₦airaland Forum

Dupeodus:
You say the country is heavily dependent on imports as if that must always be the case and policies must be formulated to accommodate that. So, how do you fund the imports?

GeneralDae:
Exactly. This is where we were as at September 2023 when the naira was approaching over 1000/$ for the first time.
There was real scarcity of forex for businesses and we were going down already such that letters of credit for imports were already been rejected. We were thinking of selling our stakes in NLNG to raise $10 Billion at the time but that would have been tricky.
We needed to convince investors that monies trapped in Billions of dollars due to FX backlogs would be paid back in order to bring back FPI’s which were very low. At this point the FMDQ was getting an average of $30 million a day ( down from the usual $200 million a day). It was a crises and only heavy borrowing ($10 Billion and above) would have steadied the ship if we were to maintain an FX rate below 1000 at that stage.

chimex38:
was expecting your revenge playful gbas-gbos reply.

You no disappoint..
eee say na syllabus

@Mike say na "Tip off" to avoid being caught in the "expo" web

mikeapollo:
What I mean is that it is wrong to float and devalue the currency by 200% in an import-dependent economy if the objective is to accrue more revenue.
The better option is to limit or reduce the import of non-essential items, so we can reduce the pressure on the exchange rate, as close the trade gap rather than just devalue the currency anyhow just because you want more revenue in local currency.

Resurgent2016:
Wait till after the loan repayment due in Nov. If Naira holds steady past that date, the only thing that threatens FX will be election.

mikeapollo:
I am not even talking about Nigerian govts alone. All over Africa and developing countries, all the progressive govts. do gradual, piece-meal, phased devaluation in order to be able to manage the dislocations. There is no country that did what the man in Abuja did (reckless floating and subsidy removal that has been able to recover and achieve purchase power parity with the dollar, as the earlier OP mentioned. It will not happen.
With a weak industrial base, we need to incentivize local producers to produce more. I expected the govt to ban importation of some non-essential items to reduce the pressure on the naira, and then do a gradual, piecemeal management of the exchange rate to avoid the harsh effects of a reckless floatation.

pluto09:
I think this is where you are getting it wrong.
We didn't devalue the currency just because we wanted more revenue in naira or because the leaders are wicked.
The currency was devalued primarily because we didn't have enough foreign currency to keep subsidizing the naira and maintain an artificial peg.

mikeapollo:
My friend, it is a combination of both factors. Even the FGN is openly saying that they are able to give more funds to the states because of the devaluation of the naira and removal of fuel subsidy.
The devaluation of the naira also enables the govt to receive more naira for each USD of crude export (e.g. N1,535, instead of N500).
A govt that has been battling with huge budget deficits (in naira) and you are pretending and here saying that they did not devalue because of need for more naira revenue.
Govt historically tweaks these things to get more revenue to support the budget: taxes and levies, increased exports, foreign loans, and exchange rate devaluation (to boost export receipts in local currency)

Agbalowomeri:
So the primary reason for devaluation is to get more revenue? Then government does not need to be productive na. Just dey devalue dey go

mikeapollo:
I never said it the primary reason. I said it is one of the reasons.

Agbalowomeri:
It cannot even be a reason. The only reason why there is more revenue after devaluation is that there is less pressure on the dollar which can be deployed elsewhere instead of defending the naira.

If it is one of the reasons, then the government should not be fighting tooth and nail to keep the naira stable

mikeapollo:
.

Lol! I don't know why we sometimes deny the obvious truth.
Every economist will tell you that devaluation of the local currency leads to higher liquidity (exports revenue)for the govt to be able to support its budget.
If you still doubt, read the following (see paragraph 9-11):
https://www.chathamhouse.org/2025/03/nigerias-economy-needs-naira-stay-competitive

PETERiCHY:
OANDO gearing up for a MEGA RALLY
WE did some TOP UP @t #50

BARGAIN HUNTERS TAKE NOTE!

crownprince2017:
So it's only government that do export?
The primary aim of devaluation is to discourage importation, encourage exportation and also encourage local production of Good and services.

mikeapollo:
.

Lol! I don't know why we sometimes deny the obvious truth.
Every economist will tell you that devaluation of the local currency leads to more liquidity (revenue)for the govt to be able to support its budget.
If you still doubt, read the following (see paragraph 9-11):
https://www.chathamhouse.org/2025/03/nigerias-economy-needs-naira-stay-competitive

Agbalowomeri:
It cannot even be a reason. The only reason why there is more revenue after devaluation is that there is less pressure on the dollar which can be deployed elsewhere instead of defending the naira.

If it is one of the reasons, then the government should not be fighting tooth and nail to keep the naira stable

Mpeace:
For the sake of investors in this platform, I just pray Transcorp power price does not fall to meet the Oga ( Transcorp plc) at sub 50.

mikeapollo:
My friend, it is a combination of both factors. Even the FGN is openly saying that they are able to give more funds to the states because of the devaluation of the naira and removal of fuel subsidy.
The devaluation of the naira also enables the govt to receive more naira for each USD of crude export (e.g. N1,535, instead of N500).
A govt that has been battling with huge budget deficits (in naira) and you are pretending and here saying that they did not devalue because of need for more naira revenue.
Govt historically tweaks these things to get more revenue to support the budget: taxes and levies, increased exports, foreign loans, and exchange rate devaluation (to boost export receipts in local currency)

Mpeace:
You are quoting Chathamhouse. Also add World bank and IMF. All those people that keep feeding us with lies and making us devalue since 1986.
Meanwhile the Europeans and Americans do not take their advice or methodology in their times of crisis.

What devaluation does to us is to make our raw materials cheap for the Americans and Europeans.
It would have been beneficial if we were a producing economy and not an importer.

With devaluation, it's now more expensive to buy the machinery needed to industrialize.

Eg a block moulder that would have bought a block moulding machine from china at $1million, will now spend N1.5billion at current exchange rate of N1,500/$ as against N700million using the pre-devaluation rate of N700.

If you also do the maths by calculating the money shared monthly between the FG, states and local governments you will realise that it has not really changed from the subsidy/ pre-devaluation era. In dollar terms, it is almost the same. The current government really need to explain the gains from the subsidy removal

pluto09:
Of course the government will get more local currency for devaluation but that will also makes servicing foreign denominated loans more expensive .
If you actually think the floating of the currency by PBAT is for government to get more revenue and not primarily because there was acute dollar shortage, I want to believe it is a waste of time engaging you further on this subject.

Mpeace:
For the sake of investors in this platform, I just pray Transcorp power price does not fall to meet the Oga ( Transcorp plc) at sub 50.

Streetinvestor2:
The government has been saying part of the gain is they have more money to share in naira value.
I supported the policy don't get me wrong.
I supported it because I hoped the borrowing will reduce drastically but the revise is the case with this ones implementing it.
I supported it because I was expecting the monetary gains to be channelled to sectors that will make living better for nigeria

What do we have in return is opposite
We are seeing all kind of waste. All kind of bloated contracts on things that are not immediate needs.The government and her agents are living larger than life while Nigerians who made the sacrifice are dieing of hunger and poverty. This has made a intended good policy to be a nightmare because of the people implementing it has surrounded it in corruption.
U hear 419billion shared to 6 million nigeria. How many billion for renovation of airport, conference center, high way of fraud when exiting roads are not motorable. U hear private jets,150 billion to build bus terminals etc
Oga the government is to corrupt. Is this government living and spending like we whr in economic crisis. The gains are just being looted
Make we dey talk truth and leave politics.
Next yr u want me to increase ur unnecessary expenses by taxing like we have in working economy. Make dey come collect make I see from me.What I am seeing in teaching hospital in the past two months because I have someone with cancer health challenge. We practically do everything outside the hospitals because those things no dey the hospital at cut throat price. I am seeing the unbelievable because many can't afford it in the hospital

Streetinvestor2:
What I will advise my enemy never to do in this business
1 Don't buy junk or dead business stock
2 Don't ever buy sound stock shares that is illiquid if u are not planning to hold for yrs..U go hear shaga when u whan leave after the appreciation way u dey see for paper