₦airaland Forum

Biodun556:
THE VALUE OF THE NAIRA.
~Eruobodo.

A currency's value is what is can fetch those who use it as a means of exchange!

Those in America use dollars and those in the UK use pounds sterling. Emiratis use Dirhams and Indians Rupees. Nigerians therefore use the Naira.

The Naira today, is equivalent to 600 units to the GB£ and 500 units to the US$.

Though we are quick to lampoon the Naira as worthless, but let us compare how much value each of these currencies equivalents fetch their owners/holders, within their borders?

In the US, a dollar ($) may not buy you more than a small bottle of water, while N500 will buy you a pack of 12 of the same bottles of water in Nigeria!

A pound (GB£) may not buy you even a small loaf of bread in London, but in Lagos, N600 will buy you and your partner, breakfast for 2, consisting of one N250 big loaf of bread, 4 fried eggs and 2 bottles of water!

Days ago, I bought 50 pieces of medium sized oranges from the Ketu fruit market for N1,000, that's just $2! I bought 3 pineapples for N500 ($1)!

A litre of fuel costs N160 in Lagos, but cost $0.86 (N430) in New York! While I know people who pay cad1,700 (N500,000) per month for their glorified room and parlour self-contained in Ottawa, that is what a friend pays in 6 months, for a 2 bedroom apartment, with separate toilet, bathroom and proper kitchen, in Dolphin Estate, Ikoyi!

So why do Nigerians make so much noise over the value of their currency, when it still fetches them more value than the other currencies that they pitch the Naira against? The answer is simple: the "values" of Nigerians!

While Nigerians reacted with consternation at Dino Melaye's obnoxious display of his stolen wealth, the average Nigerian behaves exactly like Dino Melaye! From the man on the streets to the Churchpreneurs who claim to represent God!

They produce nothing, but want to flaunt everything!

Someone lamented to me about his wife's tenant, who has failed to pay N120,000 rent, for nearly a year, but slaughtered a ram and made festivities, worth N150,000, during the last Moslem "Ileya" festival!
Ask me what the man produces? Zilch!

Had this same debtor taken the N150,000, wasted on the one day feasting to the market, it will be more than enough to set up a fried Yam, sweet potatoes, Akara business, that can net him N300,000 monthly, and take him out of poverty and debt forever!

So, because Nigerians are unproductive at home, but consume from used clothes, to fake hair and eye lashes, to even PMS, from the abroad, they keep whining about the value of the dollar/pound-sterling against their currency.

There are universities in Nigeria, and I had my education entirely in Nigeria! So, if I chose to send my children abroad, what is the headache of the government in my personal decision, should the currency in their country of choice proves unaffordable to me? Who send me?

My personal definition of the problem with Nigeria is that, the policies of the State are manipulated to suit the indulgences of certain classes of Nigerians, who feed fat on the miseries of the masses.

Government resorted to importing fuel because some privileged Nigerians criminally destroyed our refining capacities. Rather than punish them, we put the punishment on Nigerians.

Government "subsidized" the same imported fuel, to create artificial opportunities for some privileged people to loot our treasury, under the artificially created system of "subsidies".

These Nigerians and their fraudulent economists should stop fooling themselves about the poor exchange rates of the nation's currency. 95% of the citizens of this country need food, water, Medicare, etc, obtainable in Naira!

If some useless, lecherous and unproductive, yet entitled, vanity flaunting elements like Dino Melaye, need foreign currencies to feed their insanity, what has that got to do with Nigeria?

If you want to indulge in the zero nutrition Orange, imported from wherever and sold at times ten that of super tasting Oranges from Benue, must Nigeria care about your price plight? Who send you?

If you chose Pizza over Aboki freshly cooked spicy bread and eggs, please find enough Naira to indulge in your borrowed Italian taste. #KokanAye!

This argument over our poor currency is a lie of the elite to pass their problems as everyone's!

Days ago, I made a 4 litre bowl of cooked beans (enough to feed at least 8 adults) from a N200 ($0:40) measure of beans! Add another N500 ($1) worth of sweet potatoes, and you have a super nutritious meal for 8 adults!

That's less than $3 in total, N1,500 (including the costs of other stuff like onions, peppers and oil), to feed 8 adults?

Before you complain that the Naira is weak, tell me what you need the foreign currencies for, and #Eruobodo will show you how you and Dino Melaye are related!

ourema:
$1 is N500 please he made a good point

iHart:
if you want to go by equal grounds, I can bet that Nigeria produces more naira millionaires than dollar millionaires in US. What is even one million naira? #100, 000 x 10. So you see, you can't compare the value of the currencies on equal ground. Every currency and its purchasing power is peculiar to their local economy.

Kpomosauce:
what is purchasing power? comparing 1 dollar to 500naira? see the difference na

maynia:
Yet half of Nigeria population is in extreme poverty, we are the world capital of the World

maynia:
Yet half of Nigeria population is in extreme poverty, we are the world capital of the poverty

The world capital of Poverty produces more millionaires than the most powerful economy in the World, wawuuuu!!

Openbusiness:
Kikikiki , like how some people believe this propaganda article baffles me. Maybe up to 40% of Nigerian doctors ran to UK and other places in search of greener pastures during this year alone. How many doctors from US and UK are rushing to Nigeria if our currency and economy was that good? There is massive brain drain every year, and it is in one direction: PEOPLE ARE LEAVING. Go to Lagos airport departure, the crowd dey always full like Oshodi market, people dey escape dis country, dey japa for better life. And i'm not talking of unskilled workers alone. I'm talking of highly skilled qualified people. I have a customer here on Nairaland, the man is an engineer was working with a multinational company in Nigeria, was earning in dollars. His wife was working in a bank, good position. They are both in Canada today. Both wife and husband have relocated with their family. He is enjoying a better life today, better than when he was in Nigeria. A relative of mine that was a Paediatrician, she left Nigeria like 11 years ago, she is now an American citizen, she relocated her son abroad, he has married there and has children. They are enjoying. Till today, she never relocate back to Nigeria. Only comes in once in a few years, spends maybe a week and goes back. If Nigeria currency was better than dollar and pounds, then it automatically means our local economy is better than the local economy of UK and USA. That someone now thinks Nigeria currency visavis our economy is better and posted the DUMBEST economic theory I have ever read in my life as his justification for making such a claim, wallahi, d tin pass shock, I feel like my brain has been raped, violated, molested, assaulted, and in short na attempted murder. Honestly, if not that our Justice System and Courts are compromised, plus I don't have the spare cash to pursue it to a final conclusion, I swear I will have sue the writer of this article for aggravated assault, battery, torment and attempted murder. This article nearly killed me lies

iHart:
This has been my argument with a lot of people. What the naira will do here, its equivalent in other currency will not even do half of it in the country they use it.

Iolo:
Well said OP.

I do think you have written out the economic concept of purchasing power parity in laymans English. In some ways you are right but not entirely so.

Cost of living in Nigeria is generally lower than the developed countries in areas where we are productive (Nigeria is still generally import dependent so our productivity is still quite low). This covers food, housing and healthcare. I will give a few examples:

1. Housing: For example, A decent 3bdroom apartment costs about NGN300k - NGN2m annually depending what part of the country you’re in, in the USA you will need to spend anywhere from $800 - $2000 monthly or $9600 (NGN4.32m) and $12,000 (NGN10,8m) annually. Huge gap.

2. Healthcare: Another example is with healthcare. Here you can conveniently spend about NGN100k ($222) on maternity costs without insurance, whilst in the states you will pay nothing less than $5k for the same service without insurance. This is just normal maternity services without adding complications of delivery through CS.

In these instances your analysis is on point. The reason for this gap is due to the superior service (I.e. doctors earn more, better equipment that needs to be paid for etc.). you’ll typically be getting which is why in those countries, the average salary / pay is also higher to compensate.

But there are several areas where your analysis doesn’t hold true.

1. Imported goods: for example, cars. They cost a lot more here. In the US I can buy a 2014 ML Benz with $15k - $20k but here it costs about NGN15m ($33k) for the same car.

Since we are mostly import dependent most things we consume fall under this bracket. Clothing, Electronics, Furniture pound for pound more expensive due to import costs.

Lastly, because average pay in Nigeria is lower, we tend to have smaller disposable incomes. A larger proportion of our income goes to essentials like Food and Housing. Abroad they have a higher disposable income. For full clarity, this is both due to higher minimum wage levels as well as their credit culture (most things are paid for with a credit card so you can spend more than you earn effectively).

I have attached two images to further the discussion and maybe help with understanding these concepts. They are both on consumption expenditure where you find that in Nigeria, we spend more of our money on food (because we earn low) while in the states they spend more on housing and services (cause they earn higher and average wages are higher).

Biodun556:
THE VALUE OF THE NAIRA.
~Eruobodo.

A currency's value is what is can fetch those who use it as a means of exchange!

Those in America use dollars and those in the UK use pounds sterling. Emiratis use Dirhams and Indians Rupees. Nigerians therefore use the Naira.

The Naira today, is equivalent to 600 units to the GB£ and 500 units to the US$.

Though we are quick to lampoon the Naira as worthless, but let us compare how much value each of these currencies equivalents fetch their owners/holders, within their borders?

In the US, a dollar ($) may not buy you more than a small bottle of water, while N500 will buy you a pack of 12 of the same bottles of water in Nigeria!

A pound (GB£) may not buy you even a small loaf of bread in London, but in Lagos, N600 will buy you and your partner, breakfast for 2, consisting of one N250 big loaf of bread, 4 fried eggs and 2 bottles of water!

Days ago, I bought 50 pieces of medium sized oranges from the Ketu fruit market for N1,000, that's just $2! I bought 3 pineapples for N500 ($1)!

A litre of fuel costs N160 in Lagos, but cost $0.86 (N430) in New York! While I know people who pay cad1,700 (N500,000) per month for their glorified room and parlour self-contained in Ottawa, that is what a friend pays in 6 months, for a 2 bedroom apartment, with separate toilet, bathroom and proper kitchen, in Dolphin Estate, Ikoyi!

So why do Nigerians make so much noise over the value of their currency, when it still fetches them more value than the other currencies that they pitch the Naira against? The answer is simple: the "values" of Nigerians!

While Nigerians reacted with consternation at Dino Melaye's obnoxious display of his stolen wealth, the average Nigerian behaves exactly like Dino Melaye! From the man on the streets to the Churchpreneurs who claim to represent God!

They produce nothing, but want to flaunt everything!

Someone lamented to me about his wife's tenant, who has failed to pay N120,000 rent, for nearly a year, but slaughtered a ram and made festivities, worth N150,000, during the last Moslem "Ileya" festival!
Ask me what the man produces? Zilch!

Had this same debtor taken the N150,000, wasted on the one day feasting to the market, it will be more than enough to set up a fried Yam, sweet potatoes, Akara business, that can net him N300,000 monthly, and take him out of poverty and debt forever!

So, because Nigerians are unproductive at home, but consume from used clothes, to fake hair and eye lashes, to even PMS, from the abroad, they keep whining about the value of the dollar/pound-sterling against their currency.

There are universities in Nigeria, and I had my education entirely in Nigeria! So, if I chose to send my children abroad, what is the headache of the government in my personal decision, should the currency in their country of choice proves unaffordable to me? Who send me?

My personal definition of the problem with Nigeria is that, the policies of the State are manipulated to suit the indulgences of certain classes of Nigerians, who feed fat on the miseries of the masses.

Government resorted to importing fuel because some privileged Nigerians criminally destroyed our refining capacities. Rather than punish them, we put the punishment on Nigerians.

Government "subsidized" the same imported fuel, to create artificial opportunities for some privileged people to loot our treasury, under the artificially created system of "subsidies".

These Nigerians and their fraudulent economists should stop fooling themselves about the poor exchange rates of the nation's currency. 95% of the citizens of this country need food, water, Medicare, etc, obtainable in Naira!

If some useless, lecherous and unproductive, yet entitled, vanity flaunting elements like Dino Melaye, need foreign currencies to feed their insanity, what has that got to do with Nigeria?

If you want to indulge in the zero nutrition Orange, imported from wherever and sold at times ten that of super tasting Oranges from Benue, must Nigeria care about your price plight? Who send you?

If you chose Pizza over Aboki freshly cooked spicy bread and eggs, please find enough Naira to indulge in your borrowed Italian taste. #KokanAye!

This argument over our poor currency is a lie of the elite to pass their problems as everyone's!

Days ago, I made a 4 litre bowl of cooked beans (enough to feed at least 8 adults) from a N200 ($0:40) measure of beans! Add another N500 ($1) worth of sweet potatoes, and you have a super nutritious meal for 8 adults!

That's less than $3 in total, N1,500 (including the costs of other stuff like onions, peppers and oil), to feed 8 adults?

Before you complain that the Naira is weak, tell me what you need the foreign currencies for, and #Eruobodo will show you how you and Dino Melaye are related!

rottennaija:
You are still talking trash. Go through my post here to learn one or two things.

ethicallyright:
Respect man. You've got the whole article perfectly.
The point of view and aim of the writer was to enable poor Nigerians understand that limited dollars in Nigeria does not really affect them but the upper class.
His emphasis is that a truck pusher that lives in his family compound, eats garri and soup , sends his children to UNILAG and eats locally produced ram or chicken during Sallah or Christmas should not join the wagon of the corrupt politician who drives the German cars, wears Swiss wristwatches , dresses in Italian clothes , drinks French wine , makes use of American phones and enrolls his kids in Canadian schools to worry about dollar rates since the poor man is most likely going to get value for his naira while consuming local commodities.

rottennaija:
Explain how. He made a serious point.

Openbusiness:
Kikikiki , like how some people believe this propaganda article baffles me. Maybe up to 40% of Nigerian doctors ran to UK and other places in search of greener pastures during this year alone. How many doctors from US and UK are rushing to Nigeria if our currency and economy was that good? There is massive brain drain every year, and it is in one direction: PEOPLE ARE LEAVING. Go to Lagos airport departure, the crowd dey always full like Oshodi market, people dey escape dis country, dey japa for better life. And i'm not talking of unskilled workers alone. I'm talking of highly skilled qualified people. I have a customer here on Nairaland, the man is an engineer was working with a multinational company in Nigeria, was earning in dollars. His wife was working in a bank, good position. They are both in Canada today. Both wife and husband have relocated with their family. He is enjoying a better life today, better than when he was in Nigeria. A relative of mine that was a Paediatrician, she left Nigeria like 11 years ago, she is now an American citizen, she relocated her son abroad, he has married there and has children. They are enjoying. Till today, she never relocate back to Nigeria. Only comes in once in a few years, spends maybe a week and goes back. If Nigeria currency was better than dollar and pounds, then it automatically means our local economy is better than the local economy of UK and USA. That someone now thinks Nigeria currency visavis our economy is better and posted the DUMBEST economic theory I have ever read in my life as his justification for making such a claim, wallahi, d tin pass shock, I feel like my brain has been raped, violated, molested, assaulted, and in short na attempted murder. Honestly, if not that our Justice System and Courts are compromised, plus I don't have the spare cash to pursue it to a final conclusion, I swear I will have sue the writer of this article for aggravated assault, battery, torment and attempted murder. This article nearly killed me lies

rottennaija:
You mean I'll have to buy that particular brand of water for 500 naira here because it cost 1$ dollars there? Is it made of gold or special impurities are added to it?

rottennaija:
He did. Did you read? He clearly showed the purchasing power of our money is stronger (even at the exchange rate) compared to the dollar or pound for the goods and services we grow and consume.

rottennaija:
Probably nothing. But what is the equivalent of 1 dollars? 500 naira? Can 500 naira (1$) but you within your borders what 1$ in USA cannot?

rottennaija:
This is really interesting and there is truth in it.

Yampotatocarrot:
Waoh, I love the way you and the guy you quoted broke this analysis down.

However, I think you are wrong saying that the limited dollars will only affect those in upper class. Last time dollars went up, do you know almost everything increased in Nigeria? Even stuffs like food substances that have nothing to do with dollars.

Directly or indirectly, the value of dollars has an effect on every citizen of Nigeria, no matter the class one falls into.

Thanks for your analysis though

Openbusiness:
@iHart, you are manufacturer, so you should understand better. Let's even ignore the terrible FX and focus on local manufacturing. For a product that is 100% manufactured in Nigeria locally with 100% local materials VS a product that is 100% manufactured locally in America, against the local currency in each country, which currency gives you the higher purchasing power: is it Naira or Dollar? Even in this regard, the naira fails. As per their own shale oil, locally refined, Americans buy petrol like $0.6 per liter approx. (or like under $3 per gallon). Many people including me used to confuse it sometimes and quote this per gallon figure as per liter figure. Let's forget about current indices of importatiok of fuel and base our computation 100% on local refinery for Nigeria. As per 100% locally manufactured Nigeria crude oil and local refinery aka Dangote refinery (when it starts working), willl Nigeria ever sell petrol at less than N1 per liter? Even in the dream, it can't happen. Yet some people say Naira is better than dollar. This kind of lie is EVIL!

Depressed101:
the dust don enter this one eye

iHart:
if you want to compare the two, you do it using the equivalent values. So in your imagination, you want $1 to be equal to #1, so that when you get #100, 000 it becomes $100, 000? Do you know that an average person in US don't make $100, 000 in a year but an average business man in Nigeria can make more than #100, 000 every month? Our environments are not the same, you should not be comparing our currency head to head with that of dollar

Nigsrdumb:
Buck for buck Nigeria wins ( currency) , you know why cost of labour.

Americans will kill to have that cheap labor( skilled).

The truth is we lack the innovative ability to bring things into fruition.

What's missing is the brain power, to manufacture you still have to import machinery, to build infrastructure we must borrow from China and utilise Chinese expertise.

Brain power is what is missing , the economics is the aftermath.

Openbusiness:
Which cheap cost of labor When America and UK needed cheap labor to build roads and cities and other infrastructure to move up the ladder of national development they bought slaves from Africa, well the Americans, while the British went on a shopping conquering spree and got all the slaves they wanted. Today, the era of human rights in the West, when cheap labor is required they set up billion dollar manufacturing plants and stations across 2nd & 3rd world countries (Asia, South America etc) where the labor is even CHEAPER than Nigeria. So what labor advantage are you talking about? Are you talking about professional labor of doctors and engineers and architects etc? You have cheap labor options available in that regard too because there a millions of professionals from 3rd world countries migrating to the West daily and willing to take lesser pay for the same job a typical American will do at a higher fee and it has even gotten so bad to the point that native Americans were complaining about foreigners taking up all their jobs and that's one of the core reasons they elected Donald Trump. And aside all that, if professional labor is "cheap" as you suggest in Nigeria, then you are wrong because skilled engineers, doctors, lawyers, accountants, lecturers etc are quite highly paid as per our local economy, and you can only say they are not well paid when you are relatively comparing them to their counterparts 1st World countries and other 2nd world countries and it is for no other reason that the fact that they have a better economy and by automatic equivalence A BETTER CURRENCY than your naira. That's the idea or FACT that this guy who wrote the article and some others on this thread don't grasp or understand. The strength of a currency is directly proportional to the strength of its economy. Your economy cannot be strong and your currency weak. You cannot say Naira is better than Dollar and Pound, when the local economy of the Naira, that is the performance of the naira in terms of purchasing power within the Nigerian economy doesn't even come close by billions of light years to the purchasing power of the dollar and pounds in their respective local economies. This is 2020, unless maybe for super cars or ultra-luxury cars, there is no single regular luxury car that costs more than $130,000 and that's for fullest options of a regular luxury car like the 2020 LX570. We have Pro-force, we have Innoson, and now we have Nord that all claim to be local car manufacturer, which of them has a regular car that they "manufactured" here within the local Nigerian economy that the purchasing power of our currency and its suppporting economy is so strong that they can sell for N130,000 naira? Which one? Do you think America and UK produces everything too? Don't they import some raw materials from foreign countries to complete their manufacturing processes? Yet they still sell cheaper as per their local economy and the currency amount needed to purchase it. They buy cocoa from abroad from a country like Nigeria and then they produce Milo. How much is tin of Milo in UK and how much is tin of Milo in Nigeria? In UK 400g Milo tin is like £4 (a country that imported cocoa to produce), but in Nigeria, a cocoa producer, the same tin of 400g Milo costs over N1,000, yet they are saying Naira currency is better. Same thing petrol. Petrol costs around 60 cents per liter in America, petrol that they refined and produced from their local shale crude oil. Ok, Nigeria has BLCO crude oil, let's forget about fuel importation and assume our own local refinery is working to produce the petrol from the crude, how much are we buying petrol per liter? Nigeria finance Minister has already made a public announcement on the news (I WATCHED IT LIVE ON NTA last week) that Dangote refinery coming to full operation and refining fuel locally won't make any much difference in the price, that we should expect around the same price at it is now. What's the price now? N160 per liter. So America uses their own local shale crude oil and produces petrol to sell to Americans at 0.60 cents per liter BUT Nigeria uses their own local BLCO and produces petrol to sell to Nigerians at N160 per liter, yet naira is better than dollar. This article is nothing but a properly concocted SCAM that can only fool the ignorant.

PeacenLove2:
Op, you wan write your own economics textbook.

This your theory na mago-mago. You had me going for a bit there. If the value of $1 can purchase almost 500 Naira, value of the Naira is 500% less.

If $1 can buy a bottle of water, 1 Naira cannot even buy one piece of candy.

You speak like Nigerians earn in dollars, thus if we convert our earnings, we can then be able to buy so much more. Think of the minimum wage and ask yourself what the purchasing power is.

The Nigerian government does not deny the dire economic situation, why you dey deceive yasef na?

Nigsrdumb:
Forget about the nominal value of the wages, think of it in relative terms.

For example minimum wage in China, south korea etc. How much of a living can you get , now compare with Nigeria.

It'll begin to make sense.

Openbusiness:
See, don't come up with half intelligent discuss. If you want to talk about wages, then let's talk from a point of total intelligence.

How much is the highest minimum wage in Nigeria? N30,000 per month.

How much is the highest minimum wage in America? $15 per hour. Now average legal working hours = 40 hours per week = 8 hours per day (calculated at five days a week). Therefore, you have it as 40 h/w X 4 weeks a month = 160 hours per month. So highest minimum wage = $15 x 160 = $2,400 per month.

Therefore,

Highest minimum wage Nigeria = N30,000 per month (20 days)
Highest minimum wage America = $2,400 per month (20 days)

As a human being that you are, please be 100% honest, question number
1) where would you rather work for highest minimum wage, Nigeria or America?
2) which country will give you the best quality of life and best value for your money when you spend it, is it Nigeria or America?