₦airaland Forum

Buhari is a big disgrace not just to Nigeria but the entire World .... Its better we impeach the stupid malam

Eluwilussit:
Nothing. And I mean absolutely nothing. In fact, that's the solution to our economic woes. Pumping dollar/money into the economy will actually stimulate it.

This is actually the time the FG should award lots of contracts. Contractors borrow from banks to pay their workers and suppliers, who in turn take their money to the banks. It is a cycle. It helps to build faith in the economy and the government. Unfortunately, PMB is not a fan of positive economics or common sense.

Anyhow sha, all na change.

Yehman:
Lol! Dats myopic thinking. What will then happen to other sectors of the economy?

What is hot money? How do you insulate your economy from the effect of hot money? What is a loose fiscal policy? Why is the Nigerian economy continuously plagued by hot money? How good is your economics?

CyberWolf:
can't the FG keep their own $$$ while we keep our own(WU, MG, etcetera)? That will reduce pressure on $$$ imagine where I earn $7k in month but bank give me Naira equivalent... Now I wanna go abroad to study, they tell me to go to BDC and buy $$$ at 400/$ What da fvck is that?

Oga, the thing tire me ooo!

Last2comment:
What

Hi

Good thinking. The only solution is for the market to be flooded with dollar, unfortunately the truth is we dont earn enough as a country to have flooded the market. So the ultimate solution is for you and i to go back to farm and produce something that will be worthy of selling abroad so we can earn more dollar then without govt intervention dollar will crash like domino. Lo ba tan

Obiagelli:
I am not in anyway an economist but i have been reading a bit, especially Henry Boyo ( truth be told, i get an anytime i do).
I believe we earn our oil revenue in dollars, what if the federal government pay states their allocation in dollars and the state simple exchange their dollars for naira at the bank or BDC.
With this system there will be surplus dollar in the system that will drive the exchange rate down. A good example of this was during the last election when dollar was raining all over the place (thanks to Dasuki) the dollar fell to 170 naira despite official rate at 197 naira.



www.dailytrust.com.ng/daily/business/51434-naira-gains-against-dollar-at-black-market


So I ask again what will go wrong if we flood the economy with dollars?

A lot will go run.
1. If the CBN flows the market with dollar there will be inflation and worst of all there is no dollar in the country.
2. What if the government pay the state and others with dollar so they can convert it to dollar. That may seem like a good idea BUT, crude coil which is the main product of Nigeria is no longer sold at the same price oil has now drop, before 1 barrel=$ 65 or so but now 1 barrel=$35 or so, you do the maths why, US who is one of the major buyer now produce oil. Can you imagine US that has no oil, How did they do that? Simple they store enough and now they can now sell since they have enough worse of all electric cars are now been produced. That's bad market. Low demand high supply= cheap product. The only fault of the president is that he did not envisaged this when campaigning, I guess that explain the frequent travel to US then, and you know American they will not make a deal except there is something in it for them.
Solution: this been suggested by the UAE one of the OPEC , that if the market is flooded with oil and oil becomes cheap that even he YSA with not gain from it hoping that when they exhaust the stored up oil the price will come back to normal. Mind you this is only affecting countries that have oil only and its a favourable market for the buyers like other African countries without oil. That is why the president want to diversify the economy and move to agriculture so we can have what to fall back on.
The president has good intention, we need to give him the chance and more support. We can do this we are Nigerians. Awoh. God bless

grandstar:
What is hot money? How do you insulate your economy from the effect of hot money? What is a loose fiscal policy? Why is the Nigerian economy continuously plagued by hot money? How good is your economics?

Oga, forget all those policies u read on paper. I bet you if apply them here it won't work cos we don't even have any lay down structures for it to hold water.
* Even though my economics might not be wonderful but at least I know that Fiscal policy involves the government changing the levels of taxation and government spending in order to influence Aggregate Demand (AD) and the level of economic activity.
On the other hand, the loose fiscal policy u mentioned if you truly know what it means has to do with the emphasis on increased spending and lower tax revenue to boost economic activity, with the acceptance of a wider fiscal deficit. I.e; people are expected to spend more (buying from local manufacturing industries and not a country where almost everything is virtually imported) since they are under taxed.
I now put this questions to you..
What is the population of the country you want to apply fiscal policy? how many are children, youths and adults? What percentage of the population are employed? How many people pay the tax (esp PAYE) we are talking about? You want apply loose fiscal policy where there is no data. A country where the last population census result opined that kano is more populated than Lagos or a country where federal census reported that a state for instance; lagos is 9 million plus while state census reported 25 million plus, the same year.
* In economics, hot money is the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts. Put differently, Hot money is money invested in an economy by foreign investors. Hot money is a short-term concept that revolves around speculation of interest rates and exchange rates. If you agree with me, you can see that flows of hot money affected the economies of Spain and Greece in 2009 as they had a period of negative real interest rates fuelled by a low base rate (set by the ECB) and high levels of inflation which led to a reduction in foreign investment as their money was de-valuing. This could have contributed to their economic decline. Suffix to say, Hot money tends to be invested by rich developed countries in poorer countries that have higher interest rates in order to capitalise on the increased returns from banks etc. Having said enough, I'm yet to understand what you mean by "how do you insulate your economy from the effect of hot money?" and "Why is the Nigerian economy continuously plagued by hot money?" Why do u choose to contradict yourself? I will advice you find synonymous words for "insulate and plagued" and replace them to understand what u have typed. Bro, we don't have foreign investors yet and you have started talking about effect of hot money on our economy.
#Team #BuyNaijaToGrowNaira

Obiagelli:
I am not in anyway an economist but i have been reading a bit, especially Henry Boyo ( truth be told, i get an anytime i do).
I believe we earn our oil revenue in dollars, what if the federal government pay states their allocation in dollars and the state simple exchange their dollars for naira at the bank or BDC.
With this system there will be surplus dollar in the system that will drive the exchange rate down. A good example of this was during the last election when dollar was raining all over the place (thanks to Dasuki) the dollar fell to 170 naira despite official rate at 197 naira.



www.dailytrust.com.ng/daily/business/51434-naira-gains-against-dollar-at-black-market


So I ask again what will go wrong if we flood the economy with dollars?

What happens if all you make revenue from is the Yam you grow at your garden, the yam is paid for with Rice which is used to purchase other things (from other countries.). If you decide to flood every room of your house with Rice, how would you get Rice to purchase Fish, meat, pepper etc. You need the little rice you have (foreign reserve) to get other things you need(things imported are paid for in Dollar which is gotten from the CBN).
If the CBN floods the economy with the little they have, they will be left with nothing as foreign exchange for things brought in and we wont be able to import mere Petrol and Rice. These days, our earnings are paltry to our supposed expenses.

Stelvin101:
I have sat down calculate this thing. Nigeria government in collaboration with CBN and Nigeria Banks are the ones destroying this country internally. The last time I saw raw dollar, dollar was around 140 and then there was even little scarcity. Banks wants to make sure they are the only ones giving out dollars and other foreign currency so that they can extort we the masses like they are doing right now and our Mumu government agree to them thinking it's the best. Just imagine the result. Look at other countries, it isn't so. If government allow western union and moneygram to be independent from banks and not affiliated to them like it is in overseas, my brother you go see say Naira will rise to dollar. It is a very simple matter bro. Govt should allow foreign monetary organization like Western Union, moneygram and the rest be independent and separated from commercial banks. Banks greed for exploiting Nigerians has brought this country to this state, they want to be the only body giving out dollar and also receiving so that they can use every opportunity to rob Nigerians. "Nigerians, we are our own worst enemy".

You are somewhat right. I've actually proposed something similar and no one has been able to tell me why it would not work. Western union and moneygram do not even need to be independent from the banks. CBN just needs to reverse the ban on people receiving their remittances in foreign currency. A few years ago foreign remittances was over $21 billion. The CBN simply needs to reverse the ban and those dollars will find their way to the parallel market and the exchange rate will come down due to increased supply..

As it is now, anyone that sends dollars with western union has to use a rate of N193. The greedy banks take those dollars and sell it at the black market for over N350 and give the recipient N193 while chopping the rest..

chinchum:
CBN does not print dollars, it only earn it from exporters, remittances and FDIs. so our foreign reserves is a sum total of this inflow minus outflow from importers, students who pay in foreign currency, medical tourists and all sorts of folks who need foreign currency payment. our reserves is currently at 26 billion USD, so if CBN floods the economy with dollars, it will stabilise things a little bit, but it is bringing the evil day closer, we could run out of foreign reserves soon enough. remember the 26 billion usd foreign reserves is the lowest we've had in 12 years. Nigeria lost 1.13 billion USD last month from the foreign reserves. Venezuela ran out of foreign reserves, and turned to gold as a commodity, it is the worst hit of all the oil producing countries, the economy is in tatters at the moment, and the difference between the official rate of the dollar to bolivars at official rate and parallel rate is like 400%. Nigeria's difference in naira to dollar at official rate and parallel rate is hovering at 90%.
we are in dire straits at the moment in Nigeria, our savers are sharp reduction in demand for dollars by importers,, take note that the Nigerian govt is part of the importers, as roughly 35% of forex demand is that to import refined oil, so if the refineries can work, and other private refineries to meet local demand of refined oil, we have solve 35% of the problem, then our big boys and ladies overseas need to bring in more remittances from obodo oyinbo to shore up our reserves. we need to expand our export base, especially refined goods that value has been added, bulk of our current day exports are simply raw materials/commodities. Finally, we as Nigerians must patronise more made in naija products/services, our import base grew because the middle class has grown over the years, the typical middle class has a special appetite for imported products or foreign services.


I am using a phone, pardon my arrangement, but this two cents is that of an engineer, but economists should have no reason to dispute it.

Nice one chief; don't you think the parallel market will benefit from CBN reversing the ban on receiving remittances in foreign currency?

Adeshizzy:
can somebody explain what "floating the naira means" because some analyst are proposing that

Floating is exactly what is happening in the black market right now. It's essentially making the exchange rate completely dependent on demand and supply. If demand is more than supply, exchange rate will rise and vice versa..

Genius100:
Nice one chief; don't you think the parallel market will benefit from CBN reversing the ban on receiving remittances in foreign currency?

CBN has done that already, like a month ago to be precise.

http://sunnewsonline.com/new/cbn-lifts-ban-on-dollar-deposits-withdrawals/

CBN lifts ban on dollar deposits, withdrawals
…Discontinues forex sales to BDCs

From Isaac Anumihe, Abuja and Blaise Udunze

AS exclusively reported by Daily Sun on Monday, the Central Bank of Nigeria (CBN), yesterday lifted its ban on foreign currency deposits and withdrawals by customers from comercial banks.

This is coming as it also embargoed further foreign currency sales to Bureau de Change (BDC) operators. Daily Sun had on Monday, hinted that the apex bank might relax some of its policies in respect of domiciliary account following constraints Nigerian bank customers are having making foreign currency related transactions from their bank accounts.

The apex bank also decided to provide the available but highly limited foreign ex- change to meet matured letters of credit from commercial banks for importation of petroleum products, critical raw materials, plants, and equipment, and for payments of school fees, BTA, PTA, and related expenses.

Addressing newsmen yesterday, in Abuja, CBN Governor, Godwin Emefiele said it took the decision fol- lowing recent developments in the nation’s foreign ex- change market and to arrest the continued depletion of the reserves.

“We have continued to observe that stakeholders in some of the subsectors have not been helpful in this direction. In particular, we have noted with grave concern that Bureau de Change (BDC) operators have abandoned the original objective for their establishment, which was to serve retail end users who need US$5,000 or less. Instead, they have become wholesale dealers in foreign exchange to the tune of mil- lions of dollars per transaction’’ he said.

Emefiele lamented that the situation has gone so bad that operators of the BDCs now use fake documentations like passport numbers, BVNs, boarding passes, and flight tickets to render weekly re- turns to the CBN.

“Despite the fact that Nigeria is the only country in the world where the Central Bank sells dollars directly to BDCs, operators in this segment have not reciprocated the bank’s gesture to help maintain stability in the market’’, the governor, said.

He noted a situation where the apex bank has continued to sell US Dollars at about N197 per dollar to these operators, and they in turn sell to ordinary Nigerians, at rates as high as N250 per dollar.

According to him, given this rent-seeking behaviour, it is not surprising that since the CBN began to sell foreign ex- change to BDCs, the number of operators have risen from a mere 74 in 2005 to 2,786 BDCs today adding that the CBN receives close to 150 new applications for BDC licences every month.

“Rather than help to achieve the laudable objectives for which they were licensed, the bank has noted the following unintended outcomes: avalanche of rentseeking operators only interested in widening margins and profits from the foreign exchange market, regardless of prevailing official and interbank rates; potential financing of unauthorised transactions with foreign exchange procured from the CBN, gradual dollarization of the Nigerian economy with attendant adverse con- sequences on the conduct of monetary policy and subtle subversion of cashless policy initiative; and Prevailing ownership of several BDCs by the same promoters in order to illegally buy foreign currencies multiple times from the CBN. The governor said that more disturbing, though, is the financial burden being placed on the bank and its limited foreign exchange.

“The CBN sells US$60,000 to each BDC per week. This amount translates to US$167 million per week, and about US$8.6 billion per year. In order to curtail this reserve depletion, we have reduced the amount of weekly sales to US$10,000 per BDC, which translates into US$28.4 million depletion of the foreign reserve per week and US$1.476 billion per annum’’ he said.

He described such operations as a huge hemorrhage on the nation’s scarce foreign ex- change reserves, and cannot continue especially because BDCs have become a conduit for illicit trade and financial flows.

The apex chief noted that in view of the above, the management of the Central Bank of Nigeria has reached the following decision, which take immediate effect: that the Bank would henceforth, discontinue its sales of foreign exchange to BDCs. ‘’Operators in this segment of the market would now need to source their foreign exchange from autonomous source, they must however, note that the CBN would deploy more resources to monitoring these sources to ensure that no operator is in violation of our anti-money laundering laws’’ he said, adding that CBN would now permit commercial banks in the country to begin accepting cash deposits of foreign exchange from their customers.

CBN’s action’ll lead to 12000 job losses –BDAN

Meanwhile BDC operators have said the latest move by the apex bank will see the value of the naira hitting N300 to the dollar before the end of the week even as an estimated 12,000 would be on the line.

Reacting to the CBN announcement yesterday, the acting president of the Association of Bureau de Change

Operators of Nigeria (AB- CON) Aminu Gwadabe, in a telephone interview with said if the CBN decision is not well managed, “I see the dollar reaching N300 before the end of the week.

He noted that this would in turn lead to a “cost inflation” as the country is an import dependent economy, importing almost all its needs. Asides this, he said many BDCs will be forced out of business leading to job losses in the sector.

He noted that on the average, each BDC employs four persons, adding that about 12,000 jobs could be lost as a result of the CBN’s action. He explained that BDCs have limited sources of foreign exchange and had to rely on the CBN window.

“In other economic BDCs don’t have access to the central bank window because they have other sources of forex to them which includes banks but in Nigeria banks are being restricted from selling to BDCs, exporters can also patronise BDCs in other country’s but here it is being restricted. These are some of the issues.”

He then urged the CBN to review downwards the N35 million cautionary deposit mandated for BDCs as ac- cording to him, “this has tied down the capital of many BDCs and to get other source of foreign exchange we need capital.”

He also noted that the move by the CBN will further en- courage activities of street hawkers and illegal foreign exchange operators “because most people will say why do I have licence since I don’t have access to the CBN window, so I better operate as an illegal operator.

This he said will make it impossible for the apex bank to monitor the outflow and inflow of forex into the country and what the forex is being used for.

chinchum:
CBN has done that already, like a month ago to be precise.

No.. I meant CBN allowing western union remittances to be sent and received in dollars as well as other currencies. Currently western union can only be received in naira at a rate if N193 to a dollar..

Genius100:
You are somewhat right. I've actually proposed something similar and no one has been able to tell me why it would not work. Western union and moneygram do not even need to be independent from the banks. CBN just needs to reverse the ban on people receiving their remittances in foreign currency. A few years ago foreign remittances was over $21 billion. The CBN simply needs to reverse the ban and those dollars will find their way to the parallel market and the exchange rate will come down due to increased supply..

As it is now, anyone that sends dollars with western union has to use a rate of N193. The greedy banks take those dollars and sell it at the black market for over N350 and give the recipient N193 while chopping the rest..

People need to wake up and understand Nigeria banks are one of the major problem in Nigeria, if not the major problem and gateway to corruption. They succeeded in convincing Ediot govt to ban raw dollar paid in the likes of western union and moneygram, now they are also trying to ban dorm account cause they pay at the rate of 300+ when dollar is being received through dorm account. thieve banks

[font=Lucida Sans Unicode][/font] lolz it is rocking