IbeOkehie:
Yes. Subsidy is needed WHEN government sets a fixed price.

Or put it this way...subsidies are a predictable consequence of fixed prices.

So the EXISTENCE of a CBN rate means the government is paying a forex subsidy. The amount of subsidy is equal to the difference between the black market and official CBN rate

Good Luck to Nigeria

Lithiumite:


A cup half full or half empty,it only depends where your interests lies........in my posit I clearly stated that no govt in the world would leave their currency to the full whim of the forces of demand and supply.

It's very obvious you don't know how much it costs the govt to keep the exchange rate at 460 or basically how these dynamics work.you should go learn before opining..... everything isn't politics......if you recall, everyone of the presidential candidates acceded to fact that our forex regime was dysfunctional to our economy including subsidy

Ofunaofu:


This is the problem I have with you lots. Defending incompetence and cluelessness with bold ignorance

The past one year and fews months have clearly shown that Buhari, Emefiele was far competent, managed the economy better than Tinubu and his patch patch CV CBN governor

haybhi1:
Are you inferring that there is still some subsidy, as such?

Walai:
Point of correction they didn't float the naira, they simply devalued it but with poor planning

Oshin56:
He has forgot the pin he used to float it, that means it will be hard to unfloat it. It's 2025-2026 end that they will remember the code to unfloat it.

9jatriot:
Floating the exchange rate was a very bold step. Also fortunes favors the brave.

But I thought the exchange rate was floated by the then acting CBN governor before Cardoso took over office, abi my memory de fail me. A simple google search will clear my confusion but I non get the power to check now.

femi4:
The point you are missing is right there before your nose yet you can't see it.

There has always been control of the value naira even if it's one kobo. Telling me that it cost more to keep it at 460 is balderdash

kutashi:


The guy is olodo! Period!
Ecn 101: F9

A country like Nigeria floating is currency, is on suicide mission! And they he had forced our Naira to commit 'Harakiri'. I just hope our Naira won't be heading to 'Zimbabwe direction'

Omooba77:

https://www.vanguardngr.com/2024/10/why-we-floated-the-naira-cardoso/

ironheart:
You floated the naira and its not working. Wouldn't you unfloat it?

seguntijan:
Indonesia floated its currency in 1998, prompted by the Asian Financial Crisis, and the Rupiah depreciated from 625 to $1 to 16,000 - $1 in the same year. As of 1998, Indonesia's GDP was $95bn. The country was bankrupt. It ran to IMF 4 times, had food shortages, and had massive riots. The rupiah gained value to 8,000 in 1999 and went back to 16,000. The economy started to grow gradually since then, witnessing a rise in non-oil export revenues and capital inflows into the Jakarta stock exchange.

The Rupiah has traded between 15,000 - 16,000 to the $ since 1999. Currency stability - easier flow of capital - easier investments - price stability - easier growth. I tried to explain in the thread that fx stability is a more important factor for economic growth, not the exchange rate, and Nigeria must choose between price stability and a pegged volatile fx rate. With the same period between 1998 - 2022, Nigeria's GDP grew from $218bn to $420bn with a pegged / fixed exchange rate system that we had to defend with our fx reserves while Indonesia moved from $95bn to $1.3trn. Fx reserves are meant to facilitate economic trade, Nigeria chose to use over $200bn of its reserve to defend a pegged currency.

Now my questions to you are :

1. Did the weak Rupiah prevent the Indonesian economy from growing from a gdp of $95bn to $1.3trn ?

2. Did the weak rupiah prevent consistent Gdp growth YOY?

3. Has Indonesia not done well with its weak currency?

4. Can Indonesia make $250bn from exports without a weak currency?

What is your point again?

BigIyanga:
?
What is your shooopid point again? Is Naija Indonesia? Is Naija a manufacturing hub like Indonesia?

IbeOkehie:
haybhi1
Love800

I stated that the current system of a MANAGED FLOAT has been in place for a loooong time. It was introduced as part of the SAP programs by President Ibrahim Babangida and his Finance Minister Olu Falae. It was THE FIRST TIME that Nigeria ever had any kind of market reflective rate for forex. Prior to that, the FIXED RATE was determined by administrative order. Not even the CBN, but the Ministry of Finance!!!!

It caused all kinds of corruption. The rate was so out of touch with the market that it was profitable to import SAND into Nigeria; that's the same reason it's profitable to import USED CARS and 2nd hand clothing today. Let that sink it...the overvalued naira makes it possible for USED, 2nd hand items to compete and win against NEW domestically made stuff. That's why Nigeria is NOT productive, that's why Nigeria is NOT a good place to do manufacturing, including REFINING PETROL. We shall see if the recent adjustments make a difference...we know they've already caused a substantial rise in exports.

For more reading, peruse this important interview given by Olu Falae himself.

https://www.premiumtimesng.com/news/headlines/358394-interview-why-sap-was-essential-for-nigerias-economy-olu-falae.html?tztc=1

Without IBB and SAP Nigeria would be an economic dead zone. ALL productive and anyway competitive parts of the economy are those subjected to SAP, anyone can check it.



His point is cogent and sound.

A free floating currency will MAKE Nigeria a manufacturing and farming hub and generally a productive nation. A market determined currency value PROMOTES productivity. Indonesia wasn't created by God as a manufacturing hub. Thanks.

Good Luck to Nigeria.

Lithiumite:


So you think CBN gov just seats in his office every morning and just writes the currency rates.....do you even know how rates are arrived at.

naijaboy756:
Is there disparity now or not?

These guys just like higher bands of hardship

Fuel from #197 to #1200 both 197 and 1200 has subsidy payments

Naira from 460 to 1,600 both still has disparities

Vision101:

He was talking about disparity between the official and parallel market rates? The disparity is very marginal now. It doesn't encourage so much round tripping.

IbeOkehie:
haybhi1
Love800

I stated that the current system of a MANAGED FLOAT has been in place for a loooong time. It was introduced as part of the SAP programs by President Ibrahim Babangida and his Finance Minister Olu Falae. It was THE FIRST TIME that Nigeria ever had any kind of market reflective rate for forex. Prior to that, the FIXED RATE was determined by administrative order. Not even the CBN, but the Ministry of Finance!!!!


It caused all kinds of corruption. The rate was so out of touch with the market that it was profitable to import SAND into Nigeria; that's the same reason it's profitable to import USED CARS and 2nd hand clothing today. Let that sink it...the overvalued naira makes it possible for USED, 2nd hand items to compete and win against NEW domestically made stuff. That's why Nigeria is NOT productive, that's why Nigeria is NOT a good place to do manufacturing, including REFINING PETROL. We shall see if the recent adjustments make a difference...we know they've already caused a substantial rise in exports.

For more reading, peruse this important interview given by Olu Falae himself.

https://www.premiumtimesng.com/news/headlines/358394-interview-why-sap-was-essential-for-nigerias-economy-olu-falae.html?tztc=1

Without IBB and SAP Nigeria would be an economic dead zone. ALL productive and anyway competitive parts of the economy are those subjected to SAP, anyone can check it.



His point is cogent and sound.

A free floating currency will MAKE Nigeria a manufacturing and farming hub and generally a productive nation. A market determined currency value PROMOTES productivity. Indonesia wasn't created by God as a manufacturing hub. Thanks.

Good Luck to Nigeria.

Omooba77:

https://www.vanguardngr.com/2024/10/why-we-floated-the-naira-cardoso/

BigIyanga:

Nope, it will not. China doesnt float its currency.
Naija is lacking infrastructure.. like Electricity and roads. Manufacturers arent charities. We dont have much comparative advantage in manufacturing.

IbeOkehie:
haybhi1

Good Luck to Nigeria.

IbeOkehie:


Yes China has some controls on it's currency. China does the opposite of what Nigeria has been doing. Early in its quest for development, China SUPPRESSED the value of it's currency to promote productivity and make its exports competitive, right up to the 2010's. Then it switched to BOOSTING its currency value to promote consumption and compete with the dollar. China wasn't created as an industrial powerhouse, in the 1950's it was poor and suffered massive famines. China BECAME an industrial power by enacting some free market reforms in 1978.

I challenge anyone to simply Google with relevant queries and find the USA, Europe, Japan and many other countries complaining BITTERLY about unfair export policy anchored by Chinese suppression of the Yuan.

When it comes to currency, the best practice is free float, let a currency find an optimal value. In general, SUPPRESSING a currency value promotes productivity & exports, while BOOSTING a currency promotes consumption.

Nigeria has ALWAYS promoted and boosted the naira ABOVE its fundamental value. That is why Nigerian productivity is low and manufactured exports are low. In fact the rigged value of naira is the MAIN factor keeping Nigeria down in poverty.

Good Luck to Nigeria.

IbeOkehie:


Yes China has some controls on it's currency. China does the opposite of what Nigeria has been doing. Early in its quest for development, China SUPPRESSED the value of it's currency to promote productivity and make its exports competitive, right up to the 2010's. Then it switched to BOOSTING its currency value to promote consumption and compete with the dollar. China wasn't created as an industrial powerhouse, in the 1950's it was poor and suffered massive famines. China BECAME an industrial power by enacting some free market reforms in 1978.

I challenge anyone to simply Google with relevant queries and find the USA, Europe, Japan and many other countries complaining BITTERLY about unfair export policy anchored by Chinese suppression of the Yuan.

When it comes to currency, the best practice is free float, let a currency find an optimal value. In general, SUPPRESSING a currency value promotes productivity & exports, while BOOSTING a currency promotes consumption.

Nigeria has ALWAYS promoted and boosted the naira ABOVE its fundamental value. That is why Nigerian productivity is low and manufactured exports are low. In fact the rigged value of naira is the MAIN factor keeping Nigeria down in poverty.

Good Luck to Nigeria.

IbeOkehie:


Yes China has some controls on it's currency. China does the opposite of what Nigeria has been doing. Early in its quest for development, China SUPPRESSED the value of it's currency to promote productivity and make its exports competitive, right up to the 2010's. Then it switched to BOOSTING its currency value to promote consumption and compete with the dollar. China wasn't created as an industrial powerhouse, in the 1950's it was poor and suffered massive famines. China BECAME an industrial power by enacting some free market reforms in 1978.

I challenge anyone to simply Google with relevant queries and find the USA, Europe, Japan and many other countries complaining BITTERLY about unfair export policy anchored by Chinese suppression of the Yuan.

When it comes to currency, the best practice is free float, let a currency find an optimal value. In general, SUPPRESSING a currency value promotes productivity & exports, while BOOSTING a currency promotes consumption.

Nigeria has ALWAYS promoted and boosted the naira ABOVE its fundamental value. That is why Nigerian productivity is low and manufactured exports are low. In fact the rigged value of naira is the MAIN factor keeping Nigeria down in poverty.

Good Luck to Nigeria.

IbeOkehie:


Yes China has some controls on it's currency. China does the opposite of what Nigeria has been doing. Early in its quest for development, China SUPPRESSED the value of it's currency to promote productivity and make its exports competitive, right up to the 2010's. Then it switched to BOOSTING its currency value to promote consumption and compete with the dollar. China wasn't created as an industrial powerhouse, in the 1950's it was poor and suffered massive famines. China BECAME an industrial power by enacting some free market reforms in 1978.

I challenge anyone to simply Google with relevant queries and find the USA, Europe, Japan and many other countries complaining BITTERLY about unfair export policy anchored by Chinese suppression of the Yuan.

When it comes to currency, the best practice is free float, let a currency find an optimal value. In general, SUPPRESSING a currency value promotes productivity & exports, while BOOSTING a currency promotes consumption.

Nigeria has ALWAYS promoted and boosted the naira ABOVE its fundamental value. That is why Nigerian productivity is low and manufactured exports are low. In fact the rigged value of naira is the MAIN factor keeping Nigeria down in poverty.

Good Luck to Nigeria.

Bebigiby1:
@IbeOkehie you stylishly dodged @Biglyanga response regarding Nigeria's infrastructural deficit on electricity generation and good roads which are key.... Floating the naira remains a bad policy which will only ruin Nigeria's economy because the root problem which is corruption and looting of public funds within the government has not been addressed. No genuine progress can be made when corrupt, selfish, greedy and incompetent people are occupying sensitive public offices....

haybhi1:
In light of all these, will you then say the current administration is gearing towards productive economy reforms, since most policies being enacted are in favour of your hypothesis, e.g. floating, devaluation, letting go of subsidy, and so on?

IbeOkehie:


No dodge.

1) Mains electricity supply is low and unstable because the entire sector is controlled, dominated and majorly owned by government. The Germans have been trying to help since around 2016, to no avail. Because the government doesn't want a free market system.

2) Roads - do you know its ILLEGAL to export granite from Nigeria since the 1970's? The reason given when the law was made is that Nigeria needs all its granite to build roads, which are badly needed for development. Roads are owned by government.

3) Railways - Where is Oga Gerrard? The Chinese have helped Nigeria to build a new rail network. ALL railways in Nigeria are owned by government and here's what's happening with it -

https://nairametrics.com/2024/09/29/fg-orders-probe-into-ticket-racketeering-allegations-on-abuja-kaduna-rail-route/
https://hallmarknews.com/massive-corruption-rocks-railways-ticketing-system/
https://businessday.ng/transport/article/nigeria-rail-stutters-on-passenger-decline-rising-dollar-debt/

Basically, the ONLY WAY to make Nigeria productive and developed is to adopt a classical neo-liberal, free market and capitalist political-economy. Note the POLITICAL. Because the ingredients of a highly developed nation are KNOWN, it's no longer a secret. They are ECONOMIC-POLITICAL factors as follows -

*demographic homogeneity,
*democracy,
*free markets and
*property rights.

The more of these FOUR factors are present in a country, the more LIKELY it is to be highly developed and prosperous.

For example, Nigeria could CREATE more homogeneity by creating TRIBAL BASED states and giving each a HIGH DEGREE OF AUTONOMY.

Nigeria could bestow PROPERTY RIGHTS by repealing the Land Use Act and give lands back to the people.

Nigeria could ABOLISH the Central Bank and adopt bitcoin as official currency, thus eliminating INFLATION.

Here's a convo between Oga Gerrard and myself that summarizes what I've outlined above.

https://www.nairaland.com/8182619/cant-believe-got-whole-324k/4#131474779

That's it. The problem of Nigeria is NOT corruption, poor infrastructure, low IQ, Western or White Imperialism or anything. People say Western Sanctions have hurt the Zimbabwean economy, true but...Nigeria is NOT under ANY sanctions and yet it's the Poverty Capital of the World.

Nor will Germany, China, Aliens from Pluto or Eskimoes or Singapore ever help Nigeria develop. The ONLY way for Nigeria to develop is to give its people FREEDOM, political & economic freedom. That's all. But we know Black Africans will NEVER allow their own people to be free. I mean these are the tribes that sold their own brethren into slavery. That about says it all.

Good Luck to Nigeria.

Bebigiby1:
All these can be done to improve Nigeria's situation if we have the right people in government but unfortunately we don't.... The best I can hope for now is for Cardoso and his boss to reverse the policies killing Nigerians.... As for implementing other points I raised, we may have to wait till they are removed from power..... Nigerians need to eat and be alive first before your "classical neo-liberal, free market and capitalist political-economy"