989900:
Too many comments based on ignorance; read y'all -- it helps.

989900:


Like I said earlier, you need to read extensively and probably watch the videos about it, to fully understand the concept.

cckris:
Buhari's mismanagement will SOON shoot the naira above 1000 to the dollar, which is economically PRAGMATIC, but a political SUICIDE for APC.
PDP is a LUCKY political party. Nigerians will soon begin to scream & curse the day Luggard joined Daura to this nation.

LRNZH:
CBN does not have enough Dollars to 'flood' the markets. One of the reasons for the restriction on forex sales to certain importers.
Problem with over reliance on a commodity. Once the commodity price tanks, forex earnings plummet.

This is the short of it.

That is why economies are diversified in times of plenty and surplus earnings saved. This obviously did not happen when oil price was in excess of 80 USD/barrel under GEJ. Sorry I had to bring up Jonathan. It is what it is.

Obiagelli:
I am not in anyway an economist but i have been reading a bit, especially Henry Boyo ( truth be told, i get an anytime i do).
I believe we earn our oil revenue in dollars, what if the federal government pay states their allocation in dollars and the state simple exchange their dollars for naira at the bank or BDC.
With this system there will be surplus dollar in the system that will drive the exchange rate down. A good example of this was during the last election when dollar was raining all over the place (thanks to Dasuki) the dollar fell to 170 naira despite official rate at 197 naira.



www.dailytrust.com.ng/daily/business/51434-naira-gains-against-dollar-at-black-market


So I ask again what will go wrong if we flood the economy with dollars?

jayloms:
@Obiagelli, this your thread should hold nairaland's award of most insult free thread.

Really learnt alot here. Many thanks to you and all who have contributed to this discourse.

Sant1m:
i am impressed, what an interesting proposition, but then if states allocation are released to them in dollars remember not all monies that accrue to federation accounts is in dollars, custom duties and various taxes. It means that we still need to create income stream as a nation to earn enough dollars. Okay, lets say Benue state receives 300m dollars as her monthly allocation.
1. Since the state cannot just go cashing dollars to pay salaries, the banks still has lots of influence on the rate the dollars will be converted to raise 3b naira for them to pay salaries. Likewise payment to contractors, since they cannot be paid in dollars. At the end the banks still keep the dollars for sale to importers at a rate that will be determined by forces of demand and supply. Nay, Nay, Nay. I don't think it will fly. Is there any advantage in this model for the local manufacturers who want to buy machinery for his factory?.

SirShymexx:


Brev, even if it's going to work, it won't solve any problem other than create another bubble, different from the current bubble created by the CBN, to keep the naira at a fixed rate, by not letting it take its real value. I'm sure you know that by keeping the naira at a fixed rate, the CBN is depleting the reserves to do that, no? And when you create a next bubble parallel to that, you'll need to further deplete the reserves to do that. When the reserves get empty - how are you going to stay afloat?

One thing most people don't understand is that: apart from the fact that Naij is heavily dependent on oil, every other sector in the naij economy is also dependent on oil. And when you have got an economy that's based on one commodity like that, you've to always save for days like this one, hence other oil producing countries have huge reserves. The best thing to do now is turn it into a blessing in disguise and allow other sectors to grow, independent of oil. Manufacturing and agriculture are two key areas that can turn the tide, within a short period.

I'll go back to referencing Russia cos it's a perfect case study for naij. Read about what happened to the Russian economy between 1997-1998 when it defaulted, with economic crisis - and also read about how it was able to escape the economic crisis of 2008.

dyydxx:


But the country is too corrupt? You seek funding for agric or manufacturing, the bank frustrate genuine entrepreneurs with almost impossible conditions, while they give politicians and connected businessmen collateral free loans. The so called focus on Agriculture is a practical sham, with no guideline or proposal as I type. It's a long haul into oblivion as it currently stands

Firefire:
989900, let us simplify this discussion.

1. Do you expect CBN to print more Naira to meet it local obligations, in the face of dwindling income ?

2. How can CBN flood Nigerian market with USD, as asked by Obiagelli?

cckris:
Obiageli Aku is side-stepping the FACT that the United States was formed in 1776, based on the nearly perfect THEORY OF THE STATE, by Jean Jacques Rousseau in 1762, for individuals to form an organised people, or STATE.
NATIONAL CONFERENCE is the most appropriate forum for the disparate ethnicities that pretend to be Nigerians, to AGREE TO FORM A STATE, based mutually beneficial Terms & Conditions. This is the political FOUNDATION upon which a SUSTAINABLE ECONOMIC FOUNDATION can be built. Without this, CAPITAL FLIGHT will continue to siphon whatever billions of dollars accrues in FREE OIL MONEY.
Prof Wole Soyinka is again advising Buhari to convene an Economic Conference. Military 419 Constitution is the reason things that work in other places fail here. Even if Buhari borrows $100 billion, they will just evaporate in Capital Flight into well-organised countries, where rights & properties are protected by a Strong Judiciary.

onoja12:
economically speaking the reason why the dollar is high is because of demand and supply, meaning the quantity of dollar been earned is not enough to match the quantity been spent, hence the need to make sure we spend our few dollars been earned on the most important things and those not so important would have to source there dollar by themselves. we don't have enough dollar for several reasons but the two main reasons is the fall of the price of oil and secondly because the former government practically emptied the CBN of all the dollar to be shipped out of the country or spent on election. i hope I was able to answer your question

dyydxx:


But the country is too corrupt? You seek funding for agric or manufacturing, the bank frustrate genuine entrepreneurs with almost impossible conditions, while they give politicians and connected businessmen collateral free loans. The so called focus on Agriculture is a practical sham, with no guideline or proposal as I type. It's a long haul into oblivion as it currently stands

grandstar:


What you have written unknownly is an economic masterpiece.

what you said has the support of Charles Soludo and a fervent campaigner of it, Henry Boyo. Please read the latters write up about it at the back of Punch at least 1 in 2 weeks.

Soludo tried such in 2007 but with a tweak. The 3 tiers of government would be paid in dollar certificates. However the governors did not like it and complained to Yar'Adua who had it quashed by even promulgating a law against it.

Paying in dollars would answer 2 of the most pressing pronlems in Nigeria today: the high cost of credit and its scarcity.

Every month, the government substitutes the dollars into naira and pays the 3 tiers of government. This increases the money supply greatly forcing government to increase lending rates. That is why we borrow at 25%.

If they however paid in dollars, there would be no excess liquidity. This will lead to a crash in lending rates to between 5-8%.

Also because dollars will ne chasing naira, the naira will appreciated greatly in value.

Obiagelli:

Thanks for your input

Stelvin101:
Federal government are the ones making this economy bad. They said dollar is scarce in the international trade and yet they don't allow raw dollar into the economy such as western union and moneygram transactions. Now ask yourself this question. Do we really have a functioning government?

I believe government should reverse that decision and you will see how little that decision can change things. 80% of dollar coming into this country is through western union and moneygram. What is this government really doing? If there is excess dollars in Banks our Naira value to a dollar will increase. Another method to increase the state of our currency purchasing power is through increase in productivity in Nigeria but the thing is, ordinary toothpicks and toothbrush we import. In this world today you have to be productive as a nation else you are doom no matter the amount of Natural resources a country has. Nigeria wahala too plenty sef. I tire

CyberWolf:
Thank you my brother.. That national conference will give birth to true federalism which is the panacea to all our problems.. But we keep deceiving ourselves all this while propounding economic theories( beautiful theories that has worked wonders in other countries), but the question is, why is it not working here? The answer is faulty foundation.. We copied the US constitution but refused to copy their political and economic structure, that's the bane of our problem and until we correct this criminal mistake, we will keep propounding beautiful theories but it will never work.

Obiagelli:
I am not in anyway an economist but i have been reading a bit, especially Henry Boyo ( truth be told, i get an anytime i do).
I believe we earn our oil revenue in dollars, what if the federal government pay states their allocation in dollars and the state simple exchange their dollars for naira at the bank or BDC.
With this system there will be surplus dollar in the system that will drive the exchange rate down. A good example of this was during the last election when dollar was raining all over the place (thanks to Dasuki) the dollar fell to 170 naira despite official rate at 197 naira.



www.dailytrust.com.ng/daily/business/51434-naira-gains-against-dollar-at-black-market


So I ask again what will go wrong if we flood the economy with dollars?

phlamy:


Western union and money gram are still been collected in Nigeria just that it has to be in naira and not dollars which is the perfect thing to do otherwise where will the dollar come from- heaven? NO
The dollars will sRichard bagwelltill come from the small we have

cckris:

1000 Naira to the dollar will be so much HELL for Nigerians that even the privileged few will join the protests. It's happened everywhere else. The 6 trillion naira budget contains enough loopholes TO STEAL at least 2 trillion naira of borrowed money in one year. But the population of enlightened graduates is growing, in this IT generation. The bubble's gon burst soon, very soon.

Obiagelli:
I am not in anyway an economist but i have been reading a bit, especially Henry Boyo ( truth be told, i get an anytime i do).
I believe we earn our oil revenue in dollars, what if the federal government pay states their allocation in dollars and the state simple exchange their dollars for naira at the bank or BDC.
With this system there will be surplus dollar in the system that will drive the exchange rate down. A good example of this was during the last election when dollar was raining all over the place (thanks to Dasuki) the dollar fell to 170 naira despite official rate at 197 naira.



www.dailytrust.com.ng/daily/business/51434-naira-gains-against-dollar-at-black-market


So I ask again what will go wrong if we flood the economy with dollars?

linearity:


Beautiful scenario, but you left out the most important aspect...where will the government get those dollars from? CBN does not print dollars, our foreign reserve had dwindle, oil no longer commands the price tag, it use to...even if we want to foolishly empty all out oil wells and want to produce hands over feet in order to earn more foreign reserves, OPEC quota limitation will save us from such self-destruction.

This is exactly what happens, when a lady who did not find it necessary to cultivate other talents but felts that her beauty is enough to carry her through life and for a while, she appear to be right, all manner of men flock to her solely on account of her beauty and she did well, but as age, stress and time takes their tolls, her beauty starts fading away and the men not seeing any other talents or reason to stay behind flock to the next beauty on the block leaving her to her miseries...at her old age, she start struggling to go back to school to learn some trade and acquire other talents....that is the story of Nigeria, we neglected virtually every other sector and rode our economy on oil and now that the suitors have taken a hike, we want to develop agriculture, commodity, etc...as if 'na beans'...how many mechanism farms do we have in Nigeria, how many international agricultural trade alliances have we formed? How many supply treaties have we signed? What about meeting international agricultural standards, etc?

The bitter truth is, we have not reached rock bottom yet, brace up for the ride downward, because it is going to be a bubby ride...we have to hit that supply and demand equilibrium for the Naira and our economy to start looking attractive again.

Government initiatives and policies just provides a cushion for the ride downward, they do not solve the underlying problem, which is..we do not have enough items to supply that will attract foreign reserve at the moment to completely replace oil..

41lady:
Based on my little knowledge of trilema triangle in economics, country can only achieve two out of the three impossible options within the triangle- fixed exchange rate, capital mobility and independent Monetary policy.

In the case of Nigeria, floating exchange rate (dollar) rather than fixed and allow market forces of DD & SS to determine the value of goods and service (i.e. allow capitalism) but when the government decide to devalue naira without goods and services to export whereby the crude oil,the country dependents on have depreciate in value, the masses will suffer. China RMB has been devalued because the country fixed their manufacturing sectors, which makes their local firms to operate at lower cost and makes their products cheaper at the international market.

Thus; since Nigeria don't have technology to go into electonics and I.T product manufacturing, a good step in a good direction is to put in place all the Agricultural sectors-the irrigation,extensive farming in functionality, fixed electricity, revive the manufacturing sectors that are not functioning then Nigeria can now devalue naira to encourage export. When a country devalue its currency without corresponding available products to export, it will lead to recession, because the rate of inflation will increase along side with high unemployment rate.

In the case of hoarding dollar to make naira appreciate, that may not work without sufficient supply of local food stuff which is the basic needs. And how can that be achieve, by making the processing equipments close to the farm, whereby the farmer don't need to travel thousand of kilometres with the produces for processing, like rice, palm oil, groundnut, cassava, soya bean, Benny seed, ginger, chile, beans, rubber, cocoa e.t.c that will create avenue for preservation which will last untill next season or before it is transported to the market without getting spoilt and the farmers will get their revenue and be encouraged.

I was surprised to hear that Malaysia got her palm oil seed from Nigeria but now Malaysia is the highest exporter of palm oil while you may ask, because the government and private investors have made the processing equipment closed to the plantation farm. As it is harvested, immediately processed and package for export and or distribution. They also have machine that can remove chicken feathers.

These our leaders knows all the stuff that can fix this country but they are selfish. Only send their children abroad to study and come and continue to rule the country from where they stop.

Yehman:

After flooding the economy with dollars what next? Abi the flooded dollars no dey finish ni?

Obiagelli:
I am not in anyway an economist but i have been reading a bit, especially Henry Boyo ( truth be told, i get an anytime i do).
I believe we earn our oil revenue in dollars, what if the federal government pay states their allocation in dollars and the state simple exchange their dollars for naira at the bank or BDC.
With this system there will be surplus dollar in the system that will drive the exchange rate down. A good example of this was during the last election when dollar was raining all over the place (thanks to Dasuki) the dollar fell to 170 naira despite official rate at 197 naira.



www.dailytrust.com.ng/daily/business/51434-naira-gains-against-dollar-at-black-market


So I ask again what will go wrong if we flood the economy with dollars?