Better days await Nigerians as former Petroleum Minister, Diezani refund 90billion dollars: CNN
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I start to imagine what a normal human being would ever need 13 Billion British Pounds for in this limited world.
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I start to wonder too if former President could imagine that only one out of his ex-Ministers could have amassed such a stupendous amount under his very nose, without him knowing this.
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Wonders shall never end.
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I even saw a post on CNN that the former Minister has made a refund of $90B already!!!
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How much is Dangote worth? As at today Dangote is worth $14.7B and is the 67th in the world of the rich, while Bill Gates is still the number 1 with $79.2 on their Forbes list!!!
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Diezani is simply a wonder!!!.
Old pensioners are dying of hunger daily, workers are no longer getting their salaries as at when due, Governments can no longer build infrastructures. Roads all over the country are in complete bad shape and 70% of them can no longer be called roads but death traps!
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Then, only one woman got away with this kind of money!!!
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Nigeria is a wonder, Diezani is a wonder.
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Arise oh compatriots....!!!
Who are they? Where are they?
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How market the wailing wailers...
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Waiting for your shameless defence as usual.

The aim of the increase in CRR is to increase the value of the currency
When bamks have less money to lend out, they are likely to charge borrowers a higher interest rate , so an influx of capital into the economy will benefit from the higher interest rate which will raise the currency value

Adesiji77:


http://www.vanguardngr.com/2016/03/cbn-tightens-money-supply-raises-mpr-to-12/

It doesn't appear this CBN Governor and his MPC knows what they are doing. Which one is "balance of risk against inflation"? Once they start using fluff in public communication, know there are problems!

Dharniel:
inflation, where is the inflation?
Emefiele no sabi as e dey go at all

How much dem dey sell bread, sachet water, bag of rice before and now?

OkparaJesus:
In this life learn to be independent. Please don't trust anyone no matter how friendly the person might be.Human beings are very unreliable,even the best person you lay your trust can be the person that might hate you. No matter how friendly a person is pls dont lay down you trust in him/her. seriously this adage that goes like this "THE DEVIL U KNOW IS BETTER THAN THE ANGEL YOU DON'T KNOW". Is really true.

Dude, what happened?

lanre316:
Wait a minute. Is this interest rates mandated on loans you get from banks or interest on your savings/deposits in banks.

Loans

ednut1:
Trust nairalander to avoid this thread . Mpr was reduced we no see effect. Bank loans were still 22-24% . Mr Godwin d green tie man is confused abeg

This thread is highly educative because we learn from it especially when it concerns economics. Frontpage worthy of course.

datola:
Hmmm...

Waiting for arm chair Nairaland economists to analyse the import of the policies to the common man.

Wailers are welcome. This is democracy.

Low or high interest enables borrowers to borrow more or less. With this policy being put in place, to a large extend there will less money in circulation leading to a fall in the inflation rate. Recall now that Nigerian's inflation rate is at two digit( about 11% ) which is not too good for our economy.

davide470:
Errm. Let me help small before they come:

Hope this helps.

Thanks mate. Will read up on it. No knowledge is wasted. Ciao!

I am sorry to say this, but this governor has lost it* he is not in tune with the realities (recession), spending power has gone down and things are difficult for the generality of nigerians - now those with poor sense of judgment and confused state of mind, would say it's buhari, because he has refused to allow them devalue the currency, as if they know the real meaning of devaluation- the bunch of bankers (CEO's) have come together like the cultist they are, and have decided to make sure nigerians groan - let's watch as pat utomi, what's that lagos boys name again opeyemi agbaje, would come out and side the CBN position on increased interest rates - and then they would come out and say the government does not have an economic team, whereas these people (emefeile) should have been eased out of the system sinceeee.

Thank God nairaland moderators cannot create life- they would have ban all my posts, they don't know I joined nairaland when most of them were in primary school- Seun tell them they don't have respect

Joenyam:
This new policy may have positive and negative effects.
Firstly,
If the reserve requirement is raised, banks will have less money to loan out and this effectively reduces the amount of capital in the economy, therefore lowering the money supply. It will mean less money for investment and spending, and would stunt the growth of the economy. It would also mean that banks earn less interest and could see their share prices fall. Lowering the reserve requirement will have the opposite effect; banks will be able to lend more which would increase money supply and stimulate economic growth.

Secondly,
Raising reserve requirements can cause an increase in currency value because when banks are restricted in the amount that they can lend out, they may charge borrowers a higher rate of interest. This is bad news for borrowers, but good news for savers who can benefit from a higher rate of return on their savings. If more capital enters the economy to benefit from those higher interest rates, the value of the currency is likely to increase.

I don't know if we're to smile or cry or do both. I don't want to hear that there was a country. God help us!

Correct! Are you an Economist?

lanre316:
Wait a minute. Is this interest rates mandated on loans you get from banks or interest on your savings/deposits in banks.

See this man oh. If banks are paying you more to tie down your cash where do they get the extra money eh? Loans of course. Except if banks start printing money or they become Ponzis.

Adesiji77:


http://www.vanguardngr.com/2016/03/cbn-tightens-money-supply-raises-mpr-to-12/

I trust happy Nigerians. We go also cope no matter the situation. Hustler never lack. If u agree click like joor

It's idiotic wrong to tighten the money supply during a recession. This is how the Great Depression came to be. Economists, please back me up.

asuustrike2009:

Correct! Are you an Economist?

I'm not, never offered the course at any level. Just picked it up as a leisure course, I find it very interesting. I'm an Engineer

TippyTop:
This is stupidity.

Honestly I think it is. Higher rates mean industries already struggling with fx crunch are being dealt additional banking blows. How many will be able to withstand this punishment without submitting remains to be seen. Those that can will simply pass on the costs and inflation rumbles on. Raising rates leads to more rate rises, like a junkie on crack until cardiac arrest happens.

Joenyam:
This new policy may have positive and negative effects.
Firstly,
If the reserve requirement is raised, banks will have less money to loan out and this effectively reduces the amount of capital in the economy, therefore lowering the money supply. It will mean less money for investment and spending, and would stunt the growth of the economy. It would also mean that banks earn less interest and could see their share prices fall. Lowering the reserve requirement will have the opposite effect; banks will be able to lend more which would increase money supply and stimulate economic growth.

Secondly,
Raising reserve requirements can cause an increase in currency value because when banks are restricted in the amount that they can lend out, they may charge borrowers a higher rate of interest. This is bad news for borrowers, but good news for savers who can benefit from a higher rate of return on their savings. If more capital enters the economy to benefit from those higher interest rates, the value of the currency is likely to increase.

I don't know if we're to smile or cry or do both. I don't want to hear that there was a country. God help us!

Can't see anything good in this. Simply because it is targetted at protecting the naira because government fears criticism of a weakened naira. Raising rates is just adding one extra grave digger. They were 11 before, the CBN says we should have 12 to hasten the rites of our industries.

Everything this government does is to protect the naira. Will the naira by itself develop Nigeria?

Ecoplexus:
This will discourage investments and entrepreneurship as those looking for loans to set up businesses will be greatly affected.

You hit the nail on the head there...The cost of money will increase, making it difficult to access cash for needed capital projects and investments; for a developing economy in dire need of projects and investments, this move is counter productive.

If Naira were a reserve currency, this will be a good move, in that; people will find solace in Naira and will want to keep the Naria currency or exchange other foreign currencies for Naira if only for it's carry-trade benefit aka interest payment.

I believe that, the singular motive of the government is to see if this will discourage more people from selling Naira and keep it instead...this intended objective may not be realized if Naira keep fluctuating like a pendulum.

hmm

what this really means is that,
As CBN increases interest rate from 11% to 12%..this would have effect on the rate at which people borrow money from banks. Because, interest rate has an inverse relationship with investment, so people would be reluctant to borrow cos of the interest on the capital they are to return back, so rate at money supply grows will reduce.
And with the increase of RRr(required reserve ratio), the reserves the deposit money banks will have to keep in their vault will be increased, tightening credit creation by the commercial banks and also having little to give out to the layman in terms of loan.
So at the end money supply will be reduced and inflation will also reduce and thereby having effect on aggregate demand...The layman on the street will feel this in the long run but not immediately.
I think this policy is not the very right thing to do because we have a pressing issue, which is unemployment..which should be tackled with more investment in the manufacturing sector..I think unemployment should be tackled first and then inflation prevention policies will work well.

Ecoplexus:
This will discourage investments and entrepreneurship as those looking for loans to set up businesses will be greatly affected.

Just to protect the naira/government expenditure/budget. The private sector, the engine room of development is hung out to dry.

Joenyam:
This new policy may have positive and negative effects.
Firstly,
If the reserve requirement is raised, banks will have less money to loan out and this effectively reduces the amount of capital in the economy, therefore lowering the money supply. It will mean less money for investment and spending, and would stunt the growth of the economy. It would also mean that banks earn less interest and could see their share prices fall. Lowering the reserve requirement will have the opposite effect; banks will be able to lend more which would increase money supply and stimulate economic growth.

Secondly,
Raising reserve requirements can cause an increase in currency value because when banks are restricted in the amount that they can lend out, they may charge borrowers a higher rate of interest. This is bad news for borrowers, but good news for savers who can benefit from a higher rate of return on their savings. If more capital enters the economy to benefit from those higher interest rates, the value of the currency is likely to increase.

I don't know if we're to smile or cry or do both. I don't want to hear that there was a country. God help us!

This is just a 9% increase on a currency that fluctuates about 10% from week to week....The risk is too high for any investment to start saving in Naira, (plus Naira is not a reserve currency) for a mere 9% return at the end of each year, when he/she stands a chance of loosing almost 10% from week to week (or month to month), I do not see the risk-reward ratio tipping the scale in favor of saving in Naira or keeping Naira, which is the intended objective behind this policy.

If Naira were stable, then it would have been plausible to assume that, we will see those benefits, but with the current condition, it appear; the negatives are more likely to follow.

Sunofgod:
CBN causes inflation through its foreign exchange policy - then ups interest rates to combat it - Lol!

Increasing interest rates will increase the cost of borrowing - and if your a biz man that cost gets passed to your customers (more inflation!)

Such tricks can only be played on Nigerians!

BUHARINOMICS

You gerrit. Its like narco. The economy will absorb this and very quickly inflation will catch up again. Before you can say 'undertaker' we will see IBB regime interest rates of 35% when the only thing you could successfully use a loan for is running hard drugs or bunkering stolen crude.

OkparaJesus:
In this life learn to be independent. Please don't trust anyone no matter how friendly the person might be.Human beings are very unreliable,even the best person you lay your trust can be the person that might hate you. No matter how friendly a person is pls dont lay down you trust in him/her. seriously this adage that goes like this "THE DEVIL U KNOW IS BETTER THAN THE ANGEL YOU DON'T KNOW". Is really true.

. What happened, you sound like someone you trust disappointed you.

Another nose tight policy, the poor are to suffer as the little money in circulation will be mop up.

People keep talking about increase in interest on deposits. How will that happen?? Where will d banks get the money to pay d interests since investors will be unwilling to borrow??

The policy of increasing interest rate and cash reserves ratio CRR by CBN is very simple to understand the use to reduce the amount of cash money in circulation during inflation but this one will cause inflation because the the type of inflation will are facing now is government caused inflation because of it's bad exchange rate policy.

Reference:


Can't see anything good in this. Simply because it is targetted at protecting the naira because government fears criticism of a weakened naira. Raising rates is just adding one extra grave digger. They were 11 before, the CBN says we should have 12 to hasten the rites of our industries.

Everything this government does is to protect the naira. Will the naira by itself develop Nigeria?

Spot on bro, this policy is just to strengthen the Naira at the detriment of adding capital to the economy. So it means no economic growth following by this news.

How in the world do you raise interest rate when your economy is heading for or already in a recession? How did these people get their jobs for goodness sake? Pls someone pinch me, I must be dreaming! Chei, naija don suffer oh, is it that the IQ level in Nigeria is in the negative? Invest in manufacturing, spend money in road construction and infrastructure....the idea is to stimulate the economy not stunt it for goodness sake! These goons are looking for a solution that is not directly applicable to the problem! I am not an economst but I think this is common sense!

I was extremely happy when I saw many comments asking economists to explain and I felt there was hope for the youth of this country until I saw some ignorant people that didn't understand the post and didn't want to understand the post. Their own is just to insult the government or the CBN. #itiswellwithnigeria