₦airaland Forum

APCLyingBastard:
Banks are lending at 30% for mere consumer loans and the short term commercial loans are going for as high as 35%!

Tell me, which economy can grow in this environment?

During the US recession years, the Feds reduced interest rates to 0% in order to shore up liquidity and that helped to pump cash flows to SMEs as well as help bailout big companies.

Nigeria is being run by idiots.

I will keep it simple. Nigeria's economy is foreign exchange driven because it is basically an import and trading economy. That's where the jobs are right now. So management of fx rate is a higher priority than cutting rates to stimulate growth. Government is borrowing to stimulate growth and betting that it's borrowings with create multiplier effects.

Too much cash in the economy leads to inflation fed by higher demand/rates on the dollar due to increased importation and usd hedging. Unstable fx rates drive away investors.

It's a case of damned if you do ( cut rates) and damned if you don't. So the cbn has decided to " first do no harm"

We all want easing. We all want economic growth. Achieving it without hyping inflation is the conundrum.

The question you should be asking is - who is gaining from the current rate of affairs. Banks? HNI's? Want to solve the dysfunction? Follow the gains.

if it were up to me I would pay monthly FAAC allocations in dollars and stop states putting monthly pressure on the fx market. Earn dollar spend dollar. Let governors take some heat. What do they do with the money they receive?

4Play:
The interest rate of 14% is too low given where inflation is. The low interest rate is a contributory factor to our currency and inflation problems.

High interests rates drives up inflation.


Why should I invest in productive venture in a slow recessive economy when I can just invest in govt debt?


Think!

why

greenpasture:
I will keep it simple. Nigeria's economy is foreign exchange driven because it is basically an import and trading economy. That's where the jobs are right now. So management of fx rate is a higher priority than cutting rates to stimulate growth. Government is borrowing to stimulate growth and betting that it's borrowings with create multiplier effects.

Too much cash in the economy leads to inflation fed by higher demand/rates on the dollar due to increased importation and usd hedging. Unstable fx rates drive away investors.

It's a case of damned if you do ( cut rates) and damned if you don't. So the cbn has decided to " first do no harm"

We all want easing. We all want economic growth. Achieving it without hyping inflation is the conundrum.

The question you should be asking is - who is gaining from the current rate of affairs. Banks? HNI's? Want to solve the dysfunction? Follow the gains.

if it were up to me I would pay monthly FAAC allocations in dollars and stop states putting monthly pressure on the fx market. Earn dollar spend dollar. Let governors take some heat. What do they do with the money they receive?

you have said it, some of NLanders think a lower interest rate will make Nigeria come out of recession, they forget that the naira depreciation is the No1 reason why we are in this mess. Loans have always been high even before now, but naira depreciation is what kills the market fast. They are on track if you ask me, in the end High rates bring in foreign portfolio investors

APCLyingBastard:
Banks are lending at 30% for mere consumer loans and the short term commercial loans are going for as high as 35%!

Tell me, which economy can grow in this environment?

During the US recession years, the Feds reduced interest rates to 0% in order to shore up liquidity and that helped to pump cash flows to SMEs as well as help bailout big companies.

Nigeria is being run by idiots.

Your bolded statement should be "During the US recession years, the Feds reduced interest rates to NEAR 0%..." for it to be correct.

This said, please note that the indices of the US economy far differ from those of Nigeria's.

NuclearWinter:
High interests rates drives up inflation.


Why should I invest in productive venture in a slow recessive economy when I can just invest in govt debt?


Think!

because most productive ventures yield more than 22% annually, I said most even down to the aboki selling biscuits earns more than 22% annually on the capital he will use to startup the bizness.

Investing in debt securities should be a sort of passive income to any investor not his primary goal because lots of business give better roi than debt instruments

chukzyfcbb:
because most productive ventures yield more than 22% annually, I said most even down to the aboki selling biscuits earns more than 22% annually on the capital he will use to startup the bizness.

Investing in debt securities should be a sort of passive income to any investor not his primary goal because lots of business give better roi than debt instruments

Have you factored the huge interest rates and high cost of doing business in Nigeria?


This will bring your profit margin down significantly below your 22% benchmark from where the tax dogs will come and have their cut.