₦airaland Forum

EasternLeopard:
OK

First answer the rest of the points raised.?

Secondly is dangote running at a loss now that he has reduced the price of his cement .?

Do you see reason why buhari had to reduce inflation rate to 5%

atlwireles:
The reality of business operations demand such a law. Why lend a person N100, @6%. when inflation is 9%. You have lost money right out of the block. You are already at -3% loss.

Simple logic.

CFCfan:
I wouldn't advocate for a wholesale 1000% increase in import duty. It would only be the elite that would be able to afford TV sets and cars
Besides, other countries may retaliate, and slap a similar duty on Nigerian goods.

When the Nigerian-based manufacturing plants of Nissan, KIA, and Innoson penetrate the Nigerian market to an appreciable level, then we can talk of a gradual increase in import duty.

It will only make sense to increase duty on product the we produce locally or at least 80% production can be done. I see no reason why we should be importing consumables for instance.

What do we really export that countries want to retaliate with? We are a consuming economy, we have not even covered 10% of our local market, we still have the whole of West Africa to ourself. We need to look inward and stop chasing dollar with our few naira.

EasternLeopard:
Do you agree with me that interest rate affects cost of production. Yes or No


If we reduce interest rate the cost of production will decline therefore price of finished products will decrease.

When cost of finished products decline, demand will increase and the these 4 sectors will make more money True or False.

If demand increase,

1) production will most likely increase. Meaning more people might be employed to increase production which will put more money into their pockets therefore stimulating the economy which will make it easier to tax people on the long run and take Nigeria out of oil wealth dependence.

2) New businesses will enter into those sectors in order to make money. This will increase competition further driving down price, create more jobs and put more money into peoples pockets making it easier to tax people on the long run .


3) We will achieve the Dangote scenario in these key factors. Yes or No

This silly government uses high interest rates as a means to curb inflation. Its lazy thinking

EasternLeopard:
After Food clothing shelter, the most widely used products are electronic and electrical products.

We should sucure and stabilise areas that we are already into, like textile for instance. We also have a good electrical (copper wire) industry that we need to protect from inferior Chinese wires. In fact our copper wires are one of the best in the world. Industries like these needs government protection.

We never really produced electronics, we can't start chasing shadows, this government does that a lot.

atlwireles:
Interest rate effect the cost of production in a credit based economy. SME in Nigeria are not affected by interest rate, because 95% of them don't have bank credit or have access to obtaining said credit.

Nigeria businesses need help with the cost of transportation and the cost of energy. Most people, even in advanced economies don't start businesses with the help of bank loans. Family and savings account for most seed money used in new businesses.

How is your first paragraph an advantage? Its rather a big problem. Do you know how many SMEs die yearly?

Obiagelli:
It will only make sense to increase duty on product the we produce locally or at least 80% production can be done. I see no reason why we should be importing consumables for instance.

What do we really export that countries want to retaliate with? We are a consuming economy, we have not even covered 10% of our local market, we still have the whole of West Africa to ourself. We need to look inward and stop chasing dollar with our few naira.

Right. I was referring to a time when our non-oil export accounts for at least 40% of the forex earnings. Not now

CFCfan:
Right. I was referring to a time when our non-oil export accounts for at least 40% of the forex earnings. Not now

Oh, now i get your point. When we eventually get back to that position, we have to play the WTO politics to our advantage, just like china and the US does.

Obiagelli:
How is your first paragraph an advantage? Its rather a big problem. Do you know how many SMEs die yearly?

That was the point I made, the problem for Nigerian business is not interest rates by access to credit. Business failing or dying yearly, is normal. 8 of 10 new business fail, because of

Lack of experience
Insufficient capital (money)
Poor location
Poor inventory management
Over-investment in fixed assets
Poor credit arrangement management
Personal use of business funds
Unexpected growth
Competition
Low Sales

atlwireles:
That was the point I made, the problem for Nigerian business is not interest rates by access to credit. Business failing or dying yearly, is normal. 8 of 10 new business fail, because of

Lack of experience
Insufficient capital (money)
Poor location
Poor inventory management
Over-investment in fixed assets
Poor credit arrangement management
Personal use of business funds
Unexpected growth
Competition
Low Sales

This so wrong on many levels. Number 1 business killer in Nigeria is capital, low interest capital. Why do you think Hitv died and dstv is still alive? Interest rate.

Obiagelli:
This so wrong on many levels. Number 1 business killer in Nigeria is capital, low interest capital. Why do you think Hitv died and dstv is still alive? Interest rate.

How many Nigerian business have access to capital? Competition killed Hitv. 80% of new business started in western economies crash and burn within 18 months. Are they lacking in low interest capital too?

atlwireles:
How many Nigerian business have access to capital? Competition killed Hitv. 80% of new business started in western economies crash and burn within 18 months. Are they lacking in low interest capital too?

Competition alone didn't kill hitv, high interest rates did. They took a loan to buy Epl rights, dstv did the same but interest rates in South Africa is far lower, about 9%. Tell me how these 2 companies are supposed to compete with the same subscription rate.

Obiagelli:
Competition alone didn't kill hitv, high interest rates did. They took a loan to buy Epl rights, dstv did the same but interest rates in South Africa is far lower, about 9%. Tell me how these 2 companies are supposed to compete with the same subscription rate.

Competition killed Hitv. They knew the interest rate before they took, what ever loans. Then add any of this other factors.

Lack of experience
Insufficient capital (money)
Poor inventory management
Over-investment in fixed assets
Poor credit arrangement management
Personal use of business funds
Low Sales

Obiagelli:
Oh, now i get your point. When we eventually get back to that position, we have to play the WTO politics to our advantage, just like china and the US does.

Exactly

atlwireles:
That was the point I made, the problem for Nigerian business is not interest rates by access to credit. Business failing or dying yearly, is normal. 8 of 10 new business fail, because of

Lack of experience
Insufficient capital (money)
Poor location
Poor inventory management
Over-investment in fixed assets
Poor credit arrangement management
Personal use of business funds
Unexpected growth
Competition
Low Sales

High Interest rate is one major reason why SME avoid banks.

High interest rate leads to higher inflation rate.

Higher inflation rate leads to higher price of products.

Higher price of products leads to lower demand.


Lower demand leads to lower sales.

Lower sales leads to lower profit

Lower profit leads to collapse if income falls below expenses.






Obiagelli CFCfan and atlwireless

Obiagelli:
Competition alone didn't kill hitv, high interest rates did. They took a loan to buy Epl rights, dstv did the same but interest rates in South Africa is far lower, about 9%. Tell me how these 2 companies are supposed to compete with the same subscription rate.

People do not know the power of interest rate and its impact on economic development


I wish atlwireles CFCfan and you could search out the interest rates of developed nations.

Descartes phockphockman nigerianvenom biafraqueen egift aresa backdatassup ejine evergreen

This for intellectuals

No insult or politics needed


What will you do if you are CBN

BlackTechnology:
High Interest rate is one major reason why SME avoid banks.

High interest rate leads to higher inflation rate.

Higher inflation rate leads to higher price of products.

Higher price of products leads to lower demand.


Lower demand leads to lower sales.

Lower sales leads to lower profit

Lower profit leads to collapse if income falls

Ironically, high interest rates is one of the tools central banks use to rein in inflation. With high interest rates, fewer people would be willing to borrow, thus limiting the amount of currency in circulation. Nigeria's inflation rate is around 8%.

But I believe that 30% interest rates will NEVER lead to sustained, robust economic growth. It is also estimated that the unemployment rate amongst the youth, and fresh graduates is over 70%: that's a time bomb waiting to explode. Somehow, the banks should be made to lend to SMEs at single digit rates, if the policy makers are serious about lifting more people into the middle class.

BlackTechnology:
People do not know the power of interest rate and its impact on economic development


I wish atlwireles CFCfan and you could search out the interest rates of developed nations.

What role is interest rate in developed nation playing here? 80% of new business fail in western Nation in their first 18 months. Even with 0% interest they still fail.

BlackTechnology:
People do not know the power of interest rate and its impact on economic development


I wish atlwireles CFCfan and you could search out the interest rates of developed nations.

The interest rate here in the US, is 0.25%, as set by the federal reserve.

atlwireles:
What role is interest rate in developed nation playing here? 80% of new business fail in western Nation in their first 18 months. Even with 0% interest they still fail.

Do you know that more would have failed if the interest rate was increased.

CFCfan:
Ironically, high interest rates is one of the tools central banks use to rein in inflation. With high interest rates, fewer people would be willing to borrow, thus limiting the amount of currency in circulation. Nigeria's inflation rate is around 8%.

But I believe that 30% interest rates will NEVER lead to sustained, robust economic growth. It is also estimated that the unemployment rate amongst the youth, and fresh graduates is over 70%: that's a time bomb waiting to explode. Somehow, the banks should be made to lend to SMEs at single digit rates, if the policy makers are serious about lifting more people into the middle class.

The problem with lots of central banks especially those in Africa is that they do not have a deep understanding of the relationship btw interest rate , inflation rate and economic development.


Unknown to them

Interest rate influences inflation rate and not vice versa


If interest rate decreases inflation rate decreases and vice versa


But most graduates of money courses think it is inflation rate that influences interest rate.

CFCfan:
The interest rate here in the US, is 0.25%, as set by the federal reserve.

Yet Nigerian financial experts / graduates have failed to study why nations like US operate very low interest rate.

BlackTechnology:
Do you know that more would have failed if the interest rate was increased.

let's not do this again. I just showed you a place where almost zero interest made no difference in the business failure rates.. Nigeria businesses need access to credit, the market will regulate what the interest rate is set at. Fact is 90% of Nigerian business are not bankable. Deal with the underline fundamentals and allow the market do its thing.

If we need lower interest rates in Nigeria, then, let's control government spending and reduce the money supply.

BlackTechnology:
Yet Nigerian financial experts / graduates have failed to study why nations like US operate very low interest rate.

I think the issue may be political. The Nigerian elite do not too many people to challenge their financial status. The high interest rates ensure that govt looters, who have looted enough to be able to service the loans, would still maintain their economic monopoly.

atlwireles:
let's not do this again. I just showed you a place where almost zero interest made no difference in the business failure rates.. Nigeria businesses need access to credit, the market will regulate what the interest rate is set at. Fact is 90% of Nigerian business are not bankable. Deal with the underline fundamentals and allow the market do its thing.

If we need lower interest rates in Nigeria, then, let's control government spending and reduce the money supply.

Ok correct me


Don't you think you echoed my view and contradicted yourself.

You said our SME need access to credit.

Sir all these banks littering Nigerian landmass is it not credit they offer.?

Now if you agree with me that they offer credit, why is SMEs patronization low


Pls educate me.


Help me see your angle clearly.

BlackTechnology:
Ok correct me


Don't you think you echoed my view and contradicted yourself.

You said our SME need access to credit.

Sir all these banks littering Nigerian landmass is it not credit they offer.?

Now if you agree with me that they offer credit, why is SMEs patronization low


Pls educate me.


Help me see your angle clearly.

On Monday morning take any business person from your street or inner circle, seeking credit, walk into any bank and request credit. Come back and tell us how it went. Please try all the banks in your area of operation.

atlwireles:
On Monday morning take any business person from your street or inner circle, seeking credit, walk into any bank and request credit. Come back and tell us how it went. Please try all the banks in your area of operation.

I went with a close blood to obtain loan last 2wks and they gladly gave us

This close blood is a business person so I do have the opportunity of interacting with the person co-business partner


Their greatest complain is high interest rate and collateral( guarantors).

To be frank, l am close to people who have good bad and ugly banking relationship.

BlackTechnology:
High Interest rate is one major reason why SME avoid banks.

High interest rate leads to higher inflation rate.

Higher inflation rate leads to higher price of products.

Higher price of products leads to lower demand.


Lower demand leads to lower sales.

Lower sales leads to lower profit

Lower profit leads to collapse if income falls below expenses.






Obiagelli CFCfan and atlwireless

Well said.

CFCfan:
I think the issue may be political. The Nigerian elite do not too many people to challenge their financial status. The high interest rates ensure that govt looters, who have looted enough to be able to service the loans, would still maintain their economic monopoly.

Besides, its CBN policy to curb inflation. Very daft policy i must say.

BlackTechnology:
People do not know the power of interest rate and its impact on economic development


I wish atlwireles CFCfan and you could search out the interest rates of developed nations.

You will hardly find a developed or developing country with interest rates and inflation above 5%

Obiagelli:
Besides, its CBN policy to curb inflation. Very daft policy i must say.

The 13% should be for only importers but interest rate for key productive sectors should be reduced to 6%.


So CBN is partially correct but will be completely correct if it reduces interest rate for key productive sectors.