Let him do what he thinks will work. If it doesn't work, well too bad, but atleast he tried. But if it does work, we can move to doing other things to strengthen our economy.

I'm sure you'll hate to think of what will happen if it doesn't work, they better start their annual road show this month!

Why not before now? better late than never,Yes it is true that the quantum of money in circulation would go down but neither leading neccessarily to any improvement in the value of the naira nor improving the standard of living but may just preserve the value of the naira and probably improve our spending culture. Govt should bear in mind that a good policy does not become laudable untill it has good implementation therefore awareness must be raised and proper orientation sought for Nigerians to understand the pros and cons in the short and long run of thi policy before Aug next year,it would be better embraced and thus succeed.

Seun, how can u say that Prof. Soludo is not an economist. Pls, u better go back to school and learn the basics of ecomomics and STOP being sentimental about this issue. Also try and read economics journals and also travel far and wide if u've got the resources ok. Stop being miopic!

in my opinion as much as this might seem like a good idea, giving nigerian currency more value, its bad news because people will be earning less and possible working by the hour, just like the U.S, people will now earn 20000/yr which totally sucks. so i say make that money now before the change is effective.

What really bothers me is not even being discussed here.

The fact that government is always interested in increasing the price of petrol means it will find it difficult reverting the price to as low as 70/100. I find this completely imposible and Soludo's agenda points directly to total deflation.

How then is it possible to attain this level of deflation when it is pretty difficult for petroleum products prices to b reverted to such a lowly price.

ima1:

.so i say make that money now before the change is effective.

No. I don't think it's going to be the same money.
What we're talking about here is a new naira note.
If you make all the money, say 1 million naira now,
when the change becomes effective what you will
get in exchange is 10 thousand naira.

Hi All,

I've read with amusement every post in this thread. Please permit me to make the following observations.

1.) Most people who made posts in this thread did not bother to read properly the full text of Prof. Soludo's statement, or at least an informed summary from someone who has read it.
2.) Most people who support Prof. Soludo's position have not made any effort to quote the man's reasons for taking this position and defend them.
3.) Most people who do not support Prof. Soludo's position have not made any effort to quote the man's reasons for taking this position and point out the fallacies in his arguments.
4.) There are topics in which we can afford to yield the ground to every man's fancy, such as who should play in our national football team, and who should coach the team. Economic policies which mean the difference between eating and starving, between being able to send your kids to school and not being able to, should be excused from this category.
5.) We all have a duty, as educated people, to be sure we understand the thinking behind economic policies which our government is planning to execute. This is exactly the excuse given by white people in the American South before the Civil Rights Movement for denying African-Americans the right to vote. They claimed African-Americans were not intellectually capable of deciding who was a good candidate.

It is unfair for you to recommend we support Prof Soludo's move, or oppose it, if you cannot convince us that you have engaged in rigorous thought to arrive at your recommendation.

This will be the re-denomination of naira will only affect the bulkyness of the currency not the value of the currency this is because, They want to remove two zeros from the existing one meaning that, two zeros will be removed from  N100 to make it N1. That is why N1.26 will be equivalent to $1 against N126 which is $1 now.

Can you see the mathematics now if 2 zeros is removed from N126 it will be N1.26. That means in August 1st, 2008, if you have N100 in the bank they will only give you N1 which will be equivalent to one naira. CAN YOU SEE THAT.

SHINE YOUR EYES NIGERIA This is Frau

@dearstan


so even economist like you support this financial facade.



For those of you who agree that this re-denomination will generally have little or no effect, I would like you to consider the billions of Naira notes in circulation today and realise that to convert each to a redenominated polymer note will cost about $2 per note (but Nigeria being special, in may cost as much as $5 each) .

Therefore, it will cost us $12 billion (our total Federation Account) to print 6 billion new Naira notes at $2 each.

So why should we spend $12 billion on a project that will have little or no direct effect and even possibly, could have negative effects?


Then secondly, let's examine the indirect effect on devaluing our fixed assets.


I see the hand of IMF in this. They are not done with us yet.

Anyhow sha, God Help Nigeria because I just can't.

Guess we need to develop a positive approach to policy issues. The economic policy cannot be a failure after all, knowing fully well that the Nigerian economy is still cash based economy. Those guys earning N7,500,000 p.a should be ready to go home with N75,000 p.a. Let us strength our economy and give the naira a convertible value. One love.

For all those that said this exchange rate gymnastic will Reduce Poverty or Improve The Standard Of Living, only God will judge you.

Then We Should get Ready to host lots of Immigrants, because many people especially from under-developed countries will be flourshing to Nigeria, because if they get 1000 Naira it will be millions in their currency,

Naira will be great and become more popular, and it will become the largest currency in Africa, If that happens, I hope it is not just a word of mouth, but the action,

nothing you do pleases moda foking Nigerians - nothing - i am tired of bedroom critics who knows nothing about macro economincs sitting in here and vituperating arrant nonsense that is fit for nowhere but stupendous oblivion and immaterialistic gabbage and cowardly frigidity which is all aggravated and meaningless juxtaposedly incorrect lingoistic.

@Princejay
Thank you jare

Did you read it though? If you did, what is your opinion? OR should I say where do you stand on the matter. Its too long for me to read, I just read some of the things I thought was relevant.

princejay:


It is unfair for you to recommend we support Prof Soludo's move, or oppose it, if you cannot convince us that you have engaged in rigorous thought to arrive at your recommendation.

exactly my point! i have been requesting for an economist who understand this to provide an analysis (educated one) on this issue, i dont think sometimes this forum is the right environment to have such insightful discussion. people just spew out jagajantis from their heads.

I am still studying this and wondering what impact this will have on the stock market and landed property if anyone has any ideas please share, See below link providing info on the Ghana Experience http://www.ghanacedi.gov.gh/

@topic
i have seen some posts here, those ones who want to go on campaign or fight, lmao . fight now lets see.
abeg make una sit down, make we here beta thing.

i think its a great idea and not to great idea.
but there is nothing that cannot be tried.
if it works out well, some of us against the idea would be the ones proud of the development. which would be a real boost to Nigeria as a whole.
if it does not work out,then that would be too bad. as said above, i know nothing of these stuff so i can't support or be against.

The currency changes apply to commitments Nigeria has made under International Monetary Fund (IMF) rules regarding currency transfers.

bbc

'Yar Adua's Macro-Economic Program, ummm I dnt know when they gave him GCFR, are all Nigerian presidents GCFR?

Currency redenomination and liberalization are not without risks especially for small
open economies such as Nigeria. However, we believe that the time is auspicious for
such reforms especially in the light of the following enabling conditions:
overall commitment of the Federal Government under Alhaji Umaru Musa
Yar’Adua (GCFR) to sustaining macroeconomic and other structural reforms
a robust external reserves to meet almost 20 months of foreign exchange
disbursements and 25 months of imports
Stronger banking system powering a new economy and capital market
Inflation down to single digit, and robust GDP growth of about 6% and above
Exchange rate stability and elimination of multiple currency practices that had
been prevalent before now
Strong capital inflows (with Central Bank as increasingly marginal player in the
forex market)
Debt relief: Nigeria without a debt burden
Non-oil exports growing strongly (24% in 2006)
Nigeria de-listed from the FATF list

A: what happens to people that makes N500 a day?

thats means they are now making N5 a day?

B: what happens to our 25 big banks? they will now have $2,500,000 as total capital?

C: what happens to Bus fair from Ikorodu to Ojuelegba? It will be 5Kobo?

D: so petrol will now sell for 70kobo per litre?

@babasin
And your point is, ?

seems they guy likes American dollar too much!

If this happens thenit means great things for Nigeria. So will it work like the Ghanians slogan that says the value is the same?

what are they smoking?

http://www.indebtwetrust.org/

Will the minimum wage then become N75?

I'm sorry the last paragraph of any report on nigeria will still remain
"Nigeria is one of the world's biggest oil exporters, but it is also one of the world's poorest countries, with the majority of the population living on less than $1 per day"

This forum is too good, please someone should enlighten me on the effect of this reforms on savings please

lets say God comes in the form of a person and says to Nigerians - do you know I will make your country great, greater than any other country? Do you know Nigerians in their stupid nature will still question God, argue with God and tell Him it is not possible? God bless Nigeria.

[quote:auwale87]We Should get Ready to host lots of Immigrants, because many people especially from under-developed countries
will be flourshing to Nigeria, because if they get 1000 Naira it will be millions in their currency[quote][/quote]

so what is nigeria - a develop nation abi,

Its a good step forward to a new Nigeria, embrace it.

The cost of food items and other products will reduce to its lowest rate.  Just imagine if people are buying a 5 naira buscuit for 5kobo. How will you feel? Though for you to get 20 naira will be alot of problem, you will sweat before you get it.  Moreover cars and other products like petroleum will reduce, now that they are selling fuel for 70naira, then it will be something like 70/100=70kobo per litre.

There will be an added advantage to people living in Nigeria than those leaving abroad. People sending money home might even be requesting for money from Nigeria if that should work out well.

The rate of the development of the country can work better than if the economy rate should continue to increase.  
I quite understand the technique of CBN in this regard, they first allow people to invest money in the banks because of what will shortly take place.  I was expecting this even before Soludo changed everything, which is the introduction of the 200, 500 and 1000 naira notes. But I can see that all those plans are for good.
I like the work of Soludo, he should keep it up.

@Princejay - after reading your post i decided to go through the posts also and came across Soludo's address. Things make more sense now. Though it is not an easy policy to talk about.

This is what I gather from looking at other sources, can you please add your own opinion as you seem to be an objective person (no offence to the rest).

"The Phase Two, by focusing on the Naira, means that the Central Bank intends to give greater emphasis to the most important function of central banks everywhere in the world namely, to issue legal tender currency and to defend its value (domestically by ensuring low inflation and externally by ensuring appropriate and stable exchange rate regime)."

This comment sums up the more immediate effects of redenomination but will not be effective alone and the government is currently working on the accompanying features that will boost the economy.

Having redenomination wil:
1)  Eliminate all restrictions on capital account transfers and make its naira <NGN=> fully convertible - this apparently opens up the way for more foreign investment. Capital account convertibility is considered to be one of the major features of a developed economy. It helps attract foreign investment. It offers foreign investors a lot of comfort as they can re-convert local currency into foreign currency anytime they want to and take their money away. It basically is a policy that allows the easy exchange of local currency (cash) for foreign currency at low rates.

At the same time, capital account convertibility makes it easier for domestic companies to tap foreign markets. If you only have current account convertibility, this means one can import and export goods or receive or make payments for services rendered. However, investments and borrowings are restricted.

This was expected to spur domestic capital, which would lead to welfare gains, and in turn lead to higher GDP growth. The tradeoff for such growth was seen as a lack of sustainable internal GNP growth and a decrease in domestic capital investments. (Gross National Product (GNP) is the total value of all final goods and services produced by a country's factors of production and sold on the market in a given time period. For example, because Mercedes-Benz is owned by Germans, its profits from its Belgian activities would count towards German GNP, but because the activities take place in the Belgium it would count toward Belgian GDP. A Brit working in Paris would have his income count toward UK GNP but his output would be part of French GDP.)

When CAC is used with the proper restraints, this is exactly what happens. The entire outsourcing movement with jobs and factories going oversees is a direct result of the foreign investment aspect of CAC.

However, before the formalization of CAC, there were problems with the theory. Free flow of assets was required to work in both directions. Although CAC freely enabled investment in the country, it also enabled quick liquidation and removal of capital assets from the country, both domestic and foreign. It also exposed domestic creditors to overseas credit risks, fluctuations in fiscal policy, and manipulation.

As a result, there were severe disruptions that helped to contribute to the East Asian crisis of the mid 90's. In Malaysia, for example, there were heavy losses in overseas investments of at least one bank, in the magnitude of hundreds of millions of dollars. These were not realized and identified until a reform system strengthened regulatory and accounting controls.

2) Image and reputation as being the model for Africa, apparently the African Central Bank has agreed for Nigeria to host it and the Naira may be known as the model currency of africa like the Pound was for Europe. This may seem petty but if foreign investment is what you crave this means alot.

This is not all but the concepts are so extensive I don't understand most of it and I have copied and pasted the chunks that I understand.

In short this is one piece of a puzzle that could lead to a better Nigeria, or if rushed into too soon could destroy Nigeria (look at east Asia) if you look at Soludo's speech (I know it is long oh) he comes out with some things that give you confidence that we may be on the road to a better economy already. He even highlights the fact that other aspects need to be tackled for the people of Nigeria to see the benefits of this i.e. infrastructure, energy etc. He talks about priivatisation which I personally believe is Nigeria's only hope.

My only problem is who invests in Nigeria like I put about GNP and GDP, if the people of Nigeria are richer at first because of jobs brought by foreigners that will be great. On the other hand these foreign investors will make more from us than they will probably give. Look at Shell! The actual country i.e. governement will not be as rich as it could be if businesses were owned by Nigerian's (taxes etc). Having said that can we depend on our taxes to be spent wisely anyway? Well atleast if Nigerians invest hopefully that would create a sense of priority of Nigerians over foreigners in choosing jobs. I don't want a situation where they buy land to start a businees and send employes from aborad to work there and the taxes of the owners go to UK or something increasing there econmoy whilst ours looms. Will we be hired for the prestigious jobs or the jobs they feel they can pay chicken feed for?

Anyway it is very interesting I need to read more about this to try and understand but hopefully this will be good news if they cover all basis atleast banks have been consolidated and if they now follow through with this there is no reason (apart from past corruption i guess) to assume that they won't follow through on all the other things that will lead to a better economy.

in short . . . WATCH THIS SPACE!

I still cannot get a straight answer from people ooooo, is land of 12million now going to be sold for 12,000? somebodi help me oh