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.
__________
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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.

Majesty2:
We are proud of you our president... Go on soun

It is because of disgusting ass licking miscreants like you that vile politicians like Tinubu continue to have the opportunity to destroy this country.

nairalanda1:


The truth is, even when our economy was healthy, no NIgerian company was set up that could do the same as multichoice.

It is too expensive, either way.

It's not too expensive, there are several Nigerian companies that have the capacity to raise $1.6 billion to buy the company. That said we can always raise our standards to match up with that of South Africa.

That said, MTN came from South Africa but today MTN Nigeria is far bigger than MTN South Africa.

It would have been nice if a Nigerian media company can buy over Multichoice, sadly our economy is currently comatose due to the fact that we have braindead criminals running the country today.

https://www.thecable.ng/energising-our-power-sector-taking-a-cue-from-the-telecoms-industry/amp



Energizing our power sector: Taking a cue from the telecoms industry

By Kunle Oshobi

A lot has been said and written about how critical the power sector is to the

economic development of any country, yet Nigeria continues to falter in

getting this critical sector of our economy right. The power sector is

important because of it’s strategic importance to other sectors of the

economy which all depend on power supply and getting our power sector

right can trigger several multiplier effects that can result in a massive

increase in the country’s GDP within the short to medium term.

To put the dire situation of the power supply shortfall in Nigeria into proper

perspective, the total power generation in the country as of today stands at

only 14,000 MW but our national grid is barely able to transmit 4,000 MW

without collapsing thus a country of over 210 million people have to

contend with just 4,000 MW of electricity supply daily.

By contrast, South Africa which has a smaller economy than ours albeit

with a much bigger industrial sector generates and transmits 58,000 MW of

electricity daily to it’s population of 60 million people and even with this

huge capacity they still can’t meet the electricity demand in their country.

Suppose we are to benchmark Nigeria with South Africa based on the ratio

of power generation to their population. In that case, we will need to be

generating and transmitting at least 200,000 MW of electricity daily to be at

par with them in terms of power supply, yet we are still grappling with a

mere 4,000 MW daily output. While this figure looks abysmally low, it does

indicate that there is a huge potential for investments in the sector given

the right incentives.



One begins to wonder why investors are not taking advantage of this huge

shortfall in power supply to invest in the sector and bridge the supply gap in

the country. The simple answer is that investors will not put their money into

ventures where there are no guarantees of reasonable returns on their

investment and if we are serious about attracting investors into our power

sector, we have to provide incentives that will make it profitable for them.

Contrary to the misconception in some quarters that electricity supply

should be a government service and distributed to people cheaply, the

reality is that “government has no business in doing business” and the

private sector is best equipped to handle our power sector as is done all

over the world while government should be left to play a regulatory role.

Going back to the huge supply gap in the power sector, some of us will

recollect that as of 2001 when the telecoms sector in Nigeria was

revolutionized with the entrance of the GSM operators, Nigeria had just

over 400,000 active telephone lines but today we have well over 300 million

connected telephone lines in the country of which about 250 million of them

are active.

The question emerges; How were we able to move from a paltry 400,000

active lines in 2001 to over 300 million connected lines in just 22 years?

What lessons can we learn from it and apply to the power sector to achieve

a similar growth trajectory? The answers to these questions will reveal to

us what we need to do to get our power sector right.

The simple answer to the questions above is that the regulatory framework

for the telecoms sector was business-friendly and accommodated profitable

investments. As a result of this investors were encouraged to invest

massively in the sector and subsequently invested over $75 billion in the

telecoms industry to make Nigeria one of the countries with the highest

teledensity in the world.



How then do we incentivize investors to invest heavily in the power sector

to achieve the kind of results achieved in the telecoms sector? My

suggestion is that the government should roll out a list of incentives as a

policy document to encourage investments in the power sector and make it

more profitable for investors.

These incentives should be for a minimum of ten years and backed by

legislation to make it irreversible by subsequent administrations. The

incentives should include tax holidays for new investors in the sector while

existing investors should be given tax credits based on the value of

additional investments that they make in the industry. Zero duty should be

charged on all power generation, transmission, and distribution equipment

imported into the country while the cost of gas used for power generation

should be heavily subsidized within this ten-year framework.

Subsidizing the power sector should not be confused with subsidizing

petrol. While the former is targeted at subsidizing production which has a

lot of multiplier effects on the economy, subsidy on petrol is subsidizing

consumption which is merely an indulgence.

Having done everything possible on the side of the government to help

reduce operational costs in the power sector, the government must also

allow the power companies to charge a cost-reflective tariff without

neglecting their duty of regulating the tariffs to prevent the power

companies from exploiting their customers.

We must also revisit the costly and inefficient national grid system and

instead allow for mini-grids on a state-by-state level while the government

completely backs out of owning the grid system and allows the more

efficient private operators to own and manage them. This will encourage a

lot more investors into the power sector and allow for captive power plants.



Having ensured increased profitability for investors in the sector through,

tax holidays, zero duty, subsidies, cost reflective tariff and an investor-

friendly regulatory framework, we can be rest assured that investors will

come rushing in with tens of billions of dollars to take advantage of the

incentives and in the process, we can repeat the magic that resulted in the

exponential growth in the telecoms sector.

Oshobi, a development economist and management consultant writes from

Lagos.

Makinde should go to hell, after betraying Atiku and working for the opposition against him, he is now wailing that Atiku didn't call to greet him. This is the same hypocrite that refused to receive Atiku when Atiku went to campaign in Ibadan.

https://www.thecable.ng/aggressive-export-promotion-as-an-elixir-for-nigerias-economic-problems/amp

Aggressive export promotion as an elixir for Nigeria’s economic problems
 
By Kunle Oshobi
 
After eight years of lethargy on issues regarding the economy during the immediate past Buhari administration, the current administration took off with a bang and in rapid succession announced two earth-shaking economic policies that reverberated across the country.
 
The first was the removal of petroleum subsidies which President Bola Tinubu announced impulsively during his inauguration while the second which was announced a month later was a partial floating of the Naira which resulted in a massive devaluation of the currency with it’s consequent impact on the economy.
 
Being an import-dependent country, the impact of the devaluation of the Naira affected the cost of a wide range of goods and services across the country. When coupled with the increase in the price of petroleum products which also affected the cost of goods and services in the country, the negative consequences of this double-edged sword on the populace is best left imagined.
 
Most economists agree that the two major economic policies introduced by the current administration are a step in the right direction however, the implementation of the policies was abysmal with little or no thought of how to reduce the negative impact of these policies on the masses neither were there any plans to take advantage of these policies to accelerate economic growth.
 
Some may want to argue that the government gave some palliatives but the truth is that apart from the fact that they were an after-thought, it was just a politically motivated red herring that was designed to provide temporary relief for a handful of Nigerians while no thought was given for implementing policies that we enhance sustainable economic growth.
 
Contrary to economic theories of “demand-pull” and “cost-push” inflation, the leading causes of inflation in Nigeria are the falling exchange rate of the Naira and the cost of petroleum products. If we take into consideration the fact that the exchange rate of the Naira also affects the cost of petroleum products, we can safely conclude that the poor exchange rate of the Naira is the number one cause of inflation in Nigeria today.
 
The question now arises; what is responsible for the poor exchange rate of the Naira and why does it keep falling against other international currencies? The simple answer is that the demand for foreign exchange in the country is far higher than the supply and as a result of this, the Naira is constantly being put under pressure thus the downward slide.
 
How then do we solve this problem? We can either implement restrictive policies to reduce the demand for foreign exchange or engage in an aggressive export promotion drive to boost foreign exchange receipts into the country. For a country that is serious about growing it’s economy, the latter option is the obvious choice.
 
Nigeria currently generates between 45 and 50 billion dollars annually from exports of which over 90% of it is attributable to oil and gas exports while our import bill for 2022 alone was $53.61 billion. Although our foreign exchange receipts are also complimented by diaspora remittances of between 20 and 25 billion dollars annually, a significant amount of the forex from the oil receipts is retained by the oil-producing companies and is not available to fund the foreign exchange market thus the huge shortfall.
 
Apart from forex needed to fund imports, there is a huge demand for forex to fund intangibles such as foreign school fees, foreign medical care, BTA, and PTA all of which add up to the high demand for foreign exchange in the country. According to a banker friend of mine, the demand for forex they receive in his bank is at least ten times the forex allocation that they get from the CBN.
 
Contrary to the current administration’s strategy of borrowing $3 billion from AFREXIM Bank to provide liquidity in the foreign exchange market which will only result in temporary relief, what our government should be embarking on now is an aggressive export promotion drive to ensure that foreign exchange receipts into the country increases on a sustainable basis.
 
Ironically, AFREXIM Bank was established to promote and fund exports for African countries and one would have expected the government to approach them with the mind of funding export promotion to bring about a sustainable solution to our foreign exchange problems while giving the economy a boost. Sadly, they seem fixated on short-term solutions while postponing the evil day.
 
Given that government already has institutions like the Nigeria Export Promotion Council, (NEPC) and Nigeria Export-Import Bank (NEXIM) what the government needs to do is to energize both institutions so that they can embark on an aggressive export promotion drive. While NEPC should be given increased funding to create more awareness about the export potentials and opportunities available in the country, NEXIM should also be empowered to fund the export drive.
 
To start with, the $3 billion loan from AFREXIM should be diverted to NEXIM to fund export promotion instead of just using it to fund the forex market to provide temporary liquidity. By so doing we will be providing a permanent solution to our forex problems having used the funds to support export businesses that will continually ensure a steady flow of foreign exchange into the country. Effectively speaking, export promotion should be made a major policy of this administration, and all available resources deployed to support the initiative.
 
While Nigeria is very rich in a lot of natural resources that are in high demand globally, the agricultural sector provides a golden opportunity to significantly increase our foreign exchange earnings while at the same time creating jobs for millions of Nigerians. For instance, a small country like the Netherlands which is just about the size of Niger state generates revenues of over $100 billion annually from the export of agricultural produce. Imagine what Nigeria which has ten times more arable land can generate if we put our house in order.
 
In my reckoning, we can move Nigeria from a country that generates less than $50 billion from exports annually to one that generates more than $300 billion annually in the medium term if we put the right policies in place to aggressively support export promotion and enhance the value of our export produce. By so doing, we will not only be improving our foreign exchange earnings, but we will also be creating jobs for millions of Nigerians and ensuring the overall growth of the economy.
 
With the significant increase in the amount of foreign exchange revenue flowing into the country, there will be much less pressure on the Naira and this will give our local currency the much needed stability needed to curb inflation and it’s negative consequences on the economy while at the same time enhancing economic growth. The time to act is NOW!!!
 
Oshobi, a development economist and management consultant writes from Lagos

magoo10:
With this small and medium scale enterprises will thrive by way of loans and temporary overdrafts including large scale industries and manufacturing sectors.

Banks should be the vehicle used for economic developments assuming we have a reasonable government at the center in collaboration with the central bank.

Very well said.

kettykin:
Again this doesn't work this way. The economy is like a big machinery.

This is like putting the engine of a Boeing 747 in a keke tricycle.

Think outside the box, if countries with much smaller economies like Morocco and Algeria can have banks with capital base in excess of $5 billion, Nigerian banks should have the capacity to do much more.