₦airaland Forum

A financial expert, Dr. Olutayo Obadina, has said that the government’s floating of the Naira is the cause of the current hardship being faced by Nigerians and not the fuel subsidy removal.

Obadina, a PhD holder in Credit and Financial Management, stated this during a news conference in Lagos on Friday.

In his address titled “The Mathematics of Fuel Subsidy: A Critical Look at the Problem and Solution in Nigeria Today,” Obadina argued that the key to reducing fuel prices and easing inflation lies in stabilizing the Naira, rather than reinstating fuel subsidies.



According to Obadina, the Federal Government should focus on reducing Nigeria’s reliance on imports by promoting exports, which would help stabilize the Naira.

He recommended bringing down the Naira-to-dollar exchange rate from the current N1600/$1 to around N460/$1, which he believes would lead to a significant reduction in fuel prices to about N450 per litre.


The real problem and ways out
Emphasizing that the current economic hardship is not a direct result of the removal of the fuel subsidy but rather the consistent devaluation of the Naira, Obadina said:

“The real issue is the devaluation of the Naira. The dollar cost of importing fuel has remained relatively stable over the years, while the Naira continues to weaken.

“Strengthening the Naira is the only sustainable solution to Nigeria’s economic problems.”


Obadina also criticized the decision to float the Naira, arguing that it has only exacerbated the country’s economic woes.
He called on President Bola Tinubu to reverse this policy and return to a fixed exchange rate, which would help stabilize fuel prices and curb inflation.
Highlighting the importance of boosting Nigeria’s exports to increase the supply of dollars in the economy, Obadina proposed the establishment of marketing boards in each state to facilitate the export of key products such as cocoa, groundnuts, palm oil, and solid minerals.
“The Central Bank of Nigeria (CBN) must determine the amount of dollars required to stabilize the Naira.

“The President should then work with the 36 states and the Federal Capital Territory to meet export targets, with support from the Ministry of Commerce,” he suggested.

He added that these state marketing boards should initially be government-led but gradually transition to private sector ownership, with the public acquiring 51% of shares within three years.

This would prevent the boards from becoming another government bureaucracy and ensure their effectiveness in promoting exports.

Leveraging Nigeria’s medical sector for export
In addition to traditional exports, Obadina suggested that Nigeria should capitalize on its medical sector by encouraging the export of doctors and medical professionals.

With many Nigerian doctors seeking opportunities abroad, he argued that the country could benefit from supervising their exports and ensuring that remittances are sent back home.

“Out of every three doctors produced in Nigeria, two are willing to work abroad. The government should manage their export to maximize remittances and strengthen the economy,” he said.

Obadina also emphasized the need for increased investment in domestic farming to address Nigeria’s food deficit.
He called on Nigerians to invest in agriculture as a means of achieving food security and reducing reliance on imported food products.
What you should know: Within the last 10 months, the Nigerian Naira has devalued by over 82%. It moved from N896 in January to N1635 in mid-October.

The devaluation of the naira is an outcome of the floating exchange rate policy implemented by President Tinubu after taking office in May 2023.

https://nairametrics.com/2024/10/19/floating-of-naira-caused-hardship-for-nigerians-not-subsidy-removal-expert/

Both of them did. The timing was foolish

I already addresed this and made a correct diagnosis a year ago.

https://www.nairaland.com/8017949/how-nigeria-people-govt-got


But some dumb mofos and neophytes no gree accept or comprehend am. They are the same dumb shitfvcks that expected Dangote to sell fuel at 300 or less.

Nbote:
Both of them did. The timing was foolish

Expert with a PHD on the subject is telling you something... You with not even a degree is economics is saying your own

Na people like you dey blame IMF and world Bank

While it is true that the exchange that is running away is a major problem, his solution to returning back to fixed rate aka multiple exchange rate system where we had round tripping is not the solution. The solution is in his article, that is we have to increase our exports, that is industries should be encouraged to not only produce products for local use but also to make them of international standard to be able to export them. it does not always have to be crude oil

The advantage of this is that we can start earning more forex, enough to meet and surpass demands. We can focus on our neighboring West and East African countries first.

Treadway:
I already addresed this and made a correct diagnosis a year ago.

https://www.nairaland.com/8017949/how-nigeria-people-govt-got


But some dumb mofos and neophytes no gree accept or comprehend am. They are the same dumb shitfvcks that expected Dangote to sell fuel at 300 or less.

This rubbish started happening since APC took over in 2015.

The countries in ECOWAS have also been imported dependent just like Nigeria. But some of the countries currency has remained stable since even 2003!

I don't know what is wrong with APC, is like these guys get excited when prices of goods and services keeps flying up recklessly. To them high rate of inflation means that the country/economy is developing.

Had it been the currency rate was maintained as it was before 2010, I don't think there will hardship at all

By now we would have repaid all the foreign loan and even be lending to other nations.

k

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9jatriot:
While it is true that the exchange that is running away is a major problem, his solution to returning back to fixed rate aka multiple exchange rate system where we had round tripping is not the solution. The solution is in his article, that is we have to increase our exports, that is industries should be encouraged to not only produce products for local use but also to make them of international standard to be able to export them. it does not always have to be crude oil

The advantage of this is that we can start earning more forex, enough to meet and surpass demands. We can focus on our neighboring West and East African countries first.

What and what are Nigerians going to export? Has Tinibu since 16 months made any head way in any agricultural project? Is it palm oil, rubber, cashew, rice, coco etc? What are we going to export other than crude oil?
This policy is only for political class, more income more looting.

9jatriot:
While it is true that the exchange that is running away is a major problem, his solution to returning back to fixed rate aka multiple exchange rate system where we had round tripping is not the solution. The solution is in his article, that is we have to increase our exports, that is industries should be encouraged to not only produce products for local use but also to make them of international standard to be able to export them. it does not always have to be crude oil

The advantage of this is that we can start earning more forex, enough to meet and surpass demands. We can focus on our neighboring West and East African countries first.

How do you produce more with the high exchange rate, they all go hand in hand because most of the raw materials are imported with dollar.
Most companies closed down just because of that, t pain was on an ego trip n the fact he is naive not to understand that not all theories on text book can be implemented is weird.

Having PhD doesn't mean the holder can't misyarn.

An entrepreneur that buys petrol at 165 naira previously is now buying petrol at more than 1,200 naira. And this 'expert' is expecting the entrepreneur not to raise prices of his goods and services if only naira was not floated and only petrol subsidy was removed.

Omooba77:
A financial expert, Dr. Olutayo Obadina, has said that the government’s floating of the Naira is the cause of the current hardship being faced by Nigerians and not the fuel subsidy removal.
Obadina, a PhD holder in Credit and Financial Management, stated this during a news conference in Lagos on Friday.
In his address titled “The Mathematics of Fuel Subsidy: A Critical Look at the Problem and Solution in Nigeria Today,” Obadina argued that the key to reducing fuel prices and easing inflation lies in stabilizing the Naira, rather than reinstating fuel subsidies.
According to Obadina, the Federal Government should focus on reducing Nigeria’s reliance on imports by promoting exports, which would help stabilize the Naira.
He recommended bringing down the Naira-to-dollar exchange rate from the current N1600/$1 to around N460/$1, which he believes would lead to a significant reduction in fuel prices to about N450 per litre.
The real problem and ways out. Emphasizing that the current economic hardship is not a direct result of the removal of the fuel subsidy but rather the consistent devaluation of the Naira, Obadina said:
“The real issue is the devaluation of the Naira. The dollar cost of importing fuel has remained relatively stable over the years, while the Naira continues to weaken. “Strengthening the Naira is the only sustainable solution to Nigeria’s economic problems.”
Obadina also criticized the decision to float the Naira, arguing that it has only exacerbated the country’s economic woes.
He called on President Bola Tinubu to reverse this policy and return to a fixed exchange rate, which would help stabilize fuel prices and curb inflation.

Lies!

Nlfpmod.......

jmoore:
Having PhD doesn't mean the holder can't misyarn.

An entrepreneur that buys petrol at 165 naira previously is now buying petrol at more than 1,200 naira. And this 'expert' is expecting the entrepreneur not to raise prices of his goods and services if only naira was not floated and only petrol subsidy was removed.

I don't think that is exactly what he implies. He's not saying that removal of petrol subsidy wouldn't have any harsh effect at all on the populace rather it won't be as devastating as the flotation of the local currency.

For example NNPC is currently selling a litre around #1,070 which is about 63¢ or $0.63 since a dollar is basically 1,700 naira. if our currency wasn't floated and $1 is probably an equivalent of #600 then the same unsubsidized petrol that NNPC is selling #1,070 today would have been selling for #378 by the same organization. There would of course be implications for manufacturers and entrepreneurs but the effects on final consumers wouldn't be that lethal.



Another thing is that petrol is an energy source that may have alternatives. Some consumers that use petrol at home to power gen sets can switch to solar if they can, some dry cleaners may go back to charcoal pressing iron, for diesel users, if diesel becomes more affordable then you can switch, some motorists and tricycles are going for cng now, others are considering electric keke. If transport is costly and your place of work is trekkable you can do that. I don't know if what I'm saying makes sense but I'm just trying to paint a picture that petrol may have an alternative unlike the naira which everybody no matter who you are in Nigeria must use. There's no alternative to the legal tender. If anything happens to it, everybody must collect woto woto.

jmoore:
Having PhD doesn't mean the holder can't misyarn.

An entrepreneur that buys petrol at 165 naira previously is now buying petrol at more than 1,200 naira. And this 'expert' is expecting the entrepreneur not to raise prices of his goods and services if only naira was not floated and only petrol subsidy was removed.

Yes, being a PhD holder doesn't mean one can not say rubbish. What the person is basically telling someone like you is that the current value of our currency in the forex market dictates the prices of all commodities market which has thrown most Nigerians into poverty. Even the current price of PMS is governed by the value of naira in the forex market. If the value of naira is stabilized to somewhere around 750-850, the prices of most commodities will nosedive even petrol. But we have many educated illiterates fool who reason lowly.

Nlfpmod, Tinubu got this policy wrong..........

I agree %100. This has been my opinion.