₦airaland Forum

asorocker:
Then what is her work as a finance minister if she cannot over see government parastatals under her.

omohayek:
No, on the contrary, it's your response that betrays blatant tribalism, rather than any interest in the objective facts. If you're going to blame people for bad policies, why not blame those actually responsible making the policies you're criticizing? That Emefiele and Onyema are responsible for the CBN and the NSE respectively are facts, not tribal attacks. Ignoring said facts, on the other hand, and blaming someone who has nothing to do with the policies, is in fact tribalism of the crudest and most ridiculous kind.

grandstar:
Buhari believes in statist policies. It was this hubris the country experienced in 1984-85 during his regime.

He won't devalue. He hates devaluations. Its like a child that hates the fsct that 1 + 1= 2.

By mid next year, the peoples patience will wrong.

The masses think thay because he is incorruptible that. means he is a financial genius.

omohayek:
You point to an insightful article on Nigeria's economic direction, and then proceed to throw away all your credibility by endorsing a ridiculous attack on Kemi Adeosun, simply because it was made by "your brother". What a waste.

chukwudi44:
That Kemi Adeseoun of a woman is the true depiction of cluelessness!!

Naira devaluation talk grows stronger as Nigeria also adopts Chinese-type circuit breaker

Nigeria plans to create a $25 billion fund with public and private financing to modernize infrastructure and avoid a recession.

Copying Venezuela’s exchange rate policy and China’s failed equity market strategy might seen the height of foolishness.


But, at least in the opinion of John Ashbourne, Africa economist at Capital Economics, that is precisely what Nigeria, the continent’s largest economy, has just done.

“Low oil prices are battering Nigeria’s export-dependent economy, but it’s the government’s market-distorting response that risks pushing the country into a Venezuela-style crisis,” Mr Ashbourne says.
“Nigeria is sliding towards a Venezuela-style FX regime and adopting a Chinese-style stock market circuit breaker. Neither will reassure foreign investors, many of whom seem to be eyeing the exits.”
Both measures were announced after markets closed on Friday, January 15.
The circuit breaker on the Nigerian stock exchange, one of the worst performing in the world this year with a fall of 17.7 per cent, will pause trading for 30 minutes if stock prices fall 5 per cent. Trading will cease for the day if it is triggered twice in a session, or after 1.45pm.
This month, Beijing abandoned a similar policy after just four days, concluding that in a falling market the existence of the circuit breaker encouraged more selling as traders rushed to exit while they could.
“The effect is akin to calling last orders at a crowded bar,” Mr Ashbourne says. “It is hardly confidence-inspiring that Nigeria is copying a Chinese policy that is widely seen to have failed.”
He accepts that Nigeria’s circuit breaker may not be as badly designed as the Chinese version. Whereas the NSE All Share index rarely falls by 5 per cent a day, the Shanghai Composite did so a dozen times in 2015. The NSE’s version has not yet been called into action.
Nevertheless, Mr Ashbourne says that using a circuit breaker to shore up the market, rather than to avoid volatility, is “deeply flawed”.
Simultaneously, the central bank has said it will stop selling US dollars into the interbank FX market.

Nigeria has operated a de facto twin currency system for the naira since February 2015, when the bank held the official interbank rate at N199 to the dollar to avoid a spike in inflation. The unofficial rate, available at bureaux de change, has plunged to N300/$, as the first chart shows.
However Mr Ashbourne argues the latest move takes Nigeria a step along the road to a Venezuela-style scenario, where the dollar now buys 913 bolívars on the black market, according to dolartoday.com, compared with an unofficial rate of 6.28/$.
“Suspending US dollar sales to the interbank market will force consumers and firms to source dollars at bureaux de change,” he says, while providing an implicit subsidy for companies and individuals with the connections needed to access the official rate.
As the second chart shows, Nigeria’s reluctance to let the naira’s official exchange rate weaken means it has borne the brunt of the sharp fall in oil prices since the middle of 2014.
In naira terms, the oil price has fallen from $115 a barrel to around $35, with the modicum of weakening permitted so far doing little to take the edge off the fall in oil prices to $28 in dollar terms.

In contrast, Russia, which has allowed the rouble to fall sharply, is still seeing oil prices of around $65 in local currency terms, with many other oil exporters such as Brazil and Azerbaijan also seeing more cushioning of the blow than Nigeria.
Charles Robertson, chief global economist at Renaissance Capital, who drew up the second chart, expects Nigeria to bow to the seemingly inevitable and devalue the naira, given that his calculation of fair value is N305/$, very close to the current black market rate.
He notes that frontier market funds are now underweight Nigerian equities, and believes that international investors “are likely to remain on the sidelines,” barring an obvious catalyst for change.
Nevertheless he believes a devaluation to N250/$, “while no longer sufficient to ease all dollar shortages ... would be good enough to warrant investors taking a fresh look at Nigeria, especially if they expect a rebound in the oil price”.
Daniel Salter, global equity strategist at RenCap, has been busy analysing just when equity market investors should consider returning to a freshly devalued Nigeria, if history is anything to go by.
Mr Salter analysed 13 emerging market currency devaluations since 1994 in countries ranging from Mexico and Turkey to Egypt and South Korea.
His conclusions are that it is rarely worth buying in anticipation of a currency devaluation and that, on average, equity markets do not hit their low point (in dollar terms) until 99 days after the start of the currency devaluation.

This delay can vary significantly, though, as the final chart shows. In the case of South Korea in 1997 the stock market troughed the day before the won started to fall. In Nigeria itself, in 2009, this point was reached after 35 days.
However in the cases of Thailand (1997), the Philippines (1998) and Egypt (2001), it would have paid equity market investors to stay out for at least six months.
Mr Salter believes the lag is due to two factors: the initial devaluation is often insufficient to stabilise the currency; and that devaluations frequently coincide with banking crises.
Unfortunately, this analysis probably tells us little about how Nigeria’s equity market is likely to behave in the year after any devaluation.
In the 13 previous episodes, the stock market typically fell 3 per cent in dollar terms in the three months after the start of the devaluation. However, as the above chart shows, there has been huge variability in this figure, from -56 per cent in Mexico in 1994-1995 to +100 per cent in South Korea in 1997-98.
Likewise, on average the typical stock market gained 4 per cent in dollar terms in the year after the devaluation, but once again this is the average of a widely dispersed data set, with the returns ranging from -86 per cent (Indonesia, 1997-98) to +172 per cent (South Korea).
The sector breakdown perhaps delivers a clearer message. RenCap found that consumer staples stocks have tended to outperform in the 12 months after the start of a devaluation, while consumer discretionary companies and industrials tend to pick up once the currency has bottomed.
Financial stocks, in contrast, tend to be the worst sector in the year after a devaluation, probably due to declining credit quality.

vfactor:
“We are in the process of organising a three-day dialogue which will bring the party, government and stakeholders for an exposition on the realities facing the country, particular the economy. It will provide an opportunity to exchange ideas so that we go home with a clear direction on how to go forward.”


“The fight against corruption has already started yielding results as looted public funds are being exposed and returned while everybody occupying public office today is conscious of his actions knowing that there would be consequences for any inaction or wrong action.”

cocu25:
U deserve an award!... In fayose tone "this government is like nollywood"

SeanDada1:
I can feel fashola's presence in the useless affairs of this country. Taxing everything from money, electricity, roads, water,

francizy:
Yes I am. What about you?

francizy:
That is exactly how they sit abroad and tell us what is happening in Nigeria. If Nigeria is so cozy and so lovely to stay in, why did him and all his family members use all the necessary means (might even be their last money on earth) to send him away from Nigeria? We live in paradise yet ordinary election generated so much tension that thousands of people flooded the airports trying to run to countries they presumed was safer. Nigeria is eldorado yet our police kill us as much as armed robbers, ritualists, etc do. Nigeria is eldorado yet NE is facing boko haram menace while the people in power chooses to play politics with the insurgency. Nigeria is heaven yet it records the highest rates of accidents on yearly basis, due to the terrible nature of our roads. Nigeria is Paradise but tens of millions are living without jobs. Enough said, if we are enjoying ourselves here, that guy should just leave wherever he is and come enjoy with us.

By the way, you forgot to add that after buying land, while building our houses, we're multiply taxed by omonile for building a fence, foundation, doing lintel, decking, roofing, etc.

You hit the nail on the head sir, as a matter of fact, after building, the government still takes land use charge from us on yearly basis. We build and maintain our own roads, pay vigilante men while police runs around just to catch only people they can extort money from, we buy bathing water from tankers and since our area is bad, our borehole (which the government didnt help us sink) water is hard and therefore used for flushing toilets alone, we pay electricity bills as much as 5-15k per month without enjoying more than 50 hours power in a month.

idupaul:
Don't mind that man joor..that thread was really annoying. .it really provoked me..paradise in deed ....the senseless guy doesn't know that till recently PHCN gave me a bill of 30k every month for light I never saw and they ate the money I paid for prepaid meter and I had to get another through some extortion route because I was so tired of paying 30 k for light I don't see .

drss:
just last year black charcoal face oshiomole said US official wispered into his ears dat one minister under GEJ stole $6 billion. dis is about N1. somtin trillion. today na 55 pipul. dis APC govt ar not serious at all.

PAINGAIN:
Can't this government do something and do it right. Appointing ministers took 5months, elections r inconclusive, and now to pass budget na wahala. Honestly speaking, buhari is confused.

dearpreye:
Only the wise will learn from the mistakes of the present.

pat077:
we're fast approaching d era where water will b cheaper than dan oil.

Ijaya123:
In essence, Tompolo & co are just in a futile exercise.

nedu86:
Recession

bakynes:
I just laugh @ Lord, he doesn't know you cannot fight government no matter how much billions you have acquired. Worse come to worst the whole Country will suffer for the oil facilities destroyed and I can tell you it's the ND that will suffer for it the most coz your land will be the war zone, your only source of livelihood is Oil other regions have other things they are into. So I advice the likes of @Lord making mouth to better warn Tompolo to submit himself.