https://www.thecable.ng/how-corrupt-politicians-contribute-to-the-declining-value-of-the-naira/

How corrupt politicians contribute to the declining value of the Naira

By Kunle Oshobi

Over the past year as a result of the CBN’s decision to float the Naira, our local currency has been on a roller coaster ride with the Naira losing significant value in the process along with its consequent negative effect on the economy. Even though the value of the Naira was expected to fall as a result of the floating, not even our most pessimistic analysts expected it to fall as low as it did before the CBN intervened to defend the Naira.

Even though the floating of the Naira was a step in the right direction, the implementation was abysmal as the CBN failed to put policies in place to stimulate increased foreign exchange inflows while nothing was done to curb the high and unnecessary demand for foreign exchange in the country. Also in a move that left all observers dumbfounded, they lifted the ban placed on accessing forex from the CBN for 40 items that had been previously banned by the CBN and thus increased the demand for foreign exchange when they should have been working to reduce it.

Due to their poor planning and execution, the CBN had bungled the floating of the Naira policy and instead of addressing the root causes of the high devaluation of the Naira, they decided to look for a scapegoat to blame the same way they did under the leadership of Emefiele and blamed Aboki Fx for the fall of the Naira when our local currency was losing value during the Buhari administration.

This time around they decided to make a popular cryptocurrency trading platform, Binance their scapegoat and even went ahead to arrest two of their executives who came to the country to honor the EFCC’s invitation to their organization and shed more light on Binance’s operations in Nigeria.

While it may be argued that the cryptocurrency trading platform was used to circumvent our foreign exchange trading regulations, one is at a loss why the company’s executives who came to the country voluntarily at the invitation of the EFCC should be arrested and detained without any charges against them while turning a blind eye to the real users of the platform who are the ones breaching our forex regulations.

The uncomfortable truth is that most of the people behind the huge demand for the dollar which makes the Naira keep tumbling are powerful politicians and civil servants who find it more convenient to keep their looted funds outside the country. Knowing that if they kept their proceeds of corruption in local banks the money could be easily traced and reclaimed, these powerful politicians prefer to use the proceeds to buy real estate both within the country and outside of it and what they choose to keep in cash is converted to foreign currency and kept in safe havens overseas.

Given the unprecedented level of corruption that the country has been subjected to over the past few years, our politicians and civil servants now have a lot more cash at their disposal to buy more dollars and put the Naira under increased pressure and as a result of this, the local currency has been on the receiving end.

The current case of Yahaya Bello, the immediate past governor of Kogi State being pursued by the EFCC sheds more light on how our politicians are putting excessive pressure on the Naira. According to the EFCC, $845,000 was paid upfront to American International School Abuja for his children’s school fees which was meant to cover his children’s school fees for ten years.

The EFCC further stated that the dollars were sourced from a local bureau de change with payment for it coming directly from the state government account. While this a flagrant case of stealing which the EFCC is currently addressing, it also exposes how our politicians put pressure on the Naira with their voracious appetite for foreign exchange funded by trillions of stolen Naira to the disadvantage of our local currency. While the case of Yahaya Bello is mind-boggling, we know that it is only the tip of the iceberg and there are far bigger heists being perpetuated by our politicians across the country daily.

It is also curious that despite our laws that prohibit the sale of goods and services in foreign currencies in Nigeria as it amounts to an abuse of the Naira, the EFCC failed to prosecute the American International School for breaching our laws while going after clowns like Bobrisky and Cubana chief priest for lesser abuse of the Naira offenses.

Could this be another case of selective justice as it’s clear that organizations in Nigeria that charge in foreign currencies for their goods and services are not only abusing the Naira, they are adding to the pressure on the Naira when they force their customers/clients to source for dollars to pay for their goods/services?

It is doubtful whether this administration is serious about fighting corruption but if they are really serious about stabilizing the exchange rate of the Naira, they not only need to put corruption in check, but they also need to make massive cuts in government expenditures and put an end to deficit financing while more funds are channeled to the productive sector of the economy to help increase local production and reduce our dependence on imported goods.

Oshobi, a development economist, management consultant, and author writes from Lagos.

It's been nine years of retrogression and destruction under APC and that iragbiji thief is definitely going to be worse than that Daura President.

https://www.thecable.ng/as-nigeria-drops-to-become-the-fourth-biggest-economy-in-africa/

As Nigeria drops to become the fourth biggest economy in Africa.

By Kunle Oshobi

In 1999 when the Obasanjo-led administration took over the reins of power, Nigeria was the fourth biggest economy in Africa with a paltry GDP of just $58 billion and a GDP growth rate of 0.6%. To make matters worse, Nigeria had a national debt of $35 billion which was choking the country financially, and foreign reserves were less than $3 billion.

Without blaming the previous administrations for the pathetic state of the economy that they inherited, the duo of Obasanjo and Atiku set to work and within three years were able to achieve an economic growth rate of 15.8% which made Nigeria the fastest-growing economy in Africa and the second fastest growing in the world at the time.

They introduced several economic policies such as the privatization exercise which saved the country billions of Naira being used to maintain moribund enterprises while generating revenue for the government in the process. The deregulation of the telecoms industry saw our telecoms industry grow from less than 400,000 active subscribers to well over 200 million active telephone subscribers while creating a new digital economy.

They also embarked on banking reforms which accelerated the growth of the banking industry and increased the collective capital in the industry by over 200% within two years. The pension reforms created the pension industry which has now accumulated funds of over N18 trillion which represents the largest pool of funds in the Nigerian financial services industry today.

The cement industry policy was also implemented which made Nigeria become a net exporter of cement from a position when we were spending 3 billion dollars annually to import cement before the policy was implemented. They introduced a system of competitive bidding for oil blocks and terminated the system of discretionary allocation of oil blocks that was practiced under the military and they generated billions of dollars for the country in the process.

The local content policy in the oil industry was also introduced which ensured that up to 8 billion dollars’ worth of oil service contracts in the upstream sector of the oil industry were given to local companies and in the process local capacity was enhanced while billions of dollars were retained in the country amongst many other policies that helped stimulated economic growth.

To reduce graft, they built institutions to fight corruption such as the EFCC and ICPC while policies such as Due Process and monetization policy were introduced to reduce the cost of governance. Parastatals such as NAFDAC were empowered to fight the menace of fake drugs in the country and as a result of all these, they were able to block many leakages in the system and improve service delivery to the people.

Despite the relatively low oil price at the time they were also able to build the country's foreign reserves to the highest level in our history and pay off most of our national debt while obtaining a huge discount on the debt for the country. As a result of this, the country’s credit ratings increased internationally and Nigerian banks were now able to access the international financial market for funds to boost their operations.


The Yar'adua/Jonathan administrations also built on this solid foundation and Jonathan introduced the Automotive Industry Policy which greatly boosted the automobile manufacturing sector in Nigeria while also introducing policies that brought an end to the dubious era of fertilizer subsidies while ensuring that farmers got fertilizers at lower prices and boosting agricultural production in the process.

As a result of these policies and growth-focused leadership, the Nigerian economy grew rapidly and by 2013 when the economy was rebased, it was confirmed that Nigeria had become the biggest economy in Africa by a very wide margin with our GDP reaching a peak of $568 billion by 2014. However, in 2014 as a result of falling oil prices and poor management of our reserves, the economic growth began to slow down.

In 2015, a new government came to power and one would have expected that given the economic challenges that the country was experiencing at the time, the president would have prioritized fixing the economy. Sadly the administration did not bother to appoint an economic adviser talkless of putting an economic team in place to tackle the challenges we were facing at the time. As a result of this, the economy plummeted into a recession by the third quarter of 2016.

During the second term of the Buhari administration, they finally decided to appoint an economic adviser to the president and put an economic team in place. However, the economic team was rendered redundant as the members of the team were not given cabinet positions where they could implement their policies and the president’s lack of interest in the economy did not help matters.

In 2023, the current president Bola Ahmed Tinubu resumed office after a very controversial electoral process. Unlike his predecessor who showed zero interest in issues about the economy, Tinubu took major decisions that were aimed at addressing certain economic problems within two months of being sworn in as president. The first was the announcement of the end of the oil subsidy regime on the day of his inauguration while a decision was taken to float the Naira a few weeks later.

While both policies are a step in the right direction, they were both hurriedly and poorly implemented without proper planning and as a result of this, the value of the Naira crashed while the inflation rate reached a record high thus pushing the economy into a tailspin.

As a result of the high inflation that occurred as a result of the government’s poor implementation of its economic policies, they have now resorted to a contractionary monetary policy to fight inflation at a time when they should be channeling more funds to the productive sector to grow the economy thus inhibiting the growth of the economy further. The truth is that if our economy is to grow, then the government must be very deliberate about it and take solid steps to grow the economy and implement policies that will support economic growth as was done during the Obasanjo administration when we experienced rapid economic growth.

It was thus as a result of the poor management of the economy by successive administrations in the past ten years that the size of our GDP plummeted from an all-time high of 568 billion dollars to the 252 billion dollars it is projected to be by the end of this year. The irony is that if the Nigerian economy had continued to grow at the average rate achieved between 1999 and 2014, Nigeria would have been a $1 trillion economy today and the average Nigerian would have been four times richer.

The current administration still has the time and the opportunity to reverse this downward trend and get things right but they have to get serious about fixing the fundamental issues inhibiting economic growth and not just applying cosmetic solutions to score political points.

Oshobi, a development economist, management consultant, and author writes from Lagos.

OfoIgbo:


According to the statistical graph from the OP, our GDP recorded its steepest growth during GEJ's government

Facts don't lie.

From 2015 till date, the Yorubas and Fulanis chose to chase out GEJ and brought in policies that have grounded Nigeria economically.

Statistics don't lie.

On the contrary, Jonathan's performance with the economy was below average even though he was far better than Buhari and Tinubu. The highest economic growth rate we enjoyed was during the Obasanjo administration and Jonathan merely rode on the crest of Obasanjo's performance. It was Obasanjo that laid the solid foundation for the economic prosperity during the Jonathan administration but sadly Jonathan didn't maintain the performance.

The data below shows the highest economic growth rate that has been achieved since 1999 and it was during the Obasanjo/Atiku administration in 2002 that we achieved the highest growth rate of 15.33%.

OfoIgbo:
I also decided to show the price of crude oil for the past 70 years, so no Agbado abuser will come on this thread and start claiming that the price of oil was much more than it is now. Also don't forget that this current government no longer pays fuel subsidy so they must have all the money they need to carry out developmental tasks for the nation.

The Fulanis and Yorubas have ruined this nation economically.

Please access the link below, as a supporting data to make better sense of how far the Nigerian GDP has fallen, under Fulani and Yoruba rule.

https://www.macrotrends.net/1369/crude-oil-price-history-chart

You don't have to resort to tribalistic insults to pass your message. While buhari and Tinubu are catastrophic disasters, Nigeria enjoyed the highest economic growth rate in her history under the Yoruba/Fulani leadership of Obasanjo and Atiku. Performance or lack of it has absolutely nothing to do with tribe.

As Nigeria drops to fourth biggest economy in Africa.

In 1999 when the Obasanjo/Atiku led PDP administration took over the reigns of power, Nigeria was the fourth biggest economy in Africa with a paltry GDP of just $58 billion and a GDP growth rate of just 0.6%.

To make matters worse, Nigeria had a national debt of $35 billion which was choking the country financially and foreign reserves of less than $3 billion.

Without blaming the previous administrations for the pathetic economy that they inherited, the duo of Obasanjo and Atiku set to work and within three years were able to achieve an economic growth rate of 15.8% which made Nigeria the fastest growing economy in Africa and the second fastest growing in the world at the time.

They introduced several economic policies such as privatization, deregulation of the telecoms industry, bank consolidation, pension reforms, cement industry policy, competitive bidding for oil blocks, local content policy in the oil industry and many other policies that stimulated economic growth.

They also built institutions to fight corruption such as the EFCC, ICPC, Due Process, monetization policy, empowering of NAFDAC and as a result of this were able to block many leakages in the system and improve on service delivery to the people.

Despite the relatively low oil price at the time they were able to build the country's foreign reserves by the highest level in our history and in the process paid off most of our national debt while obtaining a huge discount on the debt for the country.

The Yar'adua/Jonathan administrations also built on this solid foundation and Jonathan introduced the Automotive Industry Policy which greatly boosted the automobile manufacturing sector in Nigeria.

As a result of these policies and dedicated leadership, the Nigerian economy grew rapidly and by 2013 when the economy was rebased, it was confirmed that Nigeria had become the biggest economy in Africa by a very wide margin with our GDP in the region of $568 billion.

Sadly in 2015, the leadership of the country was taken over by a character that was not only clueless about the economy, he also had no interest in fixing it and as a result of this the economy of the country plummeted for eight straight years under his rudderless leadership.

The country had another opportunity in 2023 when a new leader was elected. Sadly hopes were dashed when another questionable character was imposed on the country under very dubious circumstances as president.

The resultant effect is that the country's economy has continued to plummet as a result of the mismanagement of the country's resources and the rudderless economic policies of the administration.

If the Nigerian economy had continued to grow at the average rate that was achieved during the PDP years, Nigeria would have been a $1 trillion economy today. It is indeed an irony that the same charlatans that reversed the gains made in the PDP years and diminished our economy to $266 billion after nine years in power have the audacity to label the sixteen years in which Nigeria achieved the highest economic growth rate in her history as years of waste.

bennardshaw90:
How much to spray a 2001 Rx 300 complete spray

Thanks so much for the inquiry, it will cost 120k to get it done.

Buharig should go to hell, after destroying Nigeria and handing over to another charlatan who is a known notorious criminal, he is now asking us to support chronic failures. You cannot possibly love Nigeria and be supporting the kind useless leaders we currently have in the country.

OriOko88:
I tot somebori said here that wema bank can't withstand the new cbn capitalization coming up. Wema bank wey many rich old men in Yoruba land dey use. I won't be surprised if this bank has more capital base than zenith or gtbank. Na old money bank

The jagabandit is the largest shareholder in Wema bank, they won't have any problems scaling the new minimum capital base hurdl

Tinubu is the largest shareholder in Wema bank, they won't have any problems scaling the new minimum capital base hurdle.

helinues:
This one just dey remember say Nigeria still dey exist...

Mikano Atiku shouldn't be putting mouth about this particular issue. When Atiku was Vp to Obasanjo, the special assignment ( portfolio) that was given to him was how to revive Nigeria epileptic power.

Instead of Atiku to fix the problem, he rather invited generator company like Mikano to come and scatter the situation.

So Atiku, STFU about the electricity situation in Nigeria, you had all the power to fix it but you chose not to.

You people keep exposing how daft and ignorant you are. Atiku has absolutely nothing to do with Mikano and Mikano has been operating in Nigeria long before Atiku became vice president. Mikano is 100% owned by a Lebanese businessman so stop exposing your ignorance on social media.

https://www.thecable.ng/n500-billion-new-minimum-capital-base-another-missed-opportunity/amp?/n500-billion-new-minimum-capital-base-another-missed-opportunity

N500 billion new minimum capital base: Another missed opportunity?
 
By Kunle Oshobi
 
When the CBN governor, Mr Olayemi Cardoso indicated last year that they were in the process of setting a new minimum capital base for Nigerian banks to enhance their capacity to support a one trillion dollar economy, I welcomed the idea with open hands and assumed that this administration was finally going to get something right about the economy especially given the way that they had been bungling economic policies since the inception of their administration.
 
While setting the minimum capital base for banks with international operations at N500 billion seems rather high, when we do a comparative analysis with other African countries where banks have billions of dollars in capital base, we realize that we are just scratching the surface. We need to do a lot more if we are serious about supporting a one trillion-dollar economy.
 
Apart from the contradiction of Nigeria being the largest economy in Africa and yet not a single Nigerian bank is among the top ten banks in terms of capital base, we also have a situation in Nigeria where banks are very reluctant to support the economy and would rather just lend money to the government and a few large blue chip companies while millions of entrepreneurs all over the country have little or no access to credit to finance their operations from the banking industry.
 
It is instructive to note that less than 3% of Nigerians have access to credit from Nigerian banks. Yet, the banks keep making huge profits every year mostly from government securities and forex trading which add very little value to the economy.
 
To support a one trillion dollar economy, we need to create a banking system that will not only be willing to give credit to support economic growth through entrepreneurs, we must aggregate enough capital within the banking system to finance their activities.
 
We need to go from a situation whereby very few entrepreneurs have access to bank credit to one in which credit is available for all eligible businesses in the country. It is only then that businesses will be able to grow at an exponential rate for the country to realize the dream of a one trillion-dollar economy.
 
Ironically the CBN governor’s vision of wanting to support a one trillion dollar economy is contradicted by his monetary policy direction of increasing interest rates which in itself is a disincentive to businesses that will lead to economic growth.
 
While the CBN governor’s reason for increasing interest rates was allegedly to fight inflation, I have argued that interest rate hikes will only work to curb inflation in a society in which the majority of the people have access to bank credit which is not the case in Nigeria. I also observed that the current inflation that we have in Nigeria is a cost-push inflation and not a demand-pull so it doesn’t make sense to increase interest rates to curb demand when most Nigerians already have very weak purchasing power.
 
The real reason behind the high inflation rate in the country is the fiscal indiscipline of the government that is expressed by their huge budget deficits and “budget padding” which is then financed through loans from the banking system and through Ways and Means advances which both increase money supply in the system without any additional productivity and this is what leads to inflation.
 
If the CBN governor is serious about fighting inflation, he needs to prevail on the federal government to cut the deficit and stop releasing funds to them to fund the deficit while commercial banks are also restrained from lending money to the government. This is what should have been done instead of punishing the victims of their hapless economic policies with higher interest rates in the guise of fighting inflation.
 
In my previous article on this subject matter, I suggested that the CBN set the minimum capital base for tier-one banks in the country at $5 billion or its Naira equivalent if they are truly serious about supporting a one trillion dollar economy. This is because banks supporting the economies of much smaller African countries than ours have capital in excess of $5 billion while Standard Bank of South Africa has a capital base of $13.2 billion yet they are supporting economies that are much smaller than ours.
 
For Nigeria to grow into a one trillion dollar economy, we need to have a fundamental shift in the way banking is done in the country. We need to move from the current system where banks just need to invest in government bonds and treasury bills while trading in forex to make huge profits to a system where banks will focus on funding the real sector of the economy, housing development, and consumer credit.
 
To achieve this, there must be deliberate government policy to restrict the issuance of government debt instruments like bonds and treasury bills while banks are incentivized to lend more to the public while lowering interest rates.
 
More importantly, we will need to significantly enhance the capacity of our banking industry to adequately finance our population which is more than 200 million people, and to achieve this the banking industry will have to aggregate a lot more capital than the current N500 billion minimum capital base for tier-one banks can muster. 
 
It was certainly a step in the right direction for the CBN to increase the minimum capital base for banks in the country. However, the new minimum capital announced doesn’t reflect the CBN governor’s goal of supporting a one trillion dollar economy nor will it stimulate the needed seismic change that the banking industry needs to play a more supportive role in the economy.
 
Oshobi, a development economist, management consultant, and author writes from Lagos

CatchMeIfUCanMO:

What you have in the picture is a Red river hog and not an African bush pig.

Some of you people just like arguing for the sake of argument.

HIPOSOCRATES:
Ignorance is a disease. Read to understand and not to react. The minimum capital base was already set. His message was just a reminder to the banks CEOs to be mindful of the initial directive.

I guess you are still in secondary school or probably in 100 level in a university.


quote author=MrPristine post=129130891]How can he be telling them to expedite action on recapitalization without setting a new minimum capital base? Does this man know what he is doing?

If you are not so daft and just writing to insult, you should have stated the so called minimum capital base announced by the CBN. But of course you can't because the CBN is yet to announce one.

Ryda:
As seen on the street of social Media. A user posted video of animals killed by a hunter. There's a Warthog, Civet and other unidentified animals in the video.

The camera man had just one job, move the camera around so that we can have a proper view of the hunters kill.

Credit: 92 wolf

What you have in the picture is an African bush pig and not a warthog.

SmartyPants:


Lol. This is elementary economics and I don't know why you are arguing. In fact, it is obvious common sense.

When production increases, businesses earn more money which flows into income for the owner and for labour, which in turn flows into households who then have more spending power, which creates more demand and obviously then leads to inflation. Usually, this is good inflation as long as it is managed well. Unfortunately, inflation is already way too far out of control to accommodate any further increases.

It doesn't particularly matter how the inflation came about. The fact is, once there is inflation, you cannot increase the money supply in the economy. You should rather take steps to contract the money supply by reducing the velocity and quantity of money in the economy. Other steps as you've mentioned should also be taken to curtail future inflation - but to deal with the present one you must stifle the flow of money into the economy.

You obviously can't distinguish between demand pull inflation and cost push inflation and the different strategies for tackling them. What we have in Nigeria is cost push inflation but government is using interest rates increase which is a strategy for tackling demand pull inflation to tackle it and in the process creating more problems while inflation remains high.

That said, I am not suggesting that money supply be increased. Rather I am suggesting that the existing money in the system be channeled into more productive ventures and this can be achieved if government reduces their deficit spending and instead allow the banks to use the same money being used to fund the deficit (excesses and looting) to fund productive activities in the economy.

SmartyPants:


You have no clue. Inflation is sky high and you are talking about flooding the economy with money to promote new businesses. Secondly, this is being done to further stabilize the naira by attracting fresh portfolio investment. Do you understand all this?

You are obviously the one that is clueless about how the economy works. The question you should ask is what is causing the excess liquidity in the system and this is due to government's fiscal irresponsibility and huge deficits as a result of budget padding. To stabilize the Naira, what needs to be done is to cut down drastically on government expenditure while the productive sector of the economy is well funded to stimulate growth in the economy. Increased production will also bring down the rate of inflation.

This is the right thing to do instead of the daft and senseless increase in interest rates to further stifle productivity.

How can he be telling them to expedite action on recapitalization without setting a new minimum capital base? Does this man know what he is doing?

These clowns have clearly lost the plot, this is a time that they should be working to reduce interest rates and encouraging more people to go into productive businesses to help grow the economy. Instead the clueless charlatans are doing the exact opposite.

Putindbutt:

What?, $16billion to generate a mere 3,000MW?, are you a slowpoke?, are you from a lineage of thieves?

If your brain is working, you would have read where I said that they LIED, the amount spent as at the time they started their propaganda was just $3.1 billion and 11 power plants were being simultaneously built and not just one. Not everyone is as daft and gullible as you are.

horsepower102:


Source: Greatabia

This is one of the 11 power plants built by the Obasanjo administration and completed by the Jonathan administration, yet some m0rons lied that they spent $16 billion with nothing to show for it.

socialmediaman:
Abia used to have some of the worst governors in the SE region

Thank God for Alex Otti, I believe that he will do very well.

EbinPawaGovt:
You mean like the geometric progression we studied in school?

The growth is Actually expected to be astronomical and not just geometric. The Geometric came from the name of the company that built the power plant.

https://www.thecable.ng/as-aba-prepares-for-geometric-economic-growth/amp?/as-aba-prepares-for-geometric-economic-growth


As Aba prepares for ‘Geometric’ economic growth



BY KUNLE OSHOBI

MARCH 11, 2024 7:40 PM
 

 
In reality, Aba is poised for astronomical economic growth and not just a geometric one as captured in the header, however, I couldn’t resist the pun, especially because the growth is being powered by Geometric Power Limited and it’s only fair that they are given the credit.
The history of Geometric Power Limited dates back to the year 2000 when Geometric Power Limited and Renatech International Limited established a joint venture to build the first indigenously owned private sector power plant in Nigeria with Cummins Power Generation of USA as their technical partner in the building of the 15-Megawatt Emergency Power Station in Abuja.
The power station came on stream in record time by the 7th of November 2001 and was commissioned by the then Vice President of Nigeria, Alhaji Atiku Abubakar on the 21st of December 2001. The power station provided uninterrupted power supply to Aso Rock, the federal secretariat, NNPC headquarters, Abuja central business district, and the International Conference Center (ICC) until the end of the EPP contract in March 2004 thus proving that it was possible to have uninterrupted power supply in Nigeria.
Following the Obasanjo administration’s push for improved power supply and the passing of the Power Sector Reform Act in 2005, Geometric Power Limited renewed its interest in investing in the Nigerian power sector and identified an opportunity in the industrial customers in Aba, Abia state of Nigeria.


The development of the Aba power plant is based on a commercial study and technical audit of the Aba region conducted by Geometric Power Limited in collaboration with the Power Holding Company of Nigeria (PHCN) in March 2006 which covered information on daily peak load for the Aba region, suppressed demand, list of shut down industries and forecast power consumption requirements of the various customer categories in Aba.


Aba was also recognized as a major industrial hub in the southeastern part of the country that was not realizing its full potential as a result of the poor power supply in the region. Industries such as spare parts and machinery manufacturing, paper products, soap, glass products, oil mills, breweries, water bottling, processed foods, small metal and wood fabrication industries, and garment and leather products industry were identified and all of which were producing far below their installed capacity to power supply shortages.
Based on the result of the studies and the huge impact that Aba could potentially have on the industrial development of Nigeria, the Obasanjo administration gave Geometric Power Limited a twenty-year concession to supply power to Aba and its environs under an integrated power arrangement which meant that Geometric Power could generate and distribute power in the region under the concession agreement.


Built at the cost of $800 million, the 188MW Aba Integrated Power Project is easily the biggest investment in the South East of Nigeria and is the only firm that is allowed to generate and distribute its power. The project also included building a dedicated 27-kilometer natural gas pipeline from Owaza in Ukwa West LGA to the Osisioma industrial layout in Aba where the power plant is.
With the start of operations of the Aba power plant, existing manufacturers will be able to increase their output by between 200 and 300% while at the same time lowering their cost of production. This is as foreign investors have started renewing interest in investing in Aba with Taiwan’s Maxxis Tyres within 24 hours of the power plant’s inauguration, announcing plans to build a full-scale manufacturing plant in the industrial city. Neimeth Pharmaceuticals has also announced plans to relocate their factory to Aba and we can be rest assured that many more manufacturers and foreign investors will follow suit to benefit from the reduced production cost in the city of Aba.


I am particularly excited about the opportunity being presented to garment and leather products manufacturers in Aba. Many people may not know but some of the imported clothes and leather products (shoes and bags) that we buy are actually made in Aba for foreign labels. With stable power supply, Aba garment and Leather products manufacturers will be able to claim a bigger share of this $1.5 trillion per annum industry and perhaps put Nigeria on the map of quality garments and leather product manufacturers.


While Geometric Power Limited already has plans to increase the power generation capacity of the Aba power plant to 1,000 MW in phase two of the project, I would like to encourage companies like Transcorp Power Plc, Geregu Power Plc, and other major power generation and distribution companies in the country to emulate the Geometric Power model and invest more in the value chain of our power sector. At the same time, the government should also encourage more investments in the power sector by giving more concessions to investors in the power industry.


Congratulations to the good people of Aba, the sky is their starting point with this development. I just pray that they don’t leave the rest of Nigeria behind in the dark ages.


Oshobi, a management consultant, development economist, and author writes from Lagos.

Namaster:
Kunle needs to stop writing nonsense from his house in Lagos.

His view on this issue is myopic and limited. After pointing out that Kingsley Moghalu, a Professor of economics, said they used the same strategy during his tenure; Kunle went on to paint a picture of economics as understood by a secondary school student.

Make no mistake, I firmly believe that Tinubu and Cardoso are a couple of plagues to Nigeria and Nigerians. But raising the interest rate is not a bad strategy.

Here's why:

First of all, Emefiele printed a boatload of NEW money last year. The plan was to take the old currencies out of circulation and have them replaced with the new.

Tinubu threw that plan into the dustbin.

What do we have?

A shitload of new money plus a shitload of old money. All of money are left swimming around somewhere in an economy where REAL production remains virtually the same.

The result is that we have a LOT more money than goods in the economy. That includes Forex, too. That's one of the reasons why inflation is running like a Lagosian chasing down a bus.

By increasing the MPR and CRR, the bank wants to take the excess volume of unproductive money out of circulation.

So instead of a "big man" to come buy your family land from under you and hold the land without doing anything with it, he'll put his money in tge bank and be collecting a nice chunk of monthly interests on it.

It's the soft life, baby!

So instead of selling your land to a "big man" for big money, you'll be FORCED to sell it to a regular struggling Joe for a "reasonable" amount.

Thus by raising the rates, they have forced you to sell the land at more reasonable price.

Now when this interaction is replicated multiple times across different Individuals, the price of land will become more reasonable. And inflation is reduced.

Same with other products.

Don't forget that reduction in inflation will have a positive effect on the exchange rate, too.

Plus, the argument about manufacturers and businesses not having access to funds is moot. Banks and governments have special programmes for them.

The economics on this is sound,!

You obviously didn't read to understand but rather to argue and state your poorly informed opinion. The real cause of inflation is the government's fiscal indiscipline as exposed by the illegal collection of 23 trillion Naira in Ways and Means advances by the buhari administration. The new money printed by Emefiele pales in significance to this.

That said, if Government is really serious about reducing the excess liquidity in circulation, the first thing they should have done is to make drastic budget cuts to reduce the deficit while also blocking loopholes that enable corruption in the system. Increasing interest rates to fight inflation is completely senseless in Nigeria because majority of Nigerians don't have access to consumer credit and your example of a big man buying land is totally irrelevant to the issue at stake.

https://www.thecable.ng/the-irrationality-of-the-cbn-interest-rate-hike/amp?/the-irrationality-of-the-cbn-interest-rate-hike

The irrationality of the CBN interest rate hike.
 
By Kunle Oshobi
 
Rising from the Monetary Policy Committee meeting of the Central Bank of Nigeria (CBN) on Tuesday, Olayemi Cardoso the CBN governor held a press conference and announced an increase in the Monetary Policy Rate (MPR) which is the benchmark for interest rates used by banks in the country. The MPR was increased by 400 basis points from 18.75% to 22.75 %. As if that wasn’t enough the committee also increased the Cash Reserve Ratio (CRR) from 32.5% to 45% effectively meaning that banks will now be allowed to lend out less money from their deposits and it will be at higher interest rates when they do.
 
According to the CBN governor, the liquidity tightening exercise was being done to combat inflation which had risen to 29.9% as of January while explaining that the hike in inflation was due to major factors such as rising costs of energy, high fiscal deficits, and lingering security challenges. Ordinarily one would have assumed that having identified the factors causing the inflation, what the CBN or the government should have done was to address those factors rather than tightening the liquidity in the system that has no direct correlation with the present cause of inflation in the country.
 
However, this will not be the first time that the CBN has resorted to liquidity tightening in their attempts to curb inflation as Prof Kingsley Moghalu a former CBN deputy governor reminded us that during his stint at the CBN, they also applied the same strategy to tackle inflation. While I will defer to Prof Moghalu being a professor of economics who has been involved in managing the economy of the country at the highest level, the rationality of attempting to fight inflation using the liquidity tightening strategy in an economy such as ours eludes me.
 
Elementary economics tells us that inflation occurs when there is “too much money chasing too few goods”, as a result of this the often-recommended remedy to fight inflation is to reduce the money supply thus the increase in interest rates and CRR to increase the cost of funds and reduce money in circulation.
 
This works perfectly in the Western world where virtually everyone has access to consumer credit and any increase in interest rates will affect their spending pattern. However, in Nigeria, consumer credit is almost nonexistent in our banking industry and as such increase in interest rates is unlikely to affect consumer spending, rather it will negatively affect businesses and those in the productive sector that we need to produce more so that costs can come down.
 
Effectively speaking, a hike in interest rates will not affect the spending pattern of an already impoverished society that doesn’t have access to consumer credit. Rather it is those in the productive sector that we need to support to improve their productivity as a way of fighting inflation that will be negatively affected by the interest rate hike as it will increase their cost of production which they will pass on to consumers thus fueling the inflation that the CBN is attempting to curb.
 
What needs to be done to fight inflation is for the CBN to work hard on stabilizing the exchange rate of the Naira as the falling value of the Naira is the number one cause of inflation in the country today. To achieve this on a sustainable basis, they will have to promote policies that will increase dollar inflows into the country such as promotion of non-oil exports and blocking the leakages in the oil industry.
 
To promote non-oil exports, the CBN ought to be making more funds available to exporters and encouraging banks to do likewise instead of tightening up the liquidity in the system and making it more difficult for them to access loans at reasonable interest rates. With more funding available to exporters, we can be rest assured that there will be increased foreign exchange inflows into the country which will go a long way to stabilizing the value of the Naira and curbing inflation.
 
On the side of the federal government, what needs to be done to fight inflation is to take drastic measures to improve the security situation in the country so that farmers can return to their farms and increase food production. On the issue of the high fiscal deficit, this is probably the second highest cause of inflation in the country today as demonstrated by the fiscal irresponsibility of the Buhari administration that illegally obtained over 23 trillion Naira in ‘Ways and Means’ advances from the CBN for reasons that we are yet to unravel. Sadly, the current administration has continued to increase the deficit as evidenced by this year’s over-bloated budget. 
 
To fight inflation, the federal government needs to make massive cuts in its expenditure budget to reduce the deficit while also stopping taking loans from our local banks to fund their excesses and crowding out the productive sector from getting access to the same loans.
 
The CBN needs to reverse itself on the MPR and advise the federal government on the need to tackle the real issues causing inflation as they have identified instead of punishing the productive sector with higher interest rates for the sins committed by the federal government.
 
Kunle Oshobi, a development economist, author, and management consultant writes from Lagos.

https://www.thecable.ng/cutting-the-cost-of-governance-and-the-steve-oronsaye-report/amp

Cutting the cost of governance and the Steve Oronsaye report
 
By Kunle Oshobi
 
Given the economic mess that was inherited by the Bola Tinubu administration which was demonstrated by an unsustainable debt service ratio of 97%, relatively low government revenue, high cost of government, high inflation rate, and several other unfavorable economic indices, one would have assumed that the first thing that the Tinubu administration would have done upon resumption of office was to make drastic cuts in the cost of governance.
 
In fairness to the administration, they did cut the cost of governance by removing the fuel subsidy but the sad reality was that while the general public was made to bear the brunt of the removal of the fuel subsidy, the administration increased the size of government and the associated cost of running the government, thereby nullifying whatever positive effect the cost-cutting exercise might have had.
 
So, it was a very welcome development when after eight months of trial and error with economic policies the government announced that they would be implementing the Steve Oronsaye report on reducing the size of government which was what some of us expected that a prepared administration should have started with.
 
For those who are not aware, the Steve Oronsaye report was the outcome of a panel set up by the Jonathan administration in 2012 to restructure and rationalize federal government agencies and parastatals to cut the cost of governance.
 
A white paper was issued on the report two years after and it was due for implementation but unfortunately, the 2015 general elections were fast approaching by then and it would have been political suicide to implement such a far-reaching reform in the civil service just before a general election. As a result of this, the implementation of the report was stalled and has remained in the cooler since then.
 
The Steve Oronsaye report summarizes that a large number of government agencies and parastatals that have similar functions should be merged, several redundant ones be scrapped while some agencies were recommended to revert to being departments in their supervising ministries. The report aimed to have a much leaner and more efficient government while cutting the cost of governance in the process.
 
So, it was indeed a breath of fresh air when the government announced yesterday that they were going to implement the Steve Oransaye report which is indicative that they are ready to take the bold step of restructuring the civil service and making drastic costs in the cost of governance after playing politics with Nigeria’s economic problems for nine months.
 
While the decision might have been influenced by Atiku Abubakar’s suggestion to the administration to emulate the cost-cutting approach of the President Milei-led Argentine government which is already reaping numerous benefits for the Argentine economy, the Bola Tinubu-led administration must also understand that for economic policies to work, they must be robust and not just ad hoc as has been the case with the economic policies previously rolled out by the administration.
 
In this vein, it will be suggested that the cost-cutting exercise should not just be limited to the civil service structure but must include drastic cuts in overheads and procurement costs. With these cuts in the cost of governance, we will see the inflation rate coming down while the Naira will also regain some of its lost value.
 
However, the best benefit we can derive from this cost-cutting exercise is what we do with the money saved from the exercise because if we fritter it away on other luxuries for those in government as was done in the past, it will amount to an exercise in futility.
 
The best way that the savings can be utilized is to use it to fund the productive sector of the economy. To borrow from Peter Obi’s slogan, we must move “from consumption to production”. This means that we should use the funds previously used for running ‘big government’ (consumption) to start funding companies in manufacturing and agriculture (productive sector).
 
This funding can be channeled through development financial institutions like the Bank of Industry (BOI), Development Bank of Nigeria (DBN), Bank of Agriculture (BOA), and the Nigeria Export-Import Bank (NEXIM) that all already have expertise in funding businesses in the productive sector.
 
With increased productivity in the country, we can be assured that the inflation rate will come down, millions of jobs will be created, the Naira will appreciate and the government will earn more revenue from taxes while the overall health of the economy will improve.
 
Kudos to the Bola Tinubu administration for taking the decision to implement the Steve Oronsaye report but making a success of it will be determined by how disciplined they are in implementing the report and what they do with the savings they make from the cost-cutting exercise.
 
Kunle Oshobi, a development economist, author, and management consultant writes from Lagos.

Okoroawusa:
I Love Bola Ahmed Tinubu

I Love Nigeria

You cannot genuinely love Nigeria and love that vile criminal that is destroying Nigeria at the same time.

*TOP 25 LIKELY RISKS BEFORE NIGERIA IN 2024*

*1. Business closure:* Potential eventuality or threat of a business ceasing its operations permanently or temporarily.

*2. ⁠Job losses:* Individuals losing employment opportunities, due to economic downturns or organizational restructuring.

*3. ⁠Crime/theft:* Potential increase in criminal activities such as theft, fraud, violence, or cybercrime, leading to harm, loss, or disruption to individuals or organizations.

*4. ⁠MNC divestiture:* Likelihood of large corporations or multinational companies withdrawing their investments, operations, or assets from the country.

*5. ⁠$1 to N2,000:* Continued significant impact on the Naira, up to a USD exchanging for N2,000 before June 2024.

*6. ⁠Fuel price hike:* Further increase in the cost of fuel, which can impact transportation costs, production expenses, and consumer prices, potentially leading to economic hardship.

*7. Inflation:* The consumer price index may continue its downward spiral, increasing to 35% by H1 2024.

*8. Protests/Social unrest:* There may be public demonstrations, strikes or civil disturbances resulting resulting from grievances or dissatisfaction with government policies, social inequalities, and economic hardships.

*9. Debt crisis:* The country may be pressured to result into borrowing in other to meet and financial obligations.

*10. Health implications:* Citizens may be affected mentally and outweighed by their inability to afford basic medical supplies or consumables when required.

*11. Family disorientation:* Breakdown in family relationships or structures, which may result in emotional distress, social dysfunction, or negative outcomes for individuals, communities, and the Nation at large.

*12. Out of school crisis:* Private schools may hike school fees to meet operational challenges and this may result in children staying out of school if parents are unable to afford the fees.

*13. Famine:* Threat of widespread and severe food shortages leading to starvation and malnutrition within a population.

*14. Diminishing Nation brand:* Decline in the country's reputation, image, or perception on the global stage, potentially affecting tourism, investment, trade, and diplomatic relations.

*15. Ethnic & religious disintegration:* Political manipulation of present economic challenges leading to fracturing or breakdown of societal cohesion along ethnic or religious lines within a community, region, or country.

*16. Agitation for secession:* Increasing demand and organized efforts from a region, group or an ideology within a country to seek independence or separate from the existing national entity, leading to the fragmentation or dissolution of the state.

*17. Low FDI:* Insufficient or declining inflows of investment from foreign entities into domestic businesses or projects.

*18. Contract default:* Failure of parties to fulfill obligations or commitments as outlined in contractual agreements.

*19. Revenue shortage:* Shortfall or inadequacy in the amount of income or funds generated by national and subnational governments compared to what is required or expected to meet financial obligations and sustain operations.

*20. Public Service collapse:* Breakdown or deterioration of essential government services and functions such as security, electricity, transports, water, etc that are critical for the well-being and functioning of society.

*21. Labour strike:* Possibility of organized workers withholding their labor as a form of protest or bargaining tactic to demand concessions from their employers, especially govt.

*22. Inflexible policy:* Negative consequences stemming from the enactment, adoption or enforcement of rigid or unresponsive policies that fail to adapt to changing circumstances or needs.

*23. Demographic pressure:* Challenges and consequences arising from changes in population dynamics, particularly population growth, aging, and migration patterns, that exert strain on social, economic, and environmental systems.

*24. Black tax:* Increase in financial burden placed on privileged relations from family and friends limiting their ability to build wealth, invest in their own futures, or pursue personal aspirations.

*25. Corruption:* Individuals in positions of power or authority may engage in unethical or illegal activities for personal gain, at the expense of the public interest or welfare.

Thank you.
__________
Copied from another wall

SoNature:
During Nigerian football, everyone becomes a professional coach. This naira depreciation crisis has turned everyone into an economic adviser!

The writer of the article is a development economist thus making him a professional in the field and not just any other Nigerian giving an opinion.

https://www.thecable.ng/we-are-long-overdue-for-a-made-in-nigeria-policy/amp

We are long overdue for a “Made in Nigeria” policy
 
By Kunle Oshobi
 
In 1976 when fate thrust the leadership of the country on the then young General Olusegun Obasanjo, he instituted a policy that stipulated that all government vehicles must be made in Nigerian vehicles. As a result of this, all government ministries, departments and agencies restricted themselves to the use of Peugeot and Volks Wagon products which were the only two brands of cars being assembled locally at the time. To set an example, the Head of State also limited himself to the use of a Peugeot 504 which was the average man’s car in those days and was also being used by subordinate civil servants.
 
As a result of this, even private individuals were encouraged to patronize the made-in Nigerian vehicles, and as a result of this up to 70% of cars on Nigerian roads at the time were made in Nigerian vehicles. The resultant effect of this was that thousands of jobs were created down the value chain while Nigeria saved hundreds of millions of dollars annually in vehicle import costs and at the same time we were creating a solid industrial base for the country.
 
Sadly, the succeeding civilian administration that they handed over to in 1979 decided to dump the policy and instead opted for the use of imported exotic vehicles that they considered befitting for their new status. The exotic brands became so synonymous with the government that the choice of vehicle that the president was using, a Mercedes Benz 500SEL was nicknamed after the president and popularly called “Shagari Benz”.
 
The civilian administration was short-lived and the military boys soon returned to power after the military putsch of December 1983. The military leadership again decided to stick with the policy of using made-in Nigerian vehicles and avoid the flamboyance that they criticized the civilians for in managing the affairs of the country. The policy was maintained by successive military administrations until we returned to civil rule in 1999.
 
Incidentally, it was the same Obasanjo who introduced the policy as military Head of State in 1976 that assumed power as the civilian President in 1999. However, for reasons that are not very clear, he decided to dump the policy and opted for the use of foreign brands of vehicles for the presidential fleet. As a result of this, even governors that started with the use of made-in Nigerian Peugeot vehicles in 1999 soon dumped them in favor of more exotic imported vehicles.
 
As of today, the trend amongst our politicians and top government officials is to use the most expensive Toyota Landcruiser SUVs, Mercedes Benzes, Range Rover SUVs, and Lexus SUVs which cost the government billions of dollars to purchase periodically.
 
There was a glimmer of hope that we might be returning to the “made in Nigeria” policy when in 2013 the Jonathan-led administration introduced the “Nigeria Automotive Industry Policy” which was designed to boost the local production of vehicles in the country. As a result of the policy, over twenty-five vehicle manufacturers were licensed to build/assemble vehicles in the country and the natural next step would have been to introduce the “made in Nigeria” policy to support them. However, this did not happen because the succeeding Buhari administration showed very little interest in implementing the policy or growing the economy.
 
With over twenty local vehicle manufacturers in the county today, all operating sub-optimally coupled with the prohibitive cost of foreign exchange in the country and it’s resultant effect on the cost of imported vehicles, the time is ripe for the government to re-visit the “made in Nigeria” policy not only to support our local industry but also to help reduce the demand for foreign exchange in the country and thereby strengthen the Naira in the process.
Imagine the effect it will have on the economy if the president makes an executive order today that from now on, all purchases of vehicles by the government, be it ministry, departments or parastatal must be made from Nigerian vehicle manufacturers and the president goes ahead to set an example by changing the whole presidential fleet including the presidential car to made in Nigerian vehicles.
 
Imagine how much more impact the policy will have if the States and Local governments are encouraged to adopt the policy, then let’s push it further by asking the state governments to implement a policy that will stipulate that only Nigerian-made vehicles will henceforth be licensed as commercial vehicles while giving a five years deadline to phase out the existing imported commercial vehicles on our roads.
 
The resultant effect will be a massive boom in our local manufacturing industry which will create millions of jobs down the value chain while saving the country billions of dollars in foreign exchange annually. By so doing, we will not only be giving the economy a boost at no extra cost to the government, we will also be laying a very solid foundation for the industrial development of the country.
 
The “made in Nigeria” policy can also be replicated in the textile industry by the government mandating that the fabric for the uniforms of all uniformed public servants must be sourced from local manufacturers. This will include the Police Force, Nigerian Army, Navy, Airforce, Customs, Immigrations, Civil defense and every other uniformed service.
 
The State governments should also be encouraged to adopt the policy and ensure that the uniformed services under their control adopt the same policy while all public schools controlled by the Federal, State and Local governments also adopt the policy. By so doing, we will not only be revamping our textile industry, we will also be creating jobs, saving our foreign exchange and supporting the growth of the economy,
With a well implemented “made in Nigeria” policy, we will not only be saving the country over two billion dollars worth of foreign exchange annually, we will also be creating jobs for our people, growing our economy, and increasing government revenue through taxes while also strengthening the value of our Naira. As Nigerians, we all have a collective responsibility to support the growth of our economy but the onus falls on the government that has been given the mantle of leadership to lead us on this path and set the right example.
 
Oshobi, a development economist and management consultant writes from Lagos

Very disappointing the advice of the so called top economists. The first thing that the government needs to do to salvage the economy is to make drastic cuts in the cost of governance, the second thing they need to do is to give every necessary support to the productive sector to help boost productivity within the economy.