₦airaland Forum

awesomeJ:
I understand, but I believe his priority shouldn't be to investors, rather it should be to the other 90%+ of the population who could certainly use more value for their little earnings vs consistent dilutions.


Also, I agree about the impact of FPIs in 2024, but I'm saying it's time to start winding down on the rates


Why keep borrowing dollars from FPIs at 30% when we were offered $9bn in eurobond at 10%.


Carrying $5bn at 10% would cost just $500m, so why should Cardoso prefer to carry it at 30% and expend $1.5bn, that extra $1bn can be used to reduce the debt stock of the country if nothing else.


I just feel the man is getting too comfortable with performance that seem quite mediocre in my opinion.


In 2017 too, Emefiele elevated yields to around 20% but by late 2018 when rates became stable, he started winding it down to a point where yields in Nigeria became as low as US yields (sub 1%) yet the stability stayed, black market was even doing 355 to official 362.

It took terrible COVID shock to the oil market where sellers were paying buyers to lift oil (oil selling for below $0) for the currency to start faltering again, but even then the fall wasn't as steep. It was under 40% yoy.

You have made my point. In 2018 after some Eurobonds and more stability in the economy, Emiefele began to reduce rates. I believe when things start getting more stable in the Nigerian economy, Cardoso would reduce rates drastically. He has said it himself.

We can’t be that bullish with Eurobonds now because we already have lots of it to service compared to 2018 and 2019, where Buhari could easily take close to $5 Billion. Remember that global rates were also more favourable then ( no global spillover effect of inflation caused by Russia Ukraine war and COVID).

Note that under no circumstance is a negative rate above 10% good for the naira. Even 5% is too much sometimes and we are at 6% currently. Ghana, during their crises in 2022, ensured they began to have positive rates and this has reduced inflation drastically. If we reduce rates from what it is now, people / investors would not be incentivised to hold naira that much and naira falls even quicker than what high money supply effect can do. Because with money supply, the CBN still have a way of sucking that out of the system.

awesomeJ:
Yes. I agree that 10% isn't realistic, which is why I'm proposing 20%

After all the 30% hasn't quite helped in curtailing inflation. If anything it's been probably contributing to it by creating more money.

Last year we had N100trn chasing our goods and services, this year, it could reach N130trn. If the quantity of goods and services don't increase at the same rate, Cardoso would effectively be rendering the currency worth less and pushing prices higher.

That’s why it’s a catch-22 situation. If Cardoso makes interest rate 20% today, that would be 14.6% negative for investors when looking at inflation of 34.6%.

In the absence of viable increase in major exports, Cardoso stabilised the exchange rate around 1500-1700 between June to December 2024 and it was mainly by FPI’s and remittances. The increase in FPI’s is due to the current 6% negative which is better than what we had in 2023.

In 2023, we had perhaps record low dollar inflows due to the fact that we took so long to increase rates to match inflation numbers. As a result, naira at the black market rate devalued fast from 750 to 1200 approximately between the corresponding period of June to December 2023.

awesomeJ:
Awesome.
Second issue:

If a CBN governor complained that the reason the currency has lost value was cos 30trn was spent on ways and means and intervention over a given period, but he himself is printing extra N10trn annually that could be avoided, isn't he towing a similar or worse path?

This is what I mean?
If N100 trn in money supply is priced at 30% interest rate rather than a more reasonable 20%, that extra 10% is diluting the money supply even more.

Emefiele kept NTB yields below 10%, baba has carried it to 30%, government debt service alone will go up by at least N3trn due to this elevated rates, then you think of CPs, OMO bills, bonds and even bank loans, the impact of these elevated rates is almost same with ways and means as far as money dilution us concerned.

Even without naira crash, money supply will soon reach N120trn cos the rate of money printing is just quite excessive at 30%

Well with inflation now at 34.6%, it would be difficult to maintain the 10% interest rate Emiefele left it at. In Emiefele’s time, inflation grew steadily to 22% at most. It was below 20% for the most part. The current CBN is in a catch-22 situation. The removal of subsidy and naira devaluation did not occur in Emiefele’s time, so he was able to maintain a more reasonable rate while printing over 6 trillion naira in 2022.

awesomeJ:
My point is not on what the exact figures are.
It's on the growth being a paltry 10% when all the constituent goods and services have had perhaps 150%+ increase.

For simplicity.

Take the GDP in 2022 to 2024 to be like this:

2022. ... ....... 2024
Agriculture. 60trn. 120trn
Telecoms. 10trn. ..... 15trn
Industrial goods. 10trn. 20trn
Manufacturing. 10trn. 20trn
Oil and gas. 20 trn 60trn
Services. 70trn. 100trn
Total 180 335trn


From cement to tiles to malt to noodles and from the top line of companies' results the estimate are conservative.


Why is the growth not closer to 80%+?

That's my point.

Well increase in prices alone would not automatically boost the GDP at thesame rate of depreciation of the naira. For instance, many businesses and sme’s may have closed down during the early stage of the reforms (Q1 and Q2 2024). Slower purchase of goods by customers would mean the businesses are not having thesame sales volume, making the growth slower. Till date, telcos are making losses and are yet to have competitive pricing to make the kind of profit they made in 2022.

So I agree the growth should probably be higher than what the NBS is reporting, but I believe in 2024, the economy was struggling to adapt to the shocks. If the fx rate doesn’t depreciate steeply in 2025 and the inflation declines even to just 28%, you would see that economic growth reflect again and we would be better than we were in 2022.

Looking at the stock market for instance, as at May 2023, it was approximately $40 Billion ( using black market rate of 750). Today, using 1650, it is also geared towards $40 Billion.

awesomeJ:
I certainly am my brother.

Who can help make sense of these NBS figures.

This is what I think:

In 2022, the country's GDP was around 180trn, then in 2024, it's being measured by NBS as 198trn.

It looks like they're aren't doing any real measurements. They just sit in their air conditioned offices and churn out figures that have almost zero correlation with reality.


Between 2022 and 2024, there's hardly any good or service that hasn't increased by at least 50%.

Start with garri: 2022 was #700 per paint, 2024 was #2800 per paint (300%)
Rice: 100%

Now to oil:2022: about 500m barrels produced at say $80 and #460 to the USD, that's roughly 20trn.
2024: about 550m barrels produced at say $75 dollars and #1500 to the USD, that's roughly 65trn.

So oil alone has added 45trn

Then check MTNN revenue in 2022 as a matter of fact, check NSE30 revenue in 2022 vs 2024 NSE30 alone added over 5trn if not close to N10trn.


I think whatever they're measuring that's placing the economy as the 4th or 5th largest on the continent needs a thorough inspection, cos the same devaluation that they think has forced down the GDP numbers in dollar terms has doubled or in some cases quadrupled the values of all the goods and services that make up the GDP.

Then inflation, at the height of the naira crash in February 2024 when dollar was touching 1900, there was no food item that had not doubled in price compared to February 2023 when USD was 730.

So why were they reporting food inflation at 35%? What kind of items make up their basket, abi which store were they making the purchases from?

It basically feels like NBS figures are not at all connected to the economy, they just churn out whatever they feel like, or perhaps whatever a thwarted computer algorithm spins out.


Maybe I'm missing something, someone WHO KNOWS better can enlighten.

Where did you get the 198 trillion naira data from? As at Q2 2024, it was 229 trillion naira on the NGX website from what I saw.

OkCornel:
Makes sense.

Can Calabar carnival be replicated in Lagos or Ogun every quarter of the year? E go make sense

No need for that if we compete the Lagos Calabar coastal highway. Foreigners would be thrilled to travel from Lagos to Calabar in 5 hours.

Sunrisepebble:
From now till the end of the year, I’m still looking for a good entry into Nahco, might buy some more Transcorp and if MTNN trades @ 190 or below again, I’ll look to add more.

These are my stocks for 2025 though:
UGAZ
Presco
MTNN
Seplat (on LSE)
Transcorp
Vitafoam
NAHCO
Nigerian Breweries
Aradel (@ attractive entry)

On the radar/ More research to be done on: Nipco, Okitipupa, Maybaker, UACN and Unilever

What of MRS which seems to be Dangote’s major retail outlet company?

HesInMe:
I was asking for metrics to track the success of economic policies, some of which I actually endorse (at least in principle, even though the execution has been lacking). Those policies have a direct impact on market performance. How is that politics? And who is this "you people" you are referring to?

Tell us how you know the policies are on the right track. Inflation and debt are rising (austerity typically reduces both). Long-term strategic investors, and Nigeria's young elite, are fleeing. The naira is still unstable. Views on corruption haven't changed. The disastrous suppression of the new Dangote Refinery was a body blow to sagging business confidence. What economic success metrics are you looking at?

What is this disastrous suppression to the new Dangote refinery you are talking about?

Willie2015:
Getting 4 refineries to work in a year ...
is not a rocket science... Bros
D political will is just lacking...
U dont kill your citizens with hunger and starvation...
in the name of scattering everywhere....
BAT is not ready to face the cabals...
but willing to trade the masses for the pain of reforms...

Nah getting 4 refineries to work in a year is rocket science especially if you are replacing old parts not just doing turn around maintenance. It would have been foolish for Tinubu to keep waiting on the refineries while the country continued to bleed via ways and means debt and other debts.

NJV:
I'll celebrate when it comes down to 285 naira.

Then your naira would have to be at least 600/$.

Lordofalmajiri:
well with time I'm sure it'll come down to 500-700 per litre.

Exchange rate movements would play a key role in that. Exchange rate is the key factor.

WantsandMore:
Why haven’t this chairman considered sales tax since the emphasis is on “Consumption “ removing taxes of items you never taxed to begin with is no brainer that you’ve got hidden agenda. Food and staples and other products you keep saying aren’t taxed were never taxed in the first place, The northern governors on the other hand have a valid argument but are not organized enough to put it on paper so that it can be debated and rational can be extracted from it and refined, instead they’ve quickly resorted to politics of calumny and religious intolerance and ethnic jingoism. This is not how to build an ideal egalitarian society with equal distribution of wealth. Of all weirdness in the word , Nigeria is a “weirdly” weird place tbh😪😭🤷🏾‍♂️🌚

Food and Staples are tax exempt at the moment. Oyedele is saying there should be zero percent VAT applied to them instead of them just being tax exempt. This means if you produce rice, in addition to you charging no tax for the rice to consumers, you would also file an application to get tax refunds for the taxes charged on costs of production.
The purpose of tax exempt laws are to remove taxes relayed to consumers thereby reducing costs. But Zero VAT goes beyond this to not only remove taxes for consumers but also provide incentives to producers.

Nigeria and Southafrica top future M&A decisions by KPMG in SSA by a mile. Kenya a distant 3rd. Other SSA countries not in picture.

smallsmall:
Aaah, here we go again! There is always something to blame it on.

Naira was #1800/$1 when T-Pain raise the Price to #1,250/Litre.
Now that the Naira has firmed-up a bit, l hear #1500, the Price of PMS has not been reduced.
The next lower bar, is now #1,300?

Then, the next excuse will be, it has to get down to the #450/$1 that it was, when this Govt took over power in May, 2023.
People like you are just incorrigible, always fashioning out some silly excuses to justify non-performance and criminality.

The official market was 1600/1650 when it was increased above 1000. It was finally deregulated. Now official rate is 1500 and give it a week or two it may go below 1000. However, if crude oil prices rally above 75 naira at 1500/$ it may still hover around 1000 naira but at 1300, we are sure to go sub 1000.

Nazgul:
Of what use is the refinery if we're still buying fuel over 1k per liter. Has the refinery benefitted the common in any way?

If fuel dropped to N500 I would have commended them, but since I'm still paying over 1k for it, the refinery is useless to me.

If your exchange rate gets to 1300 today, you would likely buy PMS below 1000.

Obiano13:
If this was 2022 I wonder how bad things are now

Four Nigerian men stowed away on a ship and were hiding in the space above the ship's rudder for 14 days before being found.

They were rescued by Brazilian federal Police after the ship had travelled 3,500 miles from their home country, Nigeria, to Brazil.

The men thought the ship was headed for Europe only for it to end up in Brazil.

They had exhausted their food and water supplies by day 10 and managed to survive the remaining four days solely on seawater.

Two were deported back to Nigeria immediately while the other two sought asylum in Brazil.

https://x.com/CrazyVibes_1/status/1865759673913422137

Okay, so what does this have to do with the post you quoted?

vaxx:
The mood of Ghanaian right now.


Messiah of infrastructure has come

Congrats.

SmartPolician:
What about Total, Shop, Shell and Chevron? Do they take everything they make from Nigeria to the west? It seems the oil and gas industry is a hype or their decision to divest has reduced their earnings.

They pay company income taxes and royalties I guess not VAT because VAT is a consumption tax and crude oil is a raw material not for consumption.

onuman:
Foreign oil companies that are supposed to pay income tax with US Dollars pay with crude oil. They fc..cuk Nigeria front and back. They did not bring crude oil from their home countries to Nigeria.

Would crude oil production be classified under VAT? VAT is a consumption tax which would involve refining. So Dangote refinery would likely pay taxes for selling PMS to Nigerians if more than 25% (only due to the free trade zone limit).

QuietMynd:
Is it an application/software available for the general public ?
The information I read about the system shows enough transparency for me.
I think Buyer nd seller can see the rate only that users can't see each other personal information unless at the last minute when deal is about to be completed.
And any deal delayed or canceled can't be continued after trading has closed for the day. They will have to initiate a new deal.

Nice one but how do you see this addressing speculation in the parallel market and especially the crypto market? I think rather than address those markets, what the CBN has done is to create a special kind of market (transparent one) for all interbank rates and big transactions. So when there is liquidity in the Banks, there would be no hiding place and it would be clear for all big market participants to see.

All CBN would have to do from henceforth is monitor EFEMS and ensure there’s enough liquidity in the Banks for authorised dealers and all big players.

Speculators ( mainly small retailers and crypto guys) in the long run may have to either beat them or join them but their speculative actions may not necessarily dictate the direction of the naira with thesame pace as before.

QuietMynd:
What's yall take on the EFEMS system introduced into the FX market by the CBN
I have been looking for a solution like this for the financial market as a whole.

Not as transparent as I would have loved. I would have preferred a platform where all can see live rates and volumes.

theenchanter:
the reason some senators (esp from the core northern states) are against it isn't because of personal income tax, they're against it because there's a reduction in percentage of revenue shared to states on the basis of population.😂

Look, I've studied the new tax reform so well, and I'll tell u that it's a master stroke from the president, anyone without bias will also agree it's a good reform.

Those against it are only angry that 60% of the derivation will be given to states where it's generated and 20% will be shared equally to all while the remaining 20% will be shared by population.... Unlike how it is currently shared.

Imagine they shared 5 Billion naira VAT to you as a Governor currently mostly based on just equity and population while the economic activities and contributions from your state are next to nothing.
But then you see that with this new reform you would now get just 1 Billion naira share down from 5 Billion. Of course you would kick against it. It’s normal.

But this presents a good opportunity for those kind of states to sit up, fight insecurity in their states and ensure productivity and high consumption in those states. The president and his team did well on this one and the fact that it is so controversial means it is truly a big change and uncomfortable for many of these Governors and political elites who love the status quo.

But this increase in VAT comes with a decrease in CIT and other taxes together with other reforms packaged in one go. This is different from 2019 where VAT was increased without the accompanying reforms.

Obaaderemi2:
Exactly. If only Nigeria could also find a way to bring down inflation and the exchange rate

Five major indices I look out for:

Inflation
Exchange rate
GDP growth
Employment numbers
Debt Sustainability

The first two are very important.

Obaaderemi2:
Obiano13, if this is true then why do you think Ruto is as bad as you claim?

Ruto is not bad from what I’ve seen so far. I think for the likes of Obiano, it’s more about politics than anything else. All the indices for Kenya this year look better than they were in 2023. Inflation, Exchange rate, Stock Market, name it.

QuietMynd:
Ghanaian architecture designer re not made for color mixing.
The color of some of there building always gives me fever.
What's ur take on the tax reform bill.

Those bills should have been passed since like yesterday with probably some few touches here and there. A proper simulation of how it would be implemented is needed as well as the VAT sharing and the results for all states.

60% derivation for states is a good one.

vaxx:
Ghana 🇬🇭 International Mall, a massive shopping and entertainment hub, is under construction in Accra.

Once completed, it will be the largest mall in West Africa

This colour get as e be.

Just30:
Not possible to only add 20 million people in 10 years when 7 million Nigerians are born each year.

A statistical impossibility

What emperical data says 7 million Nigerians are born each year since 2018 when UNICEF made that report ? Who are those 7 million Nigerians? Where are they?

UNICEF gave out that data in 2018 but there is no census to determine this except estimates still based on 2006 census which was flawed and debated heavily. They didn’t show the studies done by their members across Nigeria so like everything else, I would take these to be estimates just like these international bodies also estimated that there are 20 million out of school children which is still being debated.

There is no emperical evidence to show that Nigeria’s growth rate has been stable at 7 million annually even if we grant it was so until 2018 ( a low likelihood) until the Nigerian NPC and NBS get to work. The NPC under this administration now have a better way of recording births and deaths in Nigeria so we would get their reports soon.

Just30:
Still 93 or 96 million humans showed up to be registered

I may be wrong but I think they registered double for some because some registered 4 years ago and changed location and may have registered again with a few changes especially since things changed a lot between 2015/2019 and 2023. Everything is part of that 93 million. That data cannot be trusted in my opinion.
Nigeria is max 170 million presently . Many Nigerians have argued this over the years with good reasons. We may have only grown from 150 million to 170 million in the last decade. The 2006 census was highly inflated for political reasons and everything are still estimates based on that.

Just30:
bvn can hardly be falsified

BVN is 60 million at the moment.

Just30:
yeah...for Nigeria, that is possible

Impossible. The 93 million is simply false.

Just30:
That is what is referred to as voter apathy

Voter apathy from 93 million to 25 million? I doubt.