure that no operator is in violation of our anti-money laundering laws’’ he said, adding that CBN would now permit commercial banks in the country to begin accepting cash deposits of foreign exchange from their customers.

CBN’s action’ll lead to 12000 job losses –BDAN

Meanwhile BDC operators have said the latest move by the apex bank will see the value of the naira hitting N300 to the dollar before the end of the week even as an estimated 12,000 would be on the line.

Reacting to the CBN announcement yesterday, the acting president of the Association of Bureau de Change

Operators of Nigeria (AB- CON) Aminu Gwadabe, in a telephone interview with said if the CBN decision is not well managed, “I see the dollar reaching N300 before the end of the week.

He noted that this would in turn lead to a “cost inflation” as the country is an import dependent economy, importing almost all its needs. Asides this, he said many BDCs will be forced out of business leading to job losses in the sector.

He noted that on the average, each BDC employs four persons, adding that about 12,000 jobs could be lost as a result of the CBN’s action. He explained that BDCs have limited sources of foreign exchange and had to rely on the CBN window.

“In other economic BDCs don’t have access to the central bank window because they have other sources of forex to them which includes banks but in Nigeria banks are being restricted from selling to BDCs, exporters can also patronise BDCs in other country’s but here it is being restricted. These are some of the issues.”

He then urged the CBN to review downwards the N35 million cautionary deposit mandated for BDCs as ac- cording to him, “this has tied down the capital of many BDCs and to get other source of foreign exchange we need capital.”

He also noted that the move by the CBN will further en- courage activities of street hawkers and illegal foreign exchange operators “because most people will say why do I have licence since I don’t have access to the CBN window, so I better operate as an illegal operator.

This he said will make it impossible for the apex bank to monitor the outflow and inflow of forex into the country and what the forex is being used for.

wirinet:
I still do not understand barcanista's views, are you calling for outright floating of the naira or devaluation ? Devaluation is still controlling the naira at a government approved price (official market). There will still be a parallel market. Then you did to answer this question, if government devalues the naira ti say N400 to the dollar, would that reduce dollar demand for importing items like cotton bud and milk? What about the socio-economic implications of such devaluation, how will the government survive it?

Here is what i wrote earlier on the topic;

Maybe he heared some big coat wearing economists say theoretical jargons, forgetting that such devaluation in current crises will likely work in a producing nation, and not a consuming nation. If naira is devalued in response to forces, and it gets to say 300 naira, does it occur to him nigerians will pay at least times 1.5 what we currently pay to buy petrol and other refined products?

Nigeria is a consuming nation, Buhari is striving to weather the storm,he cant stop this storm, if we are lucky we wont be swept off, but i must confess it seems tougher times are ahead, i predicted we will get out of the woods by the 3rd quarter of 2016.

rheidn:
And won a whooping whopping sum of 1 million.
I tap from ur blessings bro

That's correct

TonyeBarcanista:
Again you fail to see the point!

You are in fact echoeing my position. The CBN is yet to devaluate the Naira but the state of the Naira is on a comatose due to scarcity of the dollar in the market. Read again..

There is scarcity of dollar because CBN is rationing what it has, the reserves are low, 12 year low !

In the event CBN makes dollar provision business as usual, we could ran out of foreign reserves soon enough. it is at 26 billion usd presently.

Venezuela has exhausted its foreign reserves, the disaster going on there now is better imagined. The difference between venezeulas currency to a us dollar at parrallel and official rate is like times 7

NobleAngell:
Same cgpa with me. He must be ALMOST as gud as me.

Check well, 4.86 NOT 1.86

Elosky20:
he forgot to mention that in 2008 our foreign reserve was $64.8 bilion, bt in 2016 it is $28.8 bilion, the govt used it to defend the naira then.
http://www.thisdaylive.com/articles/2007-2012-movement-in-foreign-reserves-account/138991/

offcourse he missed that point, also the crash in oil price in 2008 didnt stay long, before it went back up, just about 6 months continuos decline before it went back up. The current decline has been on for over 19 freaking months. from july 2014

Obiagelli:
With the current fall in oil prices, in submission i have decided to show how better Gej and Okonjo Iweala would have done better than bubu the dullard.
I will be highlighting the measures taken by the past administration in similar but better circumstance APRIL - MAY 2015

FG borrows N473bn to pay salaries – Okonjo-Iweala

“We have serious challenges,”
Finance Minister Ngozi Okonjo-Iweala
said in an emailed statement.
“Things have been tough since the
beginning of the year and they are
likely to remain so till the end of the
year.”

www.pmnewsnigeria.com/2015/05/06/fg-borrows-n473bn-to-pay-salaries-okonjo-iweala/

Today we are not borrowing to pay salaries


Economic Crunch: Nigeria’s GDP Declined By 2.08% In Q1 2015

Data released by the National
Bureau of Statistics has shown
that the growth of the
country’s Gross Domestic
Product slowed down by about
2% in the first quarter of 2015,
with a fall from 5.94 per cent
at the end of the fourth
quarter of last year to 3.86 per
cent.

bizwatchnigeria.ng/economic-crunch-nigerias-gdp-declined-2-08-q1-2015/

HuH? this has got lai mohammed written all over it.

He wouldnt have, GEJ devalued Naira twice in 2015. From 155 to 168, and from 168- 197, as at then the economic crunch was not this hard, we had a better buffer with reserves, and even oil price was in the neighbourhood of 50usd/barrel., the biggest fall in reserves was during those period.

bizgenius1:
bro thats 243...kinda fair

really? for 1 canadian dollar? i didnt say 1 us dollar o

I was charged 78,500 naira for a 322 canadian dollar transaction on thursday. i made a great mistake using zenith card for that transaction, Gtbank would have charged me less if i had used their card.

The same state that there were over 30 drivers for a local govt with a single functional car. I don't fancy using 90% of income to pay 1% of state population. Something must give way, either revenue must be upped, commercialising some state agencies where they pay staff with income generated , or outright downsizing

chigoizie7:
U don't get it do u? I am exactly with you on your points.

Without Govt policy all these economics won't work.aint we nigerians?


I support bruce in #buynaijatogrownaira. But that is not enough without proper policies and control measures.

there is a govt policy of access to dollars at official rate for importers bringing machineries and raw materials for production. There are other policies aimed at protecting local producers

It means Baba God pick ur call, but the network from your end wasnt too strong, so the call dropped.......


Jokes apart, i had a KIV from nestle 7 yrs ago, maybe i am still on KIV till now.

It is better you keep the job hunt, hope for the best, but plan with a worst case scenario,

Obiagelli:
I am not in anyway an economist but i have been reading a bit, especially Henry Boyo ( truth be told, i get an anytime i do).
I believe we earn our oil revenue in dollars, what if the federal government pay states their allocation in dollars and the state simple exchange their dollars for naira at the bank or BDC.
With this system there will be surplus dollar in the system that will drive the exchange rate down. A good example of this was during the last election when dollar was raining all over the place (thanks to Dasuki) the dollar fell to 170 naira despite official rate at 197 naira.



www.dailytrust.com.ng/daily/business/51434-naira-gains-against-dollar-at-black-market


So I ask again what will go wrong if we flood the economy with dollars?

CBN does not print dollars, it only earn it from exporters, remittances and FDIs. so our foreign reserves is a sum total of this inflow minus outflow from importers, students who pay in foreign currency, medical tourists and all sorts of folks who need foreign currency payment. our reserves is currently at 26 billion USD, so if CBN floods the economy with dollars, it will stabilise things a little bit, but it is bringing the evil day closer, we could run out of foreign reserves soon enough. remember the 26 billion usd foreign reserves is the lowest we've had in 12 years. Nigeria lost 1.13 billion USD last month from the foreign reserves. Venezuela ran out of foreign reserves, and turned to gold as a commodity, it is the worst hit of all the oil producing countries, the economy is in tatters at the moment, and the difference between the official rate of the dollar to bolivars at official rate and parallel rate is like 400%. Nigeria's difference in naira to dollar at official rate and parallel rate is hovering at 90%.
we are in dire straits at the moment in Nigeria, our savers are sharp reduction in demand for dollars by importers,, take note that the Nigerian govt is part of the importers, as roughly 35% of forex demand is that to import refined oil, so if the refineries can work, and other private refineries to meet local demand of refined oil, we have solve 35% of the problem, then our big boys and ladies overseas need to bring in more remittances from obodo oyinbo to shore up our reserves. we need to expand our export base, especially refined goods that value has been added, bulk of our current day exports are simply raw materials/commodities. Finally, we as Nigerians must patronise more made in naija products/services, our import base grew because the middle class has grown over the years, the typical middle class has a special appetite for imported products or foreign services.


I am using a phone, pardon my arrangement, but this two cents is that of an engineer, but economists should have no reason to dispute it.

tinkinjow:
He also noted if the refinery is constructed without the capacity to produce Petroleum Motor Spirit, PMS, Automated Gas Oil, AGO and the like, the cost would be around $75 million (N25.8 billion), whereas if those components are included, the cost would be around $200 million (N69 billion).

Please what product will the one of $75m b producing?

petrochemicals

ednut1:
mama ngozi is a witch, d day u try to outsmart her she will finish u. ask Ghadafi, Sadam, Mugabe, Buhari(1985), Nkrumah and odas wat mama did to dem

that is the problem, shifting blames and not willing to accept it is your fault.

Let the hunter marry a wive who can make peppersoup with his hunt , is that too hard?

Nigeria can have functional refineries to refine crude oil to meet local demand, na foreign world powers dey stop us from operating refineries.

Dangote will singlehandedly solve Nigerias oil refinery problem by 2018 all things being equal, what is stopping government from planning?

PapaBrowne:
About refineries, I think a short term solution could be to buy or lease existing refineries overseas or enter swap agreements. Ship crude out, get it refined and ship back to base. No much exchange of currency. We save all that 35%.
As regards export value vs import value, I think available statistics would indicate that import values might have tanked to a greater degree across board than our exports.

Home > Business > Industries > Economy > [size=15pt]Nigeria’s trade balance weakens as oil prices bite
Nigeria’s trade balance weakens as oil prices bite[/size]

By BusinessNews Staff on December 20, 2015
Nigerian exports plunged in the third quarter from a year ago and imports also fell, the National Bureau of Statistics said, as currency controls introduced by the Central Bank of Nigeria this year to support the economy start to bite.

The balance of trade in the third quarter was N645bn, down from N2.87tn in the third quarter a year ago.

Africa’s biggest economy relies on oil exports for about 58 per cent of government revenue. But the price of crude has been falling, reaching its lowest in more than six years last week.

Consequently, Nigeria faces its worst economic crisis in years, since exports of oil also bring in the hard currency that pays for imports. And because of its limited manufacturing, Nigeria imports most of what it consumes.



Nigeria’s exports fell by 50.3 per cent in the third quarter from a year ago and imports declined 7.3 per cent , the NBS said. The fall in crude oil exports, which accounted for 69.1 per cent of total domestic exports this year, hit the economy the most.

“The sharp decline in exports and slight decrease in imports contributed to a continued fall in the country’s trade balance, by 32 percent,” the NBS said in a report.

Crude exports fell 18.8 per cent in the third quarter from the second. Imports dropped 1 percent from the second quarter, the NBS said. http://businessnews.com.ng/2015/12/20/nigerias-trade-balance-weakens-as-oil-prices-bite

This NBS statistics gives the picture. If you said import value has declined, you are right, but you are only half right, because export value has declined way more, no thanks to drop in crude oil price. We export mainly commodities, and close to nil refined goods. Devaluation of the currency will bring further hardship and wont solve the intended problem.

stevecantrell:
Pleading the 5th.

Too bad, i assume this forum bestow on you a pseudo anonymity. Why not tell us here how you know ? I am asking you do that because too many people call their gut feelings fact, and it is not necessarily true.

PapaBrowne:
Best comment in a while. You have a clear picture of the challenges many of which are stemming from faulty understanding of the basics.
A devalued currency would even help our productivity as the price competitiveness of our goods become quite impressive.
I like using Chivita fruit juice as an example. At N200 per juice wholesale, it would have sold in say Saudi for $1 last year at an exchange rate of N200/$. At an exchange rate of N400/$, that same juice would sell for 50 cents, making Chivita juice more competitive in Saudi vs other juice manufacturers. This is the direction I would have expected the government to push encouraging the best of our goods to be shipped out.

To what extent do we export refined goods?


As to your analogy, do you think a N200/chivita juice before devaluation can still be produced with profit margins of 200/juice after devaluation of naira.

PapaBrowne:
Trust me, the bigger source of the scarcity is hoarding and not importation. Warehouses are empty. Activities at the ports are Down. Importation has nosedived terribly. The demand for forex is more about speculation than its about importation.
Devaluing the currency, or better still allowing the markets to determine the rates albeit in a controlled fashion would do a lot to reduce the factor of speculation.

You think about this: Oil imports are our largest forex drainer. Probably more than 30%. Since the price of oil is down radically, shouldn't the demand for forex by importers of crude go down radically as well.

If the main problem is hoarding like you said, you must realise people hoard what is scarce, and there need to be stiffer controls by CBN to monitor those who have access to dollar @ official rate.

As to your other assertion, Yes crude oil accounts for roughly 35% of our import , consequently 35% forex demand, but forex reserves is export value minus import value. Our export value has dropped considerably also due to low crude oil price, in actual fact, we lost more from export value, than we lost at the import value from the differential of crude oil export and refined oil import.

The biggest impact to our declining forex reserves would be functional refineries that meet our local demand, and if we can get surplus, we start exporting refined product (foreign exchange earner), the current refineries are virtually moribund, we need new ones possibly on old sites, but new refineries is a LONG term plan, we hope DANGOTE refinery will save us before 2018, the FG is yet to give an official statement after the dec, 2015 deadline to assess the 4 refineries.

There at least 5 positive things that can be deciphered from this picture. This pix is a masterpiece that should be properly named , copyrighted and kept

stevecantrell:
Did you know it is mainly cbn execs behind round-tripping ? When a fox is in charge of a hen house, that's what you get.

That is a hefty allegation, i dont know how you are privy to that. Is it simply on suspicion or gut feeling?

No devaluation of Naira will bring about reduction in the rate at the parallel market.

Dollar is scarce because there is restriction to access, there is restriction to access because we are low in foreign reserves, 27 billion usd (almost 12 years low). Nigeria can not afford to run out of foreign reserves.


If cbn devalues naira from 197 to 260-270, parallel market rate will speedily climb to 400.

The mid term solution is access restriction for now, or else we run out of foreign reserves, long term solution is to think export apart from crude oil in large quantities to earn foreign exchange.

There should be control measures by CBN to prevent round tripping by those with access to dollar at official rate of 198

One thing i observed about her pix that brought her fame, she was smiling amidst the heavy load on her head and her situation.

So, Hakuna Matata, keep smiling!

Yet, some funny association are begging Nigerian govt to allow access to IMPORT tomato paste

nabiz:
Made in Niger online trade fare, let us see what you produce

I am a NIGERIAN, not a NIGERIEN. What we need to patronise is Made in Nigeria , NOT, made in Niger.

opribo:
the family didn't approve it now that's why they are fighting her

Story don dey change ooooo. I didnt see that condition in your earlier statement, whichever way, we are not even sure Aishas family approved it too. Case closed

opribo:
45 yes birthday and the husband is 75 yrs , woooow honestly, I'm beginning to dig this peoples style, they are surely not like us this age gap can only be possible in the south if the woman is a widow, or had a child out of wedlock or committed an abominable act and so was banished from the community
But up there it is normal for a man old enough to be ones father to marry a 12 yr old and it is welcomed
I can only but imagine at what age she got married to him. Now the man will be competing with a normal 45 yr old man married to his age mate.
I even feel that this style makes it easier for more women to be married than engaging in prostitution. The biggest birthday celebration we need now is for baba to fix Nigeria

Ojukwu vs Bianca = 35 years difference.

South East

Bianca was not a widow when he married, except ex-boyfriend(s) like FFK

2sex:
why did he keep quiet when the news started going around, even before the election?

Oh, so u expect him to call a press conference on that, what he said is paraphrased in quote, newspaper wants to sell paper, so they bring sensational headlines that mentally lazy zombies that cant read to save their lives will harp on. Nigerian dailies headlines must be taken with a pinch salt, until you read the body, you can never be sure what you see is what you get. Just yesterday, a Nigerian daily declared SE go 2.9 billion maira allocation from ministry of works,,,,,,, until you read the breakdown to find out, the headline is false, they sometimes use false but catchy headlines.

imhotep:
^^ Chai. This one is a lost case ohhhhhh

what he said was in quote, i repeat no where did he say he will make 1 naira 1 dollar.

WATCHOVER:
Most of you don't read and assimilate before accusing

common, get lost ! What do you know about reading and assimilating.? See me see trouble.

Geniro:
Zombie, May 2010 - 2015 is 6 years abi. What a tool.

i guess you are a teenager, that is the advantage of social media. Are you eligible to vote ? I mean are you 18 years yet?

Ok 2010-2015 is 6 months