₦airaland Forum

– Buhari given probable ways of saving national currency – Utomi revelas what Nigerians need to do very, very quickly Professor Pat Utomi, one of prominent Nigerian economists, has given advises to President Muhammadu Buhari on how to save naira. The Central Bank of Nigeria has taken measures to improve the value of naira on the black market. In recent times, the currency changed for N400 to a dollar and had been fluctuating between N300 and N395 ever since. READ ALSO: 5 Reasons Why Naira Rate Will Begin To Fall As at the time of filing this report, naira was changing for N320 to a dollar on the parallel market, and N197 to a dollar at the inter- bank rate. Utomi in the interview granted to the City People proposes Buhari and his economic team a new perspective as to the possible ways of saving the naira. He said: “ 4 months ago, I said look, the drop in oil prices will lead to some exchange rate challenge, in terms of widening gap between the official market being defended, by the Central Bank and the so called Open Market. “What we need to do very, very quickly is that we should go to a managed floating exchange rate, don’t be fastidious about saying we would not let the naira fall, let it just lie gradually. At that time the Purchasing Power Parity which is really your true exchange rate and the simplest measure of it is if you produce a product which is the same in every country, the same with exact ingredients, if it costs you N10 to produce one in Nigeria, and cost you 2 pounds to produce one in London, and cost you 3 dollars to produce one in the US. That is the exchange rate.
“How much of your currency produces that same exact thing? That is the Purchasing Power Parity (PPD). How you measure what the exchange rate is, realistic or not, is how it diverges from that PPP line. At that very point in time, a measure, that Bismark Rewane Offered, is that difference from the PPP line was only N6. So if we had allowed a managed floating exchange rate, it will depreciate gradually people won’t even notice much that anything is moving but immediately while that is happening you should recognize that you have a financing gap. You knew that this will not go on forever, you are planning to do this, you are planning to do that, you will begin to put your plan in place. Shoot term, Low hanging fruits of diversification, maybe Tourism, get customs men immigration officer to be more, service people to be more alert and sell it to travel agents abroad, longer term, factor endowment based development of value chains from different part of Nigeria to focus on 4 or 5 major endowment of Nigeria, maybe sesimieseed in middle Belt, Hydrocarbon Value Chain in the South-South, some Agric based value chain in the North West and take your game plan and go out to London, to New York, to the major financial centers this is what we are doing things are going to be ok and people will feel this guy is ok, they are doing well.”
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Ok

ncpat:
Ok

Pat Utomi has said nothing, only theory he is giving. We are talking about realistic approach to solve this situation.

boujaye:
Pat Utomi has said nothing, only theory he is giving. We are talking about realistic approach to solve this situation.

The realistic approach is what the OP related to us. In summary, start producing enough to meet ur needs and exceed, or atleast, match the net worth of your overall import. Any other message here is the real theory and not Pat Utomi's piece, which is the realistic approach.
If we produce all what we need at a competitive rate, we will have no use for Dollars cos going out to buy from Dollar market will be of no use.
Though we may not produce every single item we consume locally, we ought to produce enough 'excess' of what we are engaged in to cover the net worth of what we import.

BS.

Why is everybody after treating symptoms in-lieu of 'underlying causes'?

This administration is 'trying' to go after 'causes', it is slow, but assured -- they need help though.

1. The TSA implementation will help in curbing funding excess liquidity with averagely N600b every year, and checkmates fraud and a host of other things.

2. The government is presently trying to find a way to get us imported fuel without using the CBN's forex; if that happens, dollar will fall, and once we have our refineries and new ones up, dollar will crash -- especially if the CBN finds a way to replace the BDCs.


I posted the below some days ago about going after 'causes':

https://www.nairaland.com/2944479/fastest-way-get-out-economic

https://www.nairaland.com/2949997/dollar-vs-naira-done