₦airaland Forum

Nigeria’s President, Muhammadu Buhari, and his government have lost control as Nigeria’s
economic crisis sends that African nation into a
doom-loop. Everyone, including the President’s
wife, Aisha, knows that Nigeria is going down
the tubes. But not the International Monetary
Fund (IMF). As is often the case, the IMF doesn’t have a clue. The IMF’s October 2016 World
Economic Outlook projects Nigerian inflation to
average 15.4 percent for 2016. This number is in
sharp contrast to my Johns Hopkins-Cato Institute Troubled Currencies Project’s inflation estimate for Nigeria. We estimate that the year-over-year
inflation rate is currently 104.8 percent (see the
chart below). Why is the IMF so far off base? Because it is doing
what it often does: it is taking the Central Bank of
Nigeria’s (CBN) official inflation data at face value.
That official rate averaged 14.3 percent from
January to August of this year. For the IMF
forecast to materialize, official annual inflation in Nigeria would need to average 17.6 percent for
the September through December period. What
did the latest inflation report from the Central
bank of Nigeria show? According to the CBN,
annual inflation was 17.9 percent in September.
The IMF’s blind acceptance of the CBN’s data is a big mistake. Driving Nigeria’s surging inflation is the collapse
of its currency, the naira (NGN). Indeed, many of
Nigeria’s recent economic troubles are reflected
in the rapid depreciation of the naira. For over a
year, the CBN held the official exchange rate at
about 200 NGN/USD, with the aid of exchange controls. During this period, dollar shortages
raised their ugly heads and caused foreign
investment in Nigeria to deteriorate. The shortages even forced airlines to stop flights into
Lagos. Simultaneously, a black market (read: free market) for foreign currency developed and the
actual value of the naira deteriorated rapidly (see
the chart below). In June 2016, the CBN introduced a managed
“float” and claimed that the resulting NGN/USD
rate was a purely market driven exchange rate.
After a massive one-day depreciation of the
official NGN/USD rate, the naira has traded at
about 315 NGN/USD while the black market rate plunged to over 450. The sharp contrast between
official and black market rates is evidence that
the CBN is spreading disinformation (read: lying)
about its embrace of a free market for foreign
exchange. What's Day Trading: 15 Secrets to Success - Capital at risk Guardian Stockbrokers Top 10 reasons to invest in income MarketViews Reports have emerged claiming that Nigerian
businesses cannot access FX from the banks
officially tasked with providing it, so they are turning to bureaux de change (BDCs) and black
market dealers. On October 16, 2016 the black market rates and the BDC rates were both 460
NGN/USD, and the official rate was 315 NGN/USD.
The CBN brushes off the existence of the black
market, claiming these rates don’t reflect the true
value of the naira and only account for a small
portion of FX transactions. This is nonsense. If this were true, stories of businesses struggling
simply to access foreign exchange would not be
so common. The CBN’s claim to embrace a purely
free market determined Naira is a lie. Take what
the Central Bank of Nigeria says with a grain of
salt. Nigeria is in a doom loop – one that the
government and the CBN lie about and the IMF
blindly repeats.

newguy1:
I hate say. Dis but wailers stop wailing n state give productive or meaning solutions. We the bencher are tired of both wailers n buhariate.#Give us a better naija#

newguy1:
I hate say. Dis but wailers stop wailing n state give productive or meaning solutions. We the bencher are tired of both wailers n buhariate.#Give us a better naija#

freeze001:
Who is to give and implement productive and meaningful solutions? The sane government that has created a class called wailers and identified them as noisemakers whose opinions and criticisms are trash and not worth considering?

Who is to give the better Nigeria?

newguy1:
I hate say. Dis but wailers stop wailing n state give productive or meaning solutions. We the bencher are tired of both wailers n buhariate.#Give us a better naija#

newguy1:
we Asin citizens not in govt can alway pitch in Asin give constructive solutions, we always use our social media's nko which is much better can d continuous wailing n I read somewhere they we all forget our place in govt that is we the citizens are the majority dey Asin govt is the minority

freeze001:
I hadn't finished. Read the rest of my post. Citizens as majority is only head knowledge not practical in Nigeria of today. U want to know how? Go with a group of people united in a genuine cause for a civil, peaceful protest against the minority government and come and tell me the result.

PaulIdu:
Are you OK?