₦airaland Forum

I don't know what is wrong with the Mr President he does not need a seer to know that the CBN Governor is out of tune with the current economic situations ..under him things are going from bad to worse...must Baba wait till the economy collapse before he shows the man his way out..? Upon all the billions that were recklessly withdrawn by the former president & his cronies..what is this president waiting for again to confirm the unfit nature of the man at the apex bank ?

Proudlyngwa:
Hope some people know what the parallel market is.

Could you please enlighten me on what the parallel market means?

Pk001:
If they dare remove Emefiele Naira will further depreciate to 500 to 1dollar.
The problem is not him but PMB.
The way PMB is running the economy, investors are scared away.
Pretending to be fighting corruption but opening other leakages.

wow, this is a new level of shallow, how can someone be this empty??

/
Nigeria is in trouble?!

I couldn't care less.

\

yorme:
Could you please enlighten me on what the parallel market means?

Parallel market in this context is the bureau de change. i.e the Hausa men selling dollars chasing your car, when you drive past major hotels.
The dollarisation of the economy during the last elections, created a scarcity , since we are an import based nation and a petrodollar dependent economy it is telling us. Until we generate enough export commodities to balance the deficit and start local production of imported goods,
Alarm go still dey blow.

Chukzyfcb:
You tell people to avoid foreign products and patronize local product, okay where re the local products How many products do we even produce and at what price, standard and quantity? Are you even aware of the cost of manufacturing in nigeria, according to the president of MAN(manufacturers association of nigeria) on Good morning Nigeria, NTA; he says the Cost of manufacturing is 2x(2times) the cost in ghana and 9times of what it is in China. So you can Imagine............
Its very easy to say, go & purchase local products, but the reality remains that there are not enough products to go round, and so many challenges like power, transport, cost of obtaining loans hinder local production to take place......There has to be working infrastructure before you even suggest local manufacturing. #my take

MAN's president is behaving like an avarage lazy Nigerian, excuses excuses excuses instead of solution solution solution. We have been made lazy by relying of cheap oil driven economy for so long that we have forgotten how to be innovative and competitive. What stops a MAN from organizing a consortium of manufacturers and building an industrial village, where there can partner with other investors to provide basic infrastructure they need? They can partner with the new power distribution companies to provide constant power to them at a premium price. Housing estates like VGC have almost 24 hr power because of such special arrangements.
Modern businesses do not depend on loans only as source of capital. There are other sources of raising capital like crowd funding, joint ventures, etc. I have a friend in london who has chinese investors that are willing to invest up to $10 billion in Nigeria. He told me they are yet to find reliable and credible partners.

Nigerians should stop looking for excuses and reasons for failures and instead look for ways to succeed. There are a thousand excuses for failure but only one way to succeed.

MAN should pressure the National assembly to ease the laws and condition for doing business in Nigeria. For example to get license to produce ordinary pure water, NAFDAC would require a fee of up to N1,000,000. So a young entepreneur wanting to start a pure water business would need to find N1 million to pay NAFDAC before he even start searching for capital to pay for factory, equipments, trucks for transportation and distribution, pay staff salary and running costs, generator and fuel costs, etc. Then there is a pletoria of other agencies to pass through like SON, state governments, local governments and then multiple taxation.
This is just a simple pure water industry. You can imagine the huddles a entepreneur who want to set a fruit juice processing factory would face.

saintopus:
This is very smart reasoning, but you see the implication of directly devaluing the Naira will create an increase in inflation and high cost of goods and services. From the ''Body Language'' of Mr President, he seems to enjoy a socialist kind of economy which is one of the high points of his campaign promises. Going by this, the devaluation may not be approved by the president. The continual drop in the value of the naira will also mean that our foreign reserves will be depleted in time.
So what then is the way out, to me it will start with a sincere approach to a new policy aimed at first reducing cost of running government with a honest example and not a propaganda and selfish approach as we are currently seeing.
For example, I heard that couple of BMWs will be purchased by the presidency this year as highlighted in the 2016 Appropriation Bill sent to the National Assembly. I see no reason why locally made vehicles like Innoson and others should not be used instead.
This is why I am saying that it will start with a honest example by the presidency to turn around events in the nation.

There is not a lot of difference between CKDs imported to make Innoson and FBU BMWs imported by Coscharis. Both are imports and require dollars. I agree with you that Nigeria possibly do not need the 'socialist' posture at the centre now.

Proudlyngwa:
I like it when people want to learn.keep it up.

The difference between the parralel market and official rate is about a hundred naira. Our economy is controlled by the petrodollar ,the consequence being that as an import driven nation, we will always suffer when the value of crude is weak .

The decline in crude sale is not due to the united states no more buying from us( one of this days I will do a topic on that) but because most buyers have become suppliers.

Any serious economy should be 60% agric
10% security
5% research oriented

So how is the parallel mrkt dollar rate related to our economy? Because I like to buy stuffs overseas. And I want the official rate applicable to mine.

eden2015:
So how is the parallel mrkt dollar rate related to our economy? Because I like to buy stuffs overseas. And I want the official rate applicable to mine.

It is far easier to source money from the parralel market than the controlled markets.

http://lexicon.ft.com/Term?term=parallel-market

Due to scarcity in the vault, release of dollars to importers for non essential commodities has been stopped, causing essecive shortage in the parallel market. We need to turn to local production for now and wait till we can generate money through export

http://www.cenbank.org/IntOps/FXMarket.asp

kayfra:
We are a victim of a mono product commodity export based economy and when prices tank, then so is our fortune and currency. We had a boat load of opportunity under the last government to structurally change our economy by building infrastructure and diversifying our exports. But we blew away the days of oil at $140 a barrel. That was lost on private jets and ridiculous properties.

Anyway, accepting our reality let's look at what will alleviate the pain.

Monetary policy - CBN (Emefiele)
1. Devalue the naira and stop wasting reserves on our ego. Naira is not worth the official rate and let's be done with that reality. Of course, inflation will rise, which is inevitable.
2. Lower interest rates. This is to make the cost of borrowing cheaper, so more naira is available to spend to keep a buoyant economy. The banks won't enjoy runaway profits but they can make up for that in fees.
3. Stress test the banks and based on the results, recapitalizate the banks. We can't afford to have weak banks that'll collapse anytime soon. If the banks are not strong enough to do real banking, then consolidate them.
4. Formulate policies for banks to increase retail lending which will grow the economy when money is available to individuals to invest in businesses and other entrepreneurial activities such as farming. We have 160 million people and can run a growth based economy internally.
5. Put more import tariffs on frivolous goods to encourage local production.
6. Prioritize the issuance of forex to companies importing industrial or agricultural machines. Anything that will foster local production should be encouraged. This will get us from being a net exporter of raw goods to a net exporter of processed or semi processed goods.


Fiscal policy (Adeosun)
Kemi is already doing most of my recommendation

1. Look for ways to seal all the leakages in parastatals.
2. Retrieve every single kobo of revenue made by government agencies which will include customs, ports, waec, jamb etc etc
3. Review the cost of governance with the aim of drastically lowering recurrent expenditure. This may involve firing redundant people.
4. Review our VAT. We have a low tax rate and we need to tax consumption of foreign goods to discourage our dependence on them.
5. Broaden the tax base with targeted taxation across the economy. Anybody with a stall or farm has to pay taxes. No exceptions.
6. Automate governance using technology. We need an ERP solution and data warehouse. This will give easy access to information and reports so we can plan and make better policy decisions.
7. Review fee structure across the board. This will include police tickets, traffic tickets, tolls, road tax etc etc


Buhari
1. Communicate a vision and hire an economic adviser that can articulate the vision as concrete plans with milestones.
2. Go after trade agreements with African countries. We have a lot to sell the less developed African countries and can effectively replace a lot of their foreign partners. This will increase dollar repatriation from the revenue we make in those countries.
3. Stop speaking so negatively about Nigeria. You kill consumer and investor confidence when the head of state sounds so negative.
4. Fight corruption but don't let it take center stage of your government. It just shows you're not capable of managing a complex country with varying priorities.
5. Strengthen our defense. It's your #1 priority as commander in chief.
6. Go get a communication coach to teach you the art leadership using verbal and non verbal cues.


NASS
1. Pass PIB bill as a matter of urgency.
2. Pass any bill that will clear roadblocks and speed up the incubation of businesses. Example. Why does it take a year to get mining license? There are other examples.
3. Do real work and pass laws that will help the common man and big business. They go hand in hand


The People
1. Work hard, pray hard and party hard.

Good thinking!!! Good Product!!!

Dee60:
There is not a lot of difference between CKDs imported to make Innoson and FBU BMWs imported by Coscharis. Both are imports and require dollars. I agree with you that Nigeria possibly do not need the 'socialist' posture at the centre now.

At least there will be employment created in the process of patronising locally manufactured goods. That is the point am trying to make

Elxandre:
How is it our fault that Nigerian goods are substandard?
You can't get quality jeans, shoes, phones etc and you blame us for purchasing foreign goods abi?

just listen to yourselves, all blabbing but suggesting your solution,who stopped you from being creative and inventing your own phones, shoes and bags, most Nigerians don't do shiit for the country, create they can't, think of a better idea they can't but blame somebody, they all loll out like zombies and start to blame everyone blamable, it is substandard partly becase we the people never think of creating things here ror making our country better. it is a lot easier to blame, so much easier but profess a solution or logical way out, nothing, empty.

We are waiting. nduu.si@gmail.com Let me know if you need dollar, pounds.

Bevista:
Blaming the CBN Governor for the fate of the Naira is like blaming the management of Chevron for sacking 7,000 employees and reporting a 40% reduction in earnings - all due to record low oil prices. The sad truth is that certain economic events will always follow certain market realities.
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Our senators need to understand the interwoven nature of economic variables. The currency of every major oil exporting country is depreciating like hell. Even heavyweights like Saudi Arabia, Canada, Russia, Norway, etc with huge FX Reserves (in excess of $500bn) are suffering currency devaluation. Is it an import-dependent Nigeria with Reserves of $28bn that will not suffer currency devaluation? Is it the CBN Governor that authorized that our small dollars be shared to politicians? Is it CBN that said we should not invest in infrastructure to support local manufacturing? Is CBN responsible for our craze for foreign goods?
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My only grouse with the CBN Governor is that he should converge the prices at the parallel and official market by officially devaluing the Naira. The current divergence (~N100) is providing banks with arbitrage opportunities for exploiting their customers. An official exchange rate in the region of N240 - N260 might be appropriate for now.
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What Nigeria needs right now are real & clear Import Substitution policies/programs to reverse our craze for foreign goods. This will reduce the demand for dollars and consequently reduce the pressure on the Naira. That is not the job of Monetary authorities but that of Fiscal authorities. They should be summoning Kemi and Enelamah (the guy in charge of Trade & industries).

To me, this is the best comment so far on this tread.

wirinet:
MAN's president is behaving like an avarage lazy Nigerian, excuses excuses excuses instead of solution solution solution. We have been made lazy by relying of cheap oil driven economy for so long that we have forgotten how to be innovative and competitive. What stops a MAN from organizing a consortium of manufacturers and building an industrial village, where there can partner with other investors to provide basic infrastructure they need? They can partner with the new power distribution companies to provide constant power to them at a premium price. Housing estates like VGC have almost 24 hr power because of such special arrangements.
Modern businesses do not depend on loans only as source of capital. There are other sources of raising capital like crowd funding, joint ventures, etc. I have a friend in london who has chinese investors that are willing to invest up to $10 billion in Nigeria. He told me they are yet to find reliable and credible partners.

Nigerians should stop looking for excuses and reasons for failures and instead look for ways to succeed. There are a thousand excuses for failure but only one way to succeed.

MAN should pressure the National assembly to ease the laws and condition for doing business in Nigeria. For example to get license to produce ordinary pure water, NAFDAC would require a fee of up to N1,000,000. So a young entepreneur wanting to start a pure water business would need to find N1 million to pay NAFDAC before he even start searching for capital to pay for factory, equipments, trucks for transportation and distribution, pay staff salary and running costs, generator and fuel costs, etc. Then there is a pletoria of other agencies to pass through like SON, state governments, local governments and then multiple taxation.
This is just a simple pure water industry. You can imagine the huddles a entepreneur who want to set a fruit juice processing factory would face.

Its good to see you understand my stance. Seeing how expensive it is to startup production here, its difficult for the average nigerian to pick up the mantle.you just mentioned the fee necessary for pure water, and that's how it goes for other commodities. But I'll like to chip in something regarding power issues. There are reports on ground that our manufacturers of eleectric meters largely in the east have been pushed aside by the "dicos" I.e those in charge of distributing charges & interacting with the customers. Infact, the president of disco says what the manufacturers have produced are not upto standard that they require. So u can see the problem. One has produced,the other gives reason for not patronizing. The opportunities are there for any maufacturing industry to thrive, but external factors can hinder the growth. From hostile environs, to corrupt govt officials demanding one tax or another or even lack of co-operation from the populace. Its not just MAN alone, its a collective effort. But first, FG has to create the enabling environment for industries to thrive! POWER being the MOST IMPORTANT!

wirinet:
Sorry to say, i do not have a background in economics. My training is Architecture.

I am not convinced that inflation will reduce the purchasing power of citizen. Why? because, first we have a HUGE population and secondly the imported items we purchase are essential commodities, ie, Rice, Sugar, Petrol, Kerosine, Diesel, clothes, matches, candles. As long as we do not substitute imported essential items with local ones, we are forced to buy at what ever price and with whatever means. Take yourself as an example, will you buy less petrol if petrol is selling at N150/litre? will you buy less rice if rice is N15,000 per bag? The only time you can talk reducing aggregate demand for an imported essential item is if there are local alternatives.

As i said, the Naira jumped from N0.75 to the dollar in 1983 to about N250 today, had there been an aggregate reduction in the demand for dollars or imported items over the years? What guarantee do we have that there would be a reduction in the demand for essential imported items if dollars is sold at N500 to the dollar?

Every economic agent (firms, individuals, governments) are always faced with a Budget Constraint. There is only so much any body can buy with a Finite budget.
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If petrol increases to N150/ltr and it is so critical to my requirements that I cannot reduce consumption, then I'll have to spend more now for the same amount of petrol. That leaves me with less amount to spend on other items. You might want to read about Substitution Effect & Income Effect in microeconomics.
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If people, generally, now spend less on those 'other' items, the importers of those items will import less leading to less demand on FOREX.

[size=18pt]Nigeria should be restructured economically[/size]

Nigerians were warned!

History always repeats itself.

For the sake of innocent and hardworking Nigerians, may we overcome this FX doom.

wirinet:
Sacking Emefiele would not change anything. Soludo was able to "perform" because during his time oil was averaging $60 per barrel and we had huge foreign reserves and excess crude savings. Now we have low savings and low oil prices. At $30 per barrel Nigeria would not even be making up to $2 per barrel. Mind you the estimated cost of extracting Nigeria's crude is put ar $28 per barrel, so the Government and oil companies will share $2 per barrel.

So unless everybody (including Federal, State and Local governments, private companies and individuals) sit up and work at reducing exports and produce and consume made in Nigeria products instead of blaming Buhari, then the Naira will continue its free fall.

thank you my brother,,,youuu should be made finance minister!!!...abegi tell them....their rantings is getting silly....

if you dont wash your cloths,you will stink.....its nature you see......

The solution is not devaluation of naira but restrictions should be imposed on Bureau D Change, its a scam and should be scrapped.

There are over 2000 Bureau d Change outlets shrinking the Nigerian economy. CBN supply foreign currency to them and they end of controlling the forex market.

Buhari get rid of middle men and reach out to Nigerians directly and Nigerian economy will bounce back.

PROVACATEUR:
How can we be going down daily and some people are still praising this govt. I import some of my wares and for sometime now I can't break even because the clients are not ready to shoulder the extra add on

And why are you importing? Why not think if making something locally.

wirinet:
MAN's president is behaving like an avarage lazy Nigerian, excuses excuses excuses instead of solution solution solution. We have been made lazy by relying of cheap oil driven economy for so long that we have forgotten how to be innovative and competitive. What stops a MAN from organizing a consortium of manufacturers and building an industrial village, where there can partner with other investors to provide basic infrastructure they need? They can partner with the new power distribution companies to provide constant power to them at a premium price. Housing estates like VGC have almost 24 hr power because of such special arrangements.
Modern businesses do not depend on loans only as source of capital. There are other sources of raising capital like crowd funding, joint ventures, etc. I have a friend in london who has chinese investors that are willing to invest up to $10 billion in Nigeria. He told me they are yet to find reliable and credible partners.

Nigerians should stop looking for excuses and reasons for failures and instead look for ways to succeed. There are a thousand excuses for failure but only one way to succeed.

MAN should pressure the National assembly to ease the laws and condition for doing business in Nigeria. For example to get license to produce ordinary pure water, NAFDAC would require a fee of up to N1,000,000. So a young entepreneur wanting to start a pure water business would need to find N1 million to pay NAFDAC before he even start searching for capital to pay for factory, equipments, trucks for transportation and distribution, pay staff salary and running costs, generator and fuel costs, etc. Then there is a pletoria of other agencies to pass through like SON, state governments, local governments and then multiple taxation.
This is just a simple pure water industry. You can imagine the huddles a entepreneur who want to set a fruit juice processing factory would face.

Best comment so far