₦airaland Forum

Tough choices indeed
See link: https://www.nairaland.com/3123052/nigerias-daunting-economic-challenge#45903073

Nigeria’s Foreign Exchange Problem: Our Economic Problem

It is not unfounded to boldly say that the bulk of Nigeria’s current economic challenges is crude oil driven. Before now, the major impact was initially external through the fall in crude oil prices. That we can hardly influence. The latest impact is through decline in crude oil output due to increasing pipeline vandalism in the Niger Delta. This part is internal and within our control.

How are these factors combining to affect us?
Ceteris paribus, these two forces are the primary source of the nation’s economic challenges primarily through its impact on FOREX generation/policy, which has seen declining foreign investment, slowed growth of 2.79% in 2015, negative growth (-0.36%) Quarter 1 of 2016, inflation at an all time high of 13.72% (highest level since August 2010) and unemployment climbing in the last 5 quarters (Q1 2015 to Q1 2016).

(On the side note, the fight against corruption has also reduced the amount of free/corrupt money floating in the system.)

The internal crisis will lead to probable spillage, cut in production of crude oil, decrease in export of crude oil, fall in oil export earnings, cut in employment at least within the oil industry, cut in revenue to finance federal and state governments’ budgets, unpaid salaries and incomplete projects, decrease consumer demand, increase in deficit financing, rising debt stock and so on. That should see GDP for the Oil industry continue to slide if nothing is done to contain it.

On the external side, crude oil exports unfortunately accounts for an average 80% of Nigeria’s visible exports earnings. If you add export of natural gas to it, together they accounted for 92.6% and 92% of our foreign exchange earnings from visible exports in 2014 and 2015 respectively.

So a slide in the crude oil price has significantly impacted the value of the nation’s crude oil exports. Unfortunately, earnings from gas export and non-oil exports also took a hit in 2015. Thus, while the nation earned $82.5bn from visible exports in 2014, the earning slipped in 2015 to $46.4bn (declining 44%). In fact, Visible (or merchandise) trade balance entered a negative in 2015 for the first time since 1998 as visible imports exceeded visible Exports by ($6.4bn).

These factors may have occasioned the FOREX policy to restrict access to foreign exchange and import curbs to tilt funds more to the importation of inputs and away from the importation of items that are produced locally. In fact, figures in for January and February 2016 put the nations visible export earnings at $6.4bn while imports were higher at $6.99bn which may result in a negative trade balance in Q1 of 2016.

Where FOREX comes from?
Just to point out, we can identify 3 major sources of foreign exchange to the Nigerian economy, these include, Export earnings (Visible and Invisible), Unilateral transfers (e.g. remittances from siblings abroad) and foreign investments (portfolio and direct investment) and loans
As pointed out earlier, Visible export earnings declined 44% in 2015. Net current transfers (net remittances/unilateral transfers) has been above the $20bn in the last couple of years but declined 8% to $20.17bn in 2015 from $21.918bn in 2014.

After JP Morgan delisted Nigeria from its bond index in September last year, it just seemed investors that were hitherto monitoring our bonds closed shop as investment in the Quarter 1 of 2016 was a mere $1.5m from as high as $705m in Quarter 1 2015. Portfolio investment in the equity segment also took significant hit as inflow in Quarter 1 of 2016 was $201m from $1.1bn and $792m in Q1 and Q4 in 2015 respectively. Foreign Direct Investment has been pretty low with $174m coming to the country in Q1 of 2016 as against $394m same period last year. $241m was borrowed in Q1 of 2016 as against $416m same period last year. In summary, while we imported $710m of capital (foreign investment, credit and loans) in Q1 of 2016, the nation imported $2.67bn dollars of capital in Q1 of 2015. (See NBS capital importation report for Q1)

What we can basically see from the details above is that the nation’s foreign exchange income or dollars (if you prefer) has been significantly declined. The dollar scarcity is real and our current foreign exchange policy doesn’t seem to be coping well. The parallel market valuation of the Naira is 70% lower at about N340 to $1. In fact, it may appear that the CBN may actually be granting subsidy to firms that source the dollar at N197 from them. Because as it seem, market prices seem to reflect imported (exchange rate) inflation which is closer to the parallel market rate than the CBN rate.

Except a miracle happens and we fine crude oil prices rising and oil output increases in the Niger Delta region improves significantly, Nigerians should just prepare for some tough time. In fact, the tough time is already at hand, with deteriorating growth and rising unemployment.

Hmmm

When we waste our funds on frivolities, foreign economy benefits and we shortchange ourselves.
When we spend money judiciously and fix our infrastructures, foreign economies do benefit but we benefit the most.

If Nigerians choose to continue being corrupt, they need to re-brand their method of corruption so that it favours the economy more.
But in the end, scenario 3 will always lead to sustainable economic growth and development.

Hmm... NBS confirms my fear as Nigeria slides into recession...
https://www.nairaland.com/3118417/nigerias-economy-shrinks-recession-imminent

[/quote]The challenges of declining crude oil price, reduction in dollar supply, depreciated exchange rate naira and restrictions in access to foreign exchange from the official window may simply be responsible for the economic quagmire we sit in. [quote]

Nigeria's current economic challenge is mostly a foreign exchange problem. It will filter into every sector of the economy that is Forex dependent, at least through the imported PMS

oduastates:

All the gibberish and still ended up saying nothing.

How do you tell oni tomatoes that marginally increasing Public sector salaries does not mean that they should increase the price of tomatoes.
This gibberish will not change Nigerians to tax payers.
That they have to fund their government and not the other way round.
Will it stop them from going after ill-gotten weath.

Like I have said before.
When Nigerians stop the delusion of having an economy,then we will start getting somewhere.
Inflation, capital markets,stock exchange are like your idea of a government. We have the illusion of having something like America, Canada, britain. In reality, it is an illusion. It does not exist.
The closest to having a tool for dealing with inflation in that illusion is by reducing the supply of naira.
Every year, the CBN hands over N600 billion to the bank by printing money, lend it to them, then borrow it bank at an higher interest rate.
These banks make that much from simply lending you your own money back.
That scam has been going on for a long time.
They do not have to invest in housing, toll roads, mortgages, loans etc. All they have to do is hand the money back to the CBN. N600 billion just like that
Rinse and Repeat every year.
See those 4 fingers? They are pointing at you.
For choosing to live in that illusion.

Nice point Oduastates.
Notably the one made on the use of money supply to influence the level of activity in the economy and how it would have been significant if banks invested funds in housing, toll roads, mortgages and loans for businesses. But would prefer to invest them in treasury bills sold by the CBN and make a simple margin.

Nigeria crude oil export earnings

My Expectations

Just a few background that may help you understand my view points and the probable bias you may identify; I am an apologist of the current administration, at least before it came into power. My support was on the basis of its promised fight against corruption and its quest to rid the North Eastern part of Nigeria of the dreaded Boko Haram sect. At that time, I was of the opinion that those were the 2 pressing issues befalling the nation and I strongly believed that the current administration was going to thrive in those areas.

The third area that was and still is important to me, like most Nigerians, was the issue of power. I wasn’t expecting a miracle here but I was overly optimistic when I got news that Babatunde Raji Fashola would head the ministry of Power, works and housing. There’s a saying that give Nigerians power and all will be well. Has it been well thus far? It appears that the power thingy may have retrogressed.

So far, there’s been a lot of hullabaloo all over news of misappropriated funds, accusations here and there and increased fraud cases filed in courts. The media has reported interesting discoveries by the EFCC but it’s unfortunate that the big stick has been waggling on benefactors and members of the last administration. This is not to say that the several allegations are unfounded but until corrupt officials are found guilty and sentenced sanely by a court of competent jurisdiction, then it will all remain activities.

The Nigerian Army appears to be making good progress in it bit to rid the North East of Boko Haram but from all and sundry, it is obvious that the sect has eating real deep into the country than we may have thought. Well, until the suicide bombing stops, the raiding of villages ends, the incessant killing of innocent citizens is brought to a halt, the administration is yet to succeed by my books.

It’s the Economy, Silly


All my expectations were based on the economic jargon called ceteris paribus. It means all other factors remaining constant, including the economic progress being made, the fair crude oil price, stable exchange rate and available FOREX. In fact, let’s simply say, the macro-economy being stable.

This, however, isn’t the case right now. Economic indicators aren’t fairing so well as growth rate of the largest economy in Africa slowed from 6.2% in 2014 to 2.79% in 2015, her lowest growth rate since the outset of democratic rule in 1999 when the economy expanded 1.2%. Crude oil prices that averaged $100 in 2014 lost 50% of its value to trade at an average $49 in 2015.


According to data from the CBN statistical bulletin (2014), Nigeria earned $94bn in 2011, $91bn in 2012, $90bn in 2013 and $76.5bn in 2014 from the export of crude oil and gas. Note that crude oil exports contributed 73% of the nation’s total export earnings ($103bn) in 2014. In 2015, Nigeria’s FOREX earnings from crude oil export dipped 54% to $35.5bn while the total export basket brought in $50bn.

With the decrease in the supply of dollars (foreign exchange) through the export path and demand for it not declining as much (if at all), it is expected that the price of the dollar against the Naira would have risen, hence, a depreciation in the value of the Naira. On the official window, exchange rate averaged 158.55 in 2014 and depreciated 23% to an average 195.5 in 2015. However, amongst Bureau De Change, the dollar sold for an average N171.45 in 2014, the naira depreciated 30% to N222.78=$1 in 2015 and with restricted access to the hard currency on the official window, the dollar traded at an average N313.51 in the first quarter of 2016, as it dropped a further 40%. Thus, between 2014 and the Q1 2016, the naira has lost 83% of its value against the dollar. At the height of speculation, the dollar had sold for over N400 on the parallel market.

The Average Nigerian

The challenges of declining crude oil price, reduction in dollar supply, depreciated exchange rate naira and restrictions in access to foreign exchange from the official window may simply be responsible for the economic quagmire we sit in. It may not all be the fault of this administration. May be it was even the last. But if this administration can’t find a solution around the nation’s imminent challenges, then may be it needs to stand down. In fact, something tells me all the government and its agencies are doing is speculating on crude oil price and hoping for some significant increase.

In March 2016, inflation rose 12.8% to its highest level since July 2012. Although majority of Nigerians presume that consumer prices may have jumped over 50% from a year ago, given that, among other things,the 45% increase in electricity tariff, that a litre of PMS (petrol) has been selling for an average N170 since fuel scarcity bit hard in March (up 95% from the approved price) and that a bag of rise is priced at an average N14,000 (up from an average N7,500 a year ago). Cost of living has indeed increased significantly given that income level has remained sticky. The bulk of the current inflation may be classified as cost-push (cost of iputs) driven through the depreciating exchange rate. One wonders what inflation will rise to once the implementation of the 2016 (yet to be signed) budget finally takes full swing.

(Note that food and Non-alcoholic beverages have a weight of 51.8% in the consumer price index (CPI) while housing, water, electricity, gas and other fuel has a 16.7% weighting.)

As it seems, diversifying the nations export away from its huge dependence on crude oil may be a key concern over the long term to reduce the shocks it has on the Nigerian economy. But like foremost economist, John Maynard Keynes, once said, “in the long run, we are all dead”.

(On the side note, crude oil and gas only contributed 11% to the Nigerian economy in 2014 and one may say that the Nigerian economy is fairly diversified than it was in 2000 when the sector contributed 48.9% to the economy).

[quote][/quote]Citizens want some relief to these devastating economic situation and in as much as diversifying the economy’s export and limiting its dependence on importation of consumer goods may appear sane (we’ll take a look at those numbers critically on a later date), we want some opium for this mess. May be a quick fix won’t be out of place, if it exists.

Re-echoing the words on the streets, “we want fuel, we want light, we want the price of food to come down” after which you can go back to the pursuit of those criminals who embezzled our common wealth.

[s]On a side note, even the canteen at the office has done some margin improvement as I have to pay 33% more to derive the same level of satisfaction as before.
[/s]
"Imaguezegie Emmanuel is a graduate of Economics and statistics from the University of Benin, a Chartered Stockbroker and a Channel Marketing Analyst with PZ Cussons"

I think something should be made clear... there is a difference between when I use my salary to live a lavish life style from when I use shareholders funds or citizens taxes to live a lavish lifestyle...

Abeg...
Let this thread be closed

An FMCG distributor in the Ipaja area of Lagos urgently seeks the services of a Motorcycle Sales Representative in driving distribution and sales of the organisations products across kiosk and table tops in her environs.

The choice candidate should be of high integrity, ready to learn and drive business expectations.
Maximum of OND holder should apply. Payment is the minimum wage with incentives on meeting certain KPIs.

Kindly submit your CV at 13, Tejumade street, by Olude Bus stop, Ipaja road, Ipaja, Lagos

Applicants living around the Ipaja, Command, Ayobo, Egbeda and Ikotun axis may be favoured

Thanks

Do share information with friends and acquaintances who may be interested

Applicants living around the Ipaja, Ayobo, Egbeda and Ikotun axis may be favoured

An FMCG distributor in the Ipaja area of Lagos urgently seeks the services of a Motorcycle Sales Representative in driving distribution and sales of the organisations products across kiosk and table tops in her environs. 

The choice candidate should be of high integrity, ready to learn and drive business expectations.
Maximum of OND holder should apply. Payment is the minimum wage with incentives.

Submit your CV at 13, Tejumade street, by Olude Bus stop, Ipaja, Lagos Or send an email to emmyvans@yahoo.com or mopelolamarquis@gmail.com

Applicants living around the Ipaja, Ayobo, Egbeda and Ikotun axis may be favoured

Thanks

Please do share. The job may take care of some family's need and give others an opportunity to learn n grow

An FMCG distributor in the Ipaja area of Lagos urgently seeks the services of a van sales representative and bike sales rep in driving distribution and sales of the organisations products across neighbourhood stores in her environs. 

The choice candidate should be of high integrity, ready to learn and drive business expectations.
Pay is quite decent for the role

Submit your CV at 13, Tejumade street, by Olude Bus stop, Ipaja, Lagos
Or send an email to olufunke.marquis@pzcussons.com

Thanks

Please do share. The job may solve some needs for a family

An FMCG distributor in the Ipaja area of Lagos urgently seeks the services of a van sales representative and bike sales rep in driving distribution and sales of the organisations products across neighbourhood stores in her environs.

The choice person should be of high integrity, ready to learn and drive business expectations.
Pay is quite decent for the role

Submit your CV at 13, Tejumade street, by Olude Bus stop, Ipaja, Lagos
Or send an email to olufunke.marquis@pzcussons.com

Thanks

Hmmm. I used to think they were being greedy, but from an economic stand point, asking for employment or funds to develop such infrastructure themselves may just be good for the host communities prosperity

I have come across several cases in which host communities to multinational companies request them to develop several areas of their communities from road construction to water provisioning for her people. Well, in the South-south part of Nigeria, that's pretty prevalent as host community leaders request such from multinational oil firms. However, what do you think when the host communities request that members of the community should be employed as part of the workers for the project? How about when they request that the contract for such construction should be wholly given to the host communities?

Is It that these communities are being greedy or they may actually be being intelligent economists? Note that with their people being employed or the contract being awarded to them, the host community does not only enjoy better infrastructure but the people also get richer and enjoy a better welfare.

I seek nairalanders opinion for my research.
If host communities are being greedy, please click like.
If host communities are being intelligent economists, click share.

Hmmm. And these 344 persons have gone to share testimony in church already, say Baba God don do am. Oga Wike why now.
Why you dey use your Raggae spoil their blues

davies123:
WHY DID YOU NOT GIVE THIS SAME SUPPORT TO GEJ ADMINISTRATION?

Hmmm. We did support him...
And I must say, GEJ didn't perform woefully...
We were part of the peeps that made noise so he could be acting president...
We were part of those who voted him in as President in 2011...

And we supported him till the challenges of the nation appeared overwhelming and he didn't seem to know how best to tackle them
Not until 6 weeks before the just concluded election...

And by that time... Most Nigerians were already immersed in the wind of change

One thing is for sure... GMB is Nigeria's President Elect....

But enough of all the propaganda....
We did not vote GMB because of any of the realistic or silly promises he may have made...
Not because APC said they'll make power available under one year...

We voted because we wanted a change...
We voted because we wanted something different from the norm...
We voted because we wanted to see a different approach to development...

So... All the many manifestos you gave, we knew most of the contents were overstated and exaggerated....
90% of US did not read it.... We just wanted change.... And 4 years from now, we want to be sure we did not make a mistake...
If at all we did, we'll have no regrets, cos it was our choice....

So sir, start assembling your economic team and draw up a realistic path for our development...
We will support you until the climax of your 4 years... and then we will review your performance against the last admin and against your realistic plan.... And all Nigerians will again decide our countries fate...

Democracy wins thanks to GEJ... NIGERIA wins thanks to electorates

FrancisTony:
I am not surprised, APC is a party;

-For illiterates
-School drop out
-Chest beaters & cowards...
-Fraudstars etc

Who take them serious?

That's the same thing they all said about Chelsea fc. Yet they have won all the necessary trophies

We just dey observe

fkaz:
http://abusidiqu.com/ekiti-teachers-curse-governor-fayose-over-xmas-gifts/

Simple economics, create the enabling environment ... even our elders knew it... Teach a man how to catch fish, not how to eat fish... Give him the tools, the knowledge and if he adds determination, he will not only feed himself, he'll feed his family,, neighbours, his community... He'll not only feed for today, he'll feed for tomorrow and beyond...

I guess Fayose wasn't paying attention to the elders of his time. SMH
Stomach Infrastructure my foot...
80, 000 bags of rice @9000 is 720million naira.
If he uses that money to fix adjoining roads to the farmlands in Ekiti state, does he know the business opportunities he would 've created for the residents of Ekiti to make money and buy their own bags of rice n chicken next Christmas.

God help Nigeria

Olympic Refill pack

Nutricima Limited, an arm of PZ Cussons, and makers of Olympic, Coast and Nunu milk seek sub-distributors for her brands in Bori, Khana LGA of Rivers state. Her brands are growing at a very fast paced with necessary supports and incentive to be provided by the company.
Products for redistribution include the Olympic evaporated and powdered milk, the Olympic apple drink, Coast evaporated and powdered milk, Nunu evaporated and powdered milk as well as the Yo Yogurt. Also available are the Olympic 25kg and Nunu 25kg which are in high demand by yogurt producers and bakeries.
Regards

You know, it's actually funny when some individuals rise up to condemn a product of some company.

A little enlightening should help. Now, the producers of Olympic milk, Nutricima is an arm of PZ Cussons.
The same company that produces the imperial leather and joy soap you used to have your bath while growing up, the Robb you often use when you've got some ache, the morning fresh you still use to get your dishes clean, the canoe soap you have been using to wash your coloured clothes, the Haier Thermocool refrigerator in your parents house and your own if you've got one, the mamador and kings vegetable oil you use for your cooking. A company that has been producing quality brands from time immemorial.

Then someone rises up to call Olympic milk a poor milk... SMH...
Please, go start a company

Please, has anyone successfully scaled through the personality strength test.
I've been turned down on 3 attempts already sef...
Please dont ask how.
Any interesting tips please
Thanks