https://thepeoplesnewsafrica.com/we-must-stop-borrowing-and-start-printing-money-for-our-development/

Africa's Position in the Global Economic System

by Mavis Enyan March 31, 2020

Does Africa have the need to continuously borrow Money for her today’s survival while creating debt-burden the next generations?
The simplest answer that can be given is “it depends”, -but on what?

In conventional economic theories, we are told that when a government prints money, it exposes itself to inflation because there will be more money in the system to chase fewer goods, causing the money to lose its value.

However, if we can think beyond these theories, and accept the fact that these theories were developed by humans; individuals with brain capacities same as ours and we also have the capacity to device alternative models to solve our own problems, then, we can start to ask questions like: How can there be fewer goods in the system if the money printed is used as an incentive for innovation and production rather than serving as an object for demanding goods and services?; what is the central duty of a sovereign government when it prints paper and calls it money? What are the fundamental differences between monies printed into an economy and those borrowed into the same economy? Questions of these kinds can help us probe deeper to understand the system that controls us better.

To a very large extent, when a government borrows money, it shows the lack of ability and understanding of that government to an effective management of the economy. Unfortunately, the idea of going to another sovereign country to borrow paper (fiat money) instead of using our sovereign status to print money and manage this printed money to support our developmental projects and programs has become the normal and easy way for almost all African countries since attaining independence status.


Why should someone print paper and hand it over to you as money and let you pay back not with the same paper (paper as used here means what one has the right to print, in this case, if America prints dollar for us to support our economy, we should be able to print our own currencies to pay back after our economy has become stronger and not to pay back with dollar which we do not have the right to print and as such, it becomes a value for us), instead, we are required to pay back these paper loans in values, resources, and efforts? I know it is not as simple as I am putting it in this piece, but the truth it is that, it is also not as impossible as they make it looks to us.

Before going further, it is important to point out that in an extreme distressed circumstance, a country may borrow money in a 1 or 2 cases (this happened to continental Europe, wherein, after the Second World War when America has to print and loan out money to Europe under the Marshall Plan to help them recover from the total breakdown). However, it is so not normal for a sovereign nation to resort to borrowing of paper money as a way of life. In fact, no one has borrowed her way into freedom or development.

At this stage, I want to point out, first and foremost that every sovereign state, no matter how small it may be, has the right and authority to print and manage its own money.

Second, I want to state categorically that the act of printing money does NOT result in inflation (that concept is a hoax at least). Rather, it is the mode of management of the printed money that causes inflation or deflation.

For example, if the government of Ghana (inset here the name of any African country of your choice) realises that a region/state needs a road and it estimates the cost of constructing the road to be 50 Billion Ghana Cedis (inset here the currency of your selected African country). If the government goes on to print 50 Billion Ghana Cedis for the purpose of this project, and then calls on a Chinese or an European construction agency to construct this road on a condition that 20% of the capital cost is giving to the government or the political party in power as a kick-back, the following is what will happen:

1.The Chinese or the European company will demand that the payment is made in Chinese Yuan or European Euro. This means, the government of Ghana has to place the local currency it has printed on the international financial market to demand for Yuan or Euro. When this happens, there will be more Cedi (than it should be) on the market and if there are not equally more customers on the market demanding for Cedi, then this automatically reduce the value or relevance of Cedi, hence drastic or continuous exchange rate depreciation of the Cedi.

2.Once, the company pays the 20% of the capital cost to the government or party in power, it immunes itself of any system of control that is meant to regulate and manage the economy of the said African countries. In this case, the foreign construction company will construct a road with a quality far below what the money it has received should normally construct, it will under-pay local labour if it ever employs one, and it will invade taxes and all other statutory payments. The compositions of these negative actions will weaken the economic management regime of the said country.

Additionally, it is important to consider that the 20% (paid in kickback) which has gone in the hands of the ruling gangs as a mere paper because they have received that without working, or exchanging any value for it. The effect from this is no different from the damage the economy will suffer when a criminal sits in his or her room and print counterfeit and release them in the economy. Yet this money will be cheerful release in our economy through unproductive and abusive channels such as paying for sex of, and rent for ‘slay queens’ and ‘Bleep boys’; sponsoring of political hooliganism to destroy lives and properties in our countries; and embarking on expensive holiday trips abroad and showing offs at public gathering and events.

In the end of all the above scenarios, what will happen is that Ghana has used it sovereign status to print 50 billion in cash/paper but that 50 billion paper has not been properly managed to translate into /create actual wealth in equivalence of 50 billion. This, among many other negative economic consequences will result in inflation (more money in the system chasing fewer goods) because the focus of the money printed was to serve as object for demand rather than being an incentive to induce production and innovation. It will also result in exchange rate depreciation and damaging of the country’s economic sovereign worth because no one can trust a system managing by ineffective heads.

On the other hand, if the government prints 50 billion of the local currency for the purpose of constructing a road and this government ensures that the capacity of local construction companies are strengthened to execute the project, it will have no need to put such huge amount of the local currency on the global financial market for foreign exchange (because local companies are paid in local currency) to damage the exchange rate value of the local currency. Ethiopia has been able to developed strong local Construction, Banking, and Telecommunication system to champion the country’s development internally. Other African countries can learn from the Ethiopian system.

In the event that 50 Billion is printed to embark on road construction, all that the governments has to do to avoid inflation is to internally manage this printed money to ensure that:

1.It is fairly and widely distributed
2.It translates into multiples of actual values and wealth in the economy

Why is Fair and Widely Distribution of Printed Money Important?

First of all, every member of a society has some potential(s) or value in them which when is encouraged and tapped, will contribute to national development. However, this value cannot just be tapped unless regimes of rewards and recognition are instituted as a modality of exchange for these inherent values in the citizens.

After printing money, the government has a management duty to ensure that the money does not get concentrated in the hands of a few people; rather it must be wisely and widely distributed with an objective to use it as a bait to attract and uncover hidden potentials in citizens for national development.

How can this be done?

Whereas the main objectives of businesses owners will be to maximize profit, the government who has a duty to provide social good must at all times aim at maximizing quality and ensure that standards are strictly adhered to. When this is done, contractors are expected to spend the money received fairly on ‘all’ sectors of the economy to ensure widely and fairly distribution of the money.

For example, by insisting on quality and adherence to standards, the construction of a single road can lead to: increase demand for general logistics; available capital for trading and operations of the banking sector; higher employment and welfare for citizens; and capital returns for government to embark on other project generated through efficient and transparent tax system and many other benefits to the economy.

When the printed money is efficiently managed to inject the above benefits in the economy, the beneficiaries, will subsequently use and reuse the money/the benefits to create multiples of values (far higher than the original value of 50 billion) in the economy, thereby, promoting steady and long-term development of the country.

Will Printing of Money rather than Borrowing be an Easy thing to do by any African Country?

Certainly not, no single African country will find it easy to adopt this strategy; it even seems impossible because, lending to keeping Africa and her future in debt is a big business that helps those who want to keep Africans in an unending slavery use in controlling both the labour and human capital, and natural resources on the continent. By this any country/leader that makes such an attempt will face strong sabotage, sanction, and likely power instability from the controllers of the system.

Nonetheless, Africa will certainly win, when all or most African countries come together in unity and make this a continental policy. Without, doing this in unity, we must consider it that we are ready to bring our next generation into a new mode of slavery.

Mynd44,
Lalasticlala

While this may go against simple Economics the arguments laid out make it very attractive and something to be considered by African nations. I listened to a podcast that that was exactly what China did. I think it is worth trying.

Goldencheese:
While this may go against simple Economics the arguments laid out make it very attractive and something to be considered by African nations. I listened to a podcast that that was exactly what China did. I think it is worth trying.

Yes is worth trying

Seems borrowing is in Africa's blood....Late Lucky Dube talk say "Blessed is the hand that giveth than the one that taketh"

Tinubu suggested this some weeks back and the social media mob shouted him down. It is good that the president of Rwanda is suggesting same to African leaders and nobody can accuse him of wanting to embezzle freshly minted notes.

Hopefully, those in charge of our monetary policy would look at this suggestion objectively and decide if it’s worth exploring. All options must be considered at this point.

Yesterday, the chairman of the Governors forum said that states might be getting zero allocation from June if there is no rebound in the fortunes of crude oil price and sales. Simply put, by June ending, most states and even the FG may not be able to pay workers salaries not to talk about completing ongoing projects or embarking on new ones. This should tell us the kind of problem we’re going to face once this lockdown is over.

Government leaders across board and those in charge of managing our economy must start thinking out of the box to come up with an homegrown solution to the inevitable economic crisis that is coming. No idea should be discarded without properly weighing its merit and demerits.

Why does this old idea sound so INTERESTING because it came from Rwandan President, Paul Kagame? Interestingly, the same people who insist that Naira should be left to the whims and caprices of market forces are now excited that Paul Kagame suggested that African countries should print more money to fund development rather than borrow. The truth is that if African leaders would manage and allocate their resources efficiently to building vital infrastructure, expanding their agricultural production, exploring their natural resources transparently and encouraging local production, there would little need to borrow, let alone PRINT MONEY. But lack of vision, wrong/insincere policies and corruption among the leaders are big drawbacks. Therefore, telling African leaders to print money is creating another avenue for them to artificially create money and loot, leaving their economies deeper in woes. In my opinion, this Kagame's bold policy proposition is inapplicable for African economies.

In the case of Nigeria, we are borrowing to fund basic infrastructure simply because our own brothers and sisters looted the money we made from oil over the years and took the money to develop other countries, leaving their country in terrible state.

Now, apart from corruption, leadership is also a big problem in Africa. In this area, Paul Kagame for all his digital posturing is a big culprit for holding on to power for too long and brooking no slightest of opposition or criticism. The truth is whatever accomplishments he made will crumble when he eventually leaves office or dies as politicians will fight dirty for power in the absence of stable power transfer process. When this happens, it will take Rwanda back to square one. It happened in Côte d'Ivoire with Félix Houphouët-Boigny, Somali with Mohamed Siad Barre and Libya with Muammar al-Gaddafi.

A typical negation of Macro and microeconomics, but a very viable option if I might say.
But I tell you, this should not be tried in Nigeria else , we will end up buying 10 private jets and Luxury Yatchs each for our unending gluttons called POLITICIANS

Kageme should lead the way forward for Africa

I admire the boldness and innovativeness of the idea. Africa needs to find homegrown solutions to its problems if it is to ever really develop at scale. The IMF/World bank model has never helped us. Upon all the borrowing we have been borrowing since 'independence', we still aren't developing appreciably enough. In the end we will go and still beg for 'debt relief' from the same developed countries that are in far more debt than us multiple times over, and these same countries don't hesitate to borrow and print their own currency when and anyhow they feel like it.

The coming post-covid era is going to be brutal for Nigeria and Africa economically, due to dwindling revenues. Most African countries will again be forced to go and do bambiala to IMF/World Bank. For how long?

Wow! Food for thought.

Print more monies for economic looters to destroy your lives? Abeg we already have enough papers to go round.

While this line of argument appears to have some merit, it is that uncertainty of proper management and transparency that is critical. Are the Nigerian political actors of today ready to keep their sticky, pilfering fingers out of the cookie jar?

Can Buhari, his APC members and state governors generally commit to being honest enough to let real development take root without factoring in their greedy tendencies? Are they prepared to really enhance local capacity and stop patronising everything foreign like the Julius Bergers, the Chinese and so on?

If these cannot be guaranteed or ensured, there is no point!

Only the craziest of the crazies will implement such a suggestion.
This isn't a novel idea, printing notes to solve economic stagnation have been tried throughout history
and it never ends well, a famous example being the Weimer Republic.
There are many factors that must be in place including:
First, the country must be 99% technologically self-sustaining.

Second, the country must find others willing to do trade by barter in case of essential supplies
because no sane person will accept money with no known value business outside such a country.


Which African country has these securities?

What proponents of these methods don't realize is that they will end up destroying confidence in their
currency.
If 2 contractors were awarded two different projects with freely printed money, the net effect will be inflation
which means by the time the projects gets to 30%, about 5 times the initial cost may be needed to progress.

Also, they never tell us when they will stop printing more notes and how they will reverse the erosion of public confidence.
Perhaps, Kagame wants to create some Rwanda trillionaires overnight just like Mugabe.

seunmsg:
Tinubu suggested this some weeks back and the social media mob shouted him down. It is good that the president of Rwanda is suggesting same to African leaders and nobody can accuse him of wanting to embezzle freshly minted notes.

Hopefully, those in charge of our monetary policy would look at this suggestion objectively and decide if it’s worth exploring. All options must be considered at this point.

Yesterday, the chairman of the Governors forum said that states might be getting zero allocation from June if there is no rebound in the fortunes of crude oil price and sales. Simply put, by June ending, most states and even the FG may not be able to pay workers salaries not to talk about completing ongoing projects or embarking on new ones. This should tell us the kind of problem we’re going to face once this lockdown is over.

Government leaders across board and those in charge of managing our economy must start thinking out of the box to come up with an homegrown solution to the inevitable economic crisis that is coming. No idea should be discarded without properly weighing its merit and demerits.

Tinubu was rightly shut down: It's a super-dumb idea, with inflation already at 10-15%.

AtikuNetwork:
I admire the boldness and innovativeness of the idea. Africa needs to find homegrown solutions to its problems if it is to ever really develop at scale. The IMF/World bank model has never helped us. Upon all the borrowing we have been borrowing since 'independence', we still aren't developing appreciably enough. In the end we will go and still beg for 'debt relief' from the same developed countries that are in far more debt than us multiple times over, and these same countries don't hesitate to borrow and print their own currency when and anyhow they feel like it.

The coming post-covid era is going to be brutal for Nigeria and Africa economically, due to dwindling revenues. Most African countries will again be forced to go and do bambiala to IMF/World Bank. For how long?

Because their currency is in demand. Who wants Naira besides Benin and Togo. Guys, open an economics notebook. What can you buy with Naira outside Nigeria? You can't say this for other dollar & Euro and Swiss Francs. So if you print and print, you will just inflate local prices and it's back to square one. Nigeria must produce more of what it needs locally; that way it can print currency. As long as we buy foreign, purchasing in dollars, we can't print.

You think western nation maintain their expensive huge militaries for war?

Goldencheese:
While this may go against simple Economics the arguments laid out make it very attractive and something to be considered by African nations. I listened to a podcast that that was exactly what China did. I think it is worth trying.

China can do that because it's a Producer economy and it's currency is in demand, albeit mostly in Asia. Only the US & Europe & China, can pull that at the moment. If we do that, like Zimbabwe, bread will cost N100,000.

Dtribeless:


Because their currency is in demand. Who wants Naira besides Benin and Togo. Guys, open an economics notebook. What can you buy with Naira outside Nigeria? You can't say this for other dollar & Euro and Swiss Francs. So if you print and print, you will just inflate local prices and it's back to square one. Nigeria must produce more of what it needs locally; that way it can print currency. As long as we buy foreign, purchasing in dollars, we can't print.

Which of the economics notebooks? The big powers have been breaking the economic rules and getting away with, but Africans dare not try it. America is more indebted than any other nation of the earth, yet their money no dey ever finish. Why?? Left to the West, the Chinese would never have risen to prominence economically in spite of their communist history, yet China rose to its level of development without the World Bank and IMF breathing down their necks.

Look, the economic notebook model you are touting was rigged to never work for anyone except those that wrote it (and even they break those rules yet they never suffer any consequences). Hitler didn't have to toe the line of the WW1 Victors to lift up Germany from the ruins. He simply rewrote the rules and made it work for Germany.

My point is that all these years of IMF and World Bank inspired economic policies have not lifted Nigerians and Africans out of poverty so your textbook economics will not cut it for us. We need other solutions.

seunmsg:
Tinubu suggested this some weeks back and the social media mob shouted him down. It is good that the president of Rwanda is suggesting same to African leaders and nobody can accuse him of wanting to embezzle freshly minted notes.

Hopefully, those in charge of our monetary policy would look at this suggestion objectively and decide if it’s worth exploring. All options must be considered at this point.

Yesterday, the chairman of the Governors forum said that states might be getting zero allocation from June if there is no rebound in the fortunes of crude oil price and sales. Simply put, by June ending, most states and even the FG may not be able to pay workers salaries not to talk about completing ongoing projects or embarking on new ones. This should tell us the kind of problem we’re going to face once this lockdown is over.

Government leaders across board and those in charge of managing our economy must start thinking out of the box to come up with an homegrown solution to the inevitable economic crisis that is coming. No idea should be discarded without properly weighing its merit and demerits.

The writer of the article is Kwadwo Agyei Yeboah and I can't see any evidence Paul Kagame stated we need to start printing money

The fact that you and your ilk think money printing hasn't been tried before and that it will work tells us about the stranglehold of voodoo economics in Africa.

If you print more naira, increasing the supply of naira, it will reduce the value of naira. The more of something you have, the less valuable it is. If you reduce the naira's value, you will have a currency crisis and we all know how impoverishing it is as the cost of goods become unaffordable.

This money printing came up because we keep hearing about western economies doing it but they face a different set of problems - deflation which is a situation where cost of goods are falling as companies/investors will rather deposit money in the central bank than invest. By central banks increasing the quantity of money and using it to buy assets, they reduce its value and force investors to put their deposits to productive use instead of seeing it lose value.

In Africa, we don't face the threat of deflation. In an economic crisis, cost of goods rise rapidly as people convert local currency to dollars and exporters refuse to repatriate money home. Remember our crises also coincide with fall in commodity prices which reduces export revenues and access to dollars. If you print more local currency, this will increase the imbalance between the supply of the local currency and the demand for dollars. So you will guarantee a currency crisis and a rapid increase in the cost of goods.

Before aping an idea you see on CNN, ask yourself how this will work in Nigeria. And don't regurgitate a stupid idea because Tinubu supports it - I am sure he's able to protect himself by keeping a lot of his assets abroad.

AtikuNetwork:


Which of the economics notebooks? The big powers have been breaking the economic rules and getting away with, but Africans dare not try it. America is more indebted than any other nation of the earth, yet their money no dey ever finish. Why?? Left to the West, the Chinese would never have risen to prominence economically in spite of their communist history, yet China rose to its level of development without the World Bank and IMF breathing down their necks.

Look, the economic notebook model you are touting was rigged to never work for anyone except those that wrote it (and even they break those rules yet they never suffer any consequences). Hitler didn't have to toe the line of the WW1 Victors to lift up Germany from the ruins. He simply rewrote the rules and made it work for Germany.

My point is that all these years of IMF and World Bank inspired economic policies have not lifted Nigerians and Africans out of poverty so your textbook economics will not cut it for us. We need other solutions.

I appreciate your attempt at a reasonable conversation. I'd like you to answer a basic question on how it will work: Will more paper not be chasing the same goods, inflating prices? US dollars, pounds, yuan and Euro are in demand (US dollars full politicians across the world soak-away so can't inflate); that's why they can do that. It's called Eurodollar: dollars outside the US. I'd appreciate a measured and respectable conversation like we've had so far. LMK.

Dtribeless:


China can do that because it's a Producer economy and it's currency is in demand, albeit mostly in Asia. Only the US & Europe & China, can pull that at the moment. If we do that, like Zimbabwe, bread will cost N100,000.

Did China ask the permission of the West before becoming a 'producer economy'? When China started taking its economic destiny in its hands, didn't the Western institutions such as the IMF and World bank expect them to fail in the process?

When China embarked on ambitious developmental projects to multiply its GDP and productivity, did the Europeans and Americans give them the go-ahead? No. They just damned them and did what they had to do to get their people working and productive, thereby dramatically increasing their GDP in the process and creating value, and all the while the West was predicting their doom and shaking their heads from afar based on their own invented standards contained in their 'economic notebooks'.

Isn't the same China a respected country today? How do you think China would have fared if it had put its destiny in the hands of the IMF and World Bank? I bet you they would be nowhere near where they are today!

Dtribeless:


Because their currency is in demand. Who wants Naira besides Benin and Togo. Guys, open an economics notebook. What can you buy with Naira outside Nigeria? You can't say this for other dollar & Euro and Swiss Francs. So if you print and print, you will just inflate local prices and it's back to square one. Nigeria must produce more of what it needs locally; that way it can print currency. As long as we buy foreign, purchasing in dollars, we can't print.

They think that the effect of printing the naira is the same as printing the dollar or the euro. Interestingly, if you offer any of them $1m or N390m, they will likely choose $1m. It's about realizing the connection between the low faith/confidence in naira (evidence of which is abundant) and the consequences of increasing the supply of an untrusted currency.

The reality is that we already have printed too much naira, this is why we have double digit inflation. So their preferred policy is already being implemented to miserable effects and they are demanding more of it.

This is thrash. If printing enough currencies would solve the problem of debt, America wouldn't be owing China a dime.


I AM DONE TALKING

Xisnin:
Only the craziest of the crazies will implement such a suggestion.
This isn't a novel idea, printing notes to solve economic stagnation have been tried throughout history
and it never ends well, a famous example being the Weimer Republic.
There are many factors that must be in place including:
First, the country must be 99% technologically self-sustaining.

Second, the country must find others willing to do trade by barter in case of essential supplies
because no sane person will accept money with no known value business outside such a country.


Which African country has these securities?

What proponents of these methods don't realize is that they will end up destroying confidence in their
currency.
If 2 contractors were awarded two different projects with freely printed money, the net effect will be inflation
which means by the time the projects gets to 30%, about 5 times the initial cost may be needed to progress.

Also, they never tell us when they will stop printing more notes and how they will reverse the erosion of public confidence.
Perhaps, Kagame wants to create some Rwanda trillionaires overnight just like Mugabe.

Brilliant piece. Na this kind people I dey follow for naira land

Senseless

But there is still sense

Goldencheese:
While this may go against simple Economics the arguments laid out make it very attractive and something to be considered by African nations. I listened to a podcast that that was exactly what China did. I think it is worth trying.

Sure it worked a treat in Zimbabwe

Dtribeless:


I appreciate your attempt at a reasonable conversation. I'd like you to answer a basic question on how it will work: Will more paper not be chasing the same goods, inflating prices? US dollars, pounds, yuan and Euro are in demand (US dollars full politicians across the world soak-away so can't inflate); that's why they can do that. It's called Eurodollar: dollars outside the US. I'd appreciate a measured and respectable conversation like we've had so far. LMK.

I like the direction of Kagame's suggestion. Though I don't know how workable it would be under a democratic dispensation due to the wrangling and divisive nature of democratic systems and politics. In my opinion, the likes of China and Singapore couldn't have developed as quickly as they did under a liberal democratic setting. Even Hitler had to appropriate dictatorial and authoritarian powers to achieve everything he was able to economically during his time. Dubai that everyone touts as a model of development today is also a product of a dictatorship. It just seems like the Caucasians are the only ones that tend to attain commendable development under democratic systems. At least that is my personal observation.

I think development can only come in a restructured Nigeria, and under a 'benevolent dictatorship' setting And if our economic fortunes continues to dim with he whole COVID-19 situation, I see Nigeria restructuring by choice (or by force on the near future) even.

My proposition would be that the geopolitical units of the country draw up developmental plans that will be hinged on mass education in STEM, and human capital development. And begin increasing local capacity so that there would be less dependence on foreigners for the simplest of tasks and projects. An aggressive project of modernization based on local capacity should be embarked upon. We already have very educated and capable Nigerians that can be called upon, that have enough expertise to make this happen if the will is there. Just like the Chinese, we need to become more self-reliant.

AtikuNetwork:


Did China ask the permission of the West before becoming a 'producer economy'? When China started taking its economic destiny in its hands, didn't the Western institutions such as the IMF and World bank expect them to fail in the process?

When China embarked on ambitious developmental projects to multiply its GDP and productivity, did the Europeans and Americans give them the go-ahead? No. They just damned them and did what they had to do to get their people working and productive, thereby dramatically increasing their GDP in the process and creating value, and all the while the West was predicting their doom and shaking their heads from afar based on their own invented standards contained in their 'economic notebooks'.

Isn't the same China a respected country today? How do you think China would have fared if it had put its destiny in the hands of the IMF and World Bank? I bet you they would be nowhere near where they are today!

Don't forget that China is one-party state that operates autocracy with many of government policies and actions shrouded in secrecy. So Chinese leaders can afford to experiment policies away from prying eyes of both internal and external publics.

Moreover, China population has relative population homogeneity to stir up unnecessary resource allocation politics and ethnic shenanigans. Above all, China has zero tolerance for corruption.

In practical terms, many factors favour China to do their thing unlike Nigeria. The reality is that experimenting with this idea is a lot difficult in Nigeria.

"if the fact does not suit the theory, change the fact" - Albert Einstein

As good as this idea sounds it's a leeway to total destruction if any Africa nation attempt this..

America, Europe and China can try this because they produce enough goods that other nations need... The implication of this, is that you will need their currency to buy from them.

Let's Nigeria first produce his basic needs and then for the rest of Africa nations...

Until then we should desist from such idea... A country that your currency is not needed in both buy and selling in the international market... We sell to them to earn their dollars, pounds, euros... When we are buying from them they only demand their currency. Imagine contractors that want to build roads or any other infrastructure in this country, and we can't pay them with our own currency...

Abegi let's boost local production and manufacturing of basic goods first...

Lalasticlala, mynd44 and Seun

This topic should grace the front page ASAP

Not yeye Alex report with bleached ankle will be flooding front page with yeye models.

seunmsg:
Tinubu suggested this some weeks back and the social media mob shouted him down. It is good that the president of Rwanda is suggesting same to African leaders and nobody can accuse him of wanting to embezzle freshly minted notes.

Hopefully, those in charge of our monetary policy would look at this suggestion objectively and decide if it’s worth exploring. All options must be considered at this point.

Yesterday, the chairman of the Governors forum said that states might be getting zero allocation from June if there is no rebound in the fortunes of crude oil price and sales. Simply put, by June ending, most states and even the FG may not be able to pay workers salaries not to talk about completing ongoing projects or embarking on new ones. This should tell us the kind of problem we’re going to face once this lockdown is over.

Government leaders across board and those in charge of managing our economy must start thinking out of the box to come up with an homegrown solution to the inevitable economic crisis that is coming. No idea should be discarded without properly weighing its merit and demerits.

Paul Kagame isn't an economist and must have been dazzled by the UK, US and EU's ability to print money and "get away with it".

Rwanda sadly isn't in the same league as these countries. Inflation in these countries or regions rarely exceeds 2% and with Covid19 inspired recession, inflation is basically dead in the water. A print run will not lead to high inflation as inflationary pressure is either low or non-existent. With the print run, consumer price inflation may not rise above 2%. However, there may be asset price inflation which is usually considered benign and it improves business confidence and encourages a cycle of investment.

The real downside is the export of inflation. A lot of this money will flow outside and will surely lift the price of commodities and other assets worldwide as experienced in the series of quantitative easing used in the UK, US and eventually the EU in the late 2000s and the 2010s so as to recover from the Great Recession.

Rwanda is projected to have an inflation rate of 5% this year. Were it to print money, inflation will easily hit double-digits, hurting the poor. This will also mess up the country's present brilliant economic record.

Truth be told, 3rd world nations will need a bailout. Nigeria's cash flow problem is temporary as the price of oil will recover again. It may take about 6-8 months for prices to get back to their previous levels and this will be largely due to oil cuts from OPEC member states. Global economic growth will take some time to pick up as consumer confidence will be low due to uncertainties about whether the virus has been defeated by the populace

The US, UK and perhaps the EU will or pump prime and some have done so already. Japan has already announced a massive sum. China might encourage its bank to provide tons of credit but China might be constrained due to the huge debt overload it already carries.

For Nigeria, the sensible thing might be to seek a foreign loan. $10b is the sum that comes to mind. This should tide the country through this trying period. I see no other way out.

grandstar:


Paul Kagame isn't an economist and must have been dazzled by the UK, US and EU's ability to print money and "get away with it".

Rwanda sadly isn't in the same league as these countries. Inflation in these countries or regions rarely exceeds 2% and with Covid19 inspired recession, inflation is basically dead in the water. A print run will not lead to high inflation as inflationary pressure is either low or non-existent. With the print run, consumer price inflation may not rise above 2%. However, there may be asset price inflation which is usually considered benign and it improves business confidence and encourages a cycle of investment.

The real downside is the export of inflation. A lot of this money will flow outside and will surely lift the price of commodities and other assets worldwide as experienced in the series of quantitative easing used in the UK, US and eventually the EU in the late 2000s and the 2010s so as to recover from the Great Recession.

Rwanda is projected to have an inflation rate of 5% this year. Were it to print money, inflation will easily hit double-digits, hurting the poor. This will also mess up the country's present brilliant economic record.

Truth be told, 3rd world nations will need a bailout. Nigeria's cash flow problem is temporary as the price of oil will recover again. It may take about 6-8 months for prices to get back to their previous levels and this will be largely due to oil cuts from OPEC member states. Global economic growth will take some time to pick up as consumer confidence will be low due to uncertainties about whether the virus has been defeated by the populace

The US, UK and perhaps the EU will or pump prime and some have done so already. Japan has already announced a massive sum. China might encourage its bank to provide tons of credit but China might be constrained due to the huge debt overload it already carries.

For Nigeria, the sensible thing might be to seek a foreign loan. $10b is the sum that comes to mind. This should tide the country through this trying period. I see no other way out.

You said Nigeria and other 3rd world countries may need another bailout or another round of bambiala? From whom? Where is that bailout money coming from? The same source that never runs dry abi? Later they will ask for another debt forgiveness. This is what I was saying. For how long will this continue? Same way America that holds more debt than any other country in the world keeps bailing out its big corporations and banks to the tune of hundreds of billions (by just printing money out of thin air) without it affecting its economy even after writing off those bailouts later on; bailouts that never get paid back. But you say Nigeria should not even try the same. All these voodoo economics shrouded in esoteric mombo jumbo has never and will never favour us in this country, not because we are the only ones that don't play by the rules/book, but because it was designed to keep us in a perpetual bambiala state. Inside life.

AtikuNetwork:


You said Nigeria and other 3rd world countries may need another bailout or another round of bambiala? From whom? Where is that bailout money coming from? The same source that never runs dry abi? Later they will ask for another debt forgiveness. This is what I was saying. For how long will this continue? Same way America that holds more debt than any other country in the world keeps bailing out its big corporations and banks to the tune of hundreds of billions (by just printing money out of thin air) without it affecting its economy even after writing off those bailouts later on; bailouts that never get paid back. But you say Nigeria should not even try the same. All these voodoo economics shrouded in esoteric mombo jumbo has never and will never favour us in this country, not because we are the only ones that don't play by the rules/book, but because it was designed to keep us in a perpetual bambiala state. Inside life.

You want Nigeria with inflation rates in double digits to print money? Don't even think it.

You seem to have ignored the fact that inflation is comatose in these countries. These countries have been hawkish about inflation for decades. They have an inflation target of 2% maximum yearly. If inflation was to exceed these figures, the Central Banks will immediately increase interest rates in order to reduce the money in circulation. This action may slow down the economy or even tilt it into a recession but it usually effective in bringing inflation below the 2% mark.

It is because inflation is now either dead or in deflationary territory, they can now print money. Even if inflation stirs its ugly head, it may not rise beyond 2%. Were it to do so, the Central Banks may be forced to bring it down again below 2%.

Does this printing of currency have a negative side? Of course, it does. The dollar lost value against most major currencies when it introduced quantitative easing. Yes, it does have its downside.