Yampotatocarrot:


But currencies like Won (South Korea) have very low value against the dollar, yet their economy seem alright.

I don't think it's about the exchange rate against the dollar, whether high or low, there seem to be other more important factors at play here

It's stability, that is hardly achievable in Nigeria. Some people see FOREX as a commodity that they can price at whatever rate they deem fit. Checkout the variation of Won over about 1 year period

Now compare to % Naira devaluation in the last 1 year.

We must subsidize Naira for life because if we allow market float ... Nigeria will remain 20M people within 5years ... Many will die of hunger and abject poverty ... many armed robbers and assassins!!

stephanie11:


https://politicsnigeria.com/subsidizing-the-naira-blocks-nigerias-economic-takeoff/

Looking forward to when you will come out for Senator.

The presidency is overrated. If we can fix the senate and Judiciary, the executive arm will behave.

laosy:
Abegi, I didn't read all those okoto up there but I knew they're talking about one useless currency spoiled by our useless leaders.

If you can't read long posts, how will we move the nation forward? How will we become the future of Tomorrow?

It's well o

stephanie11:


https://politicsnigeria.com/subsidizing-the-naira-blocks-nigerias-economic-takeoff/

Subsidizing naira by defending it is a sound economic policy for its current predicament. Floating our currency at this junction will be a recipe for disaster. If we float Naira, It means there is a possibility for Naira to trade at 1000 naira/$1. What would be the economic ramifications of this possibility?

1. Higher inflation
2. Higher MPR rates in an attempt to curb inflation leading to higher interest rates from banks (Higher cost of funds for business owners)
3. Continuous economic and business instabilities due to inability of businesses to predict inflation rate, interest rate, market direction, higher cost of business operations leading to de-industrialization and job losses.
4. As a percentage of Nigeria budget, debt payments will increase significantly overnight with lower funds left for governance. Leading to under-development, increase poverty level, more debt acquisition to fund budget and others.
5. Nigerian businesses with dollar cost, debt exposure will overnight see a double whammy increase threat to their business leading to bankruptcy and extinction.

While I agree with the professor that shifting our economy from import dependent one to export dependent is the way to go, i disagree with the strategy of Naira floatation.
The best way to do this is; to fix and improve all the factors that affect cost of manufacturing and other economic productivities. Let us focus on reducing cost of manufacturing single product, then we can begin to witness export oriented economic growth.
1. Let us fix power supply. So that businesses will not have power as 50% of their operating cost.
2. Let us fix infrastructure, so that agricultural products can be easily available. Farmers can easily get products from farm to market, so that we can reduce products lost due to bad infrastructure.
3.Let us fix monetary policy rate and bank interest rate, to ensure businesses have access to low cost of funds and longer tenor.
4. Let us improve our education system, so that we do not continue to push out half-baked graduates. Also to ensure we graduate capable hands for our generation.

Fixing these fundamental economic factors and more will not only help businesses in Nigeria thrive locally, will also improve their competitive advantage and opportunities on the global stage.

RTSC:

You have not practiced capitalism the way it ought to be.


Nigeria is not more traditional than asia, and it is capitalism that brought that continent from underdevelopment.

u got it wrong! Non of China, Japan, Korea, Malaysia, Indonesia and Middle-East practice capitalism.

idtwo:

A dual exchange rate is a setup created by a government where their currency has a fixed official exchange rate and a separate floating rate applied to specified goods, sectors or trading conditions. The floating rate is often market-determined in parallel to the official exchange rate. (Investopedia).
Like the above explanation, dollars can be gotten from the bank at about a rate of $1 to N380 or so. But gotten from bureau de change at rates well above 400 to the same $1. Black market rates may even be worse. But because of the limited supply from the banks, importers often resort to sourcing the dollars they need from the black market which seems to always have. Remember those instances when filling stations gave no fuel but the black market never run short of supply
So you see, that dual exchange rates leave room for fraud. When you know people in positions in banks that can influence your being given dollars at say 380, all you need to do is to resell to the black market at say 390 & make N10 profit per dollar without doing any work. So this system denies genuine entrepreneurs access to needed foreign exchange and encourages currency roundtripping by banks & individuals.
It is foolish for govt to give people going for pilgrimage to Mecca and Jerusalem, dollars at official rate when they have not been able to satisfy those that need it for genuine business. So if you source dollars at expensive rates, your imported goods will of course be expensive.
Total Free floating of currency especially for economies that hardly export anything substantial is however fraught with own dangers and problems like many contributors have tried to explain.

Waoh, thanks for this Bro. I appreciate

Floating the already floating Naira could float Nigerians right into the sea!

surgical:
So this guy is not different from other copy and paste economist,just regurgitating text book theories,without original thought or consideration for the peculiarity of the nation,his suggestions is a recipe for disaster

I have learnt with years of experience not to be easily swayed by just being well read or well placed will mean you will be a good leader. He is suggesting the typical Economics textbook solution. If we are going to float the Nigeria, we must have reduced importation drastically so Naira can compete, Fuel importation gulps about 30% of importation, we eagerly awaits an end to fuel importation and significantly increased local food production, maybe a floating the Naira when at least those two fundamentals are met. Floating Naira at this stage is recipe for disaster. 1USD may trade at over $700.

Easier said than done.

The whole economy is in the market (open markets, supermarkets, supermarket, malls, etc. for goods, and services. I expected Kingley to focus on how to increase the share of made-in-Nigeria in the markets. If 80% of Nigeria’s daily needs are imported, then the pressure on the Naira continues unabated. So, the solution lies in an increased patronage of made in Nigeria. But we are in a democracy and we do not expect anyone to put a gun to our head to buy made in Nigeria. However, public expenditures could spearhead patronising made in Nigeria without infringing on any individual’s rights. Besides, it is unpatriotic for government spendings to support workers in foreign countries at the expense of Nigerian youths. To firm up the Naira in our pockets, we will need to embrace made in Nigeria and public procurement should take the lead. Let's stop chasing shadows.

That's why the country is not moving forward,most of our economists and policy makers are still reading Adam's smith economic book why forgetting the reality on ground. Aboki dey do sharp practice so u should tackle it first.

chinchum:
I have learnt with years of experience not to be easily swayed by just being well read or well placed will mean you will be a good leader. He is suggesting the typical Economics textbook solution. If we are going to float the Nigeria, we must have reduced importation drastically so Naira can compete, Fuel importation gulps about 30% of importation, we eagerly awaits an end to fuel importation and significantly increased local food production, maybe a floating the Naira when at least those two fundamentals are met. Floating Naira at this stage is recipe for disaster. 1USD may trade at over $700.

The truth is that those guys are not really smart in real life, just book smartness. Most of us commenting here i believe are not grounded in economics but iam glad we where able to figure out the real problem that the country is suppose to address.

yungpowers:
Tribalism will never allow our youths vote for such a product.
They'll rather vote for vegetables who'll mortgage their future.
Nigerians deserve Buhari.

Product that still reads and use adam Smith's theory to solve a peculiar problem.

Dear De Moghalu are you talking to dead Buhari or Aisha Buhari boyfriend or you are talking to thé air

courage89:


Subsidizing naira by defending it is a sound economic policy for its current predicament. Floating our currency at this junction will be a recipe for disaster. If we float Naira, It means there is a possibility for Naira to trade at 1000 naira/$1. What would be the economic ramifications of this possibility?

1. Higher inflation
2. Higher MPR rates in an attempt to curb inflation leading to higher interest rates from banks (Higher cost of funds for business owners)
3. Continuous economic and business instabilities due to inability of businesses to predict inflation rate, interest rate, market direction, higher cost of business operations leading to de-industrialization and job losses.
4. As a percentage of Nigeria budget, debt payments will increase significantly overnight with lower funds left for governance. Leading to under-development, increase poverty level, more debt acquisition to fund budget and others.
5. Nigerian businesses with dollar cost, debt exposure will overnight see a double whammy increase threat to their business leading to bankruptcy and extinction.

While I agree with the professor that shifting our economy from import dependent one to export dependent is the way to go, i disagree with the strategy of Naira floatation.
The best way to do this is; to fix and improve all the factors that affect cost of manufacturing and other economic productivities. Let us focus on reducing cost of manufacturing single product, then we can begin to witness export oriented economic growth.
1. Let us fix power supply. So that businesses will not have power as 50% of their operating cost.
2. Let us fix infrastructure, so that agricultural products can be easily available. Farmers can easily get products from farm to market, so that we can reduce products lost due to bad infrastructure.
3.Let us fix monetary policy rate and bank interest rate, to ensure businesses have access to low cost of funds and longer tenor.
4. Let us improve our education system, so that we do not continue to push out half-baked graduates. Also to ensure we graduate capable hands for our generation.

Fixing these fundamental economic factors and more will not only help businesses in Nigeria thrive locally, will also improve their competitive advantage and opportunities on the global stage.

Thank you very much for this analysis. This your contribution is what I call "being real and relistic'. Not borrowed
deadly economic theories that are so injurious to the nation. If I'm to award, the you are Professor Emiratus of Nigerian Economics.
Let's further disect it for the benefit of those that cannot see the evil Naira devaluation has brought to Nigeria.
(I)/One of the largest portfolio in the country is the pension fund portfolio which stood at N10.8 trillion as @ May 2020. About N7.2 trillion representing 66.7%) was invested in Federal Government’s Securities. Now this quantum of money is worth only half it's USD of 2015 given that the parallel market USD exchange rate is N440/$. Now in converse to this, the FG in it's
2019 Appropriation Act provided for New External Borrowing of N824.82 billion (equivalent of USD2.7 billion at USD/N305). Which literally means we have to source for atbkeast x1.5 more Naira to service this loan than we could've done if it were 2015. So our Naira output has to increase by at least half its current value. Now was that possible for you or your business between 2019 and today? Yet the exchange rate has now shifted even further to $/N380.. thus requiring even more Naira from Nigerians.
So the devaluation make us poorer and uncompetitive compared to our foreign counterparts made richer in our economy through higher $$$ purchasing power.

Interesting!!

VeeVeeMyLuv:
very funny

Do u want people to use wheelbarrow to carry money before they will be able to buy bread?

. Boss, how?

Please, elaborate on this your point

Ishiewo:
. Boss, how?

Please, elaborate on this your point

just try to picture this scenario in your mind

" an individual taking 200,000 naira in 50naira denomination packed in a wheelbarrow just to buy a loaf of bread"