Forwarded as received : Do you agree?

I still find it funny that most people don't know why Nigeria economy went into recession, they love the incompetent lies of Lai Mohammed about the past government ruining everything. It's also myopic to think that if Jonathan were to still be in power, we would be worse off.

The truth about Nigeria's recession is this; it was caused by the president's unguided rhetoric and uncultured body language.

Firstly, there is nothing we are buying today that we weren't buying 5 years ago, therefore it's not our purchase that put pressure on Naira but withdrawal of funds by foreign investors.

After the election, the president created instability with his unguided statements about how everyone is corrupt and how everyone is going to jail. The instability made foreign investors to liquidate their investment and change their money to dollars. In the process of trying to flee, they were willing to buy dollars at any price, which lead to high exchange dollar rate.

Even though some of them were not ready to run away, but want their money in dollars to save their investments from devaluation, the president gave a bad signal by banning deposit of foreign currency into dormiciliary accounts. That was enough for free market believers to see the draconian handwriting on the wall, that was the beginning of dollar rush.

To make matters worse, the president came up with another outrageous policy of rationing dollar to certain sectors and blocking many sectors out. That was the nail in the coffin which facilitated the emergence of free FALL.

In the end, foreign investors took over $80B out of the economy within a short period and everything went down to free fall.

To those who believe it will be worse if Jonathan is still there, you are all wrong. Policy continuity and political stability will not let billions of dollars leave our shores within such tiny time frame. Even though the government might have income shortag: The private sector will weather the storm with there confidence.

The fear of the unknown created by PMB is responsible for the economic downturn not low oil price. Interest rate in America is currently at 0.5% while it is 12% in Nigeria. JP Morgan Chase will not mind borrowing $50 billion from Feds at 0.5 and put in Nigeria for return of %2000 profit. Citi bank will do the same, likewise US Bank Corp. Chase gave Buhari warning about the repercussions of his fixing policy before they pulled out, but his illiterate cyber warriors and misseducated e-soldiers said JPMORGAN can go to hell, they no longer believe in economic metrics since their messiah is in charge. Funny enough they are all suffering today because of the stupid policy, but they find relief by blaming it on past administration and Gucci appetite of average Nigerians.

For your information, if your president "kontunu" with his unguided rhetoric, Naira will go down to N1000/1 $. But we thank God, he is no longer talking.

my thoughts exactly.....misguided utterances and policies.

Very ghetto write up. ..poor analysis go back to school. you didn't even mention the source of income. .start by telling us where the dollar comes from

reemix123:
Very ghetto write up. ..poor analysis go back to school. you didn't even mention the source of income. .start by telling us where the dollar comes from

When Obj came into power in 1999 oil was less than twenty dollars a barrel, even under Yar'adua oil price dropped to 30 dollars a barrel and production dropped to less than one million barrels a day yet the naira did not go on a free fall till Buhari brought is outdated and failed command style economic management. The real problem is that this government lacks sound economic policies neither do they have competent people managing the economy.

MrPristine:


When Obj came into power in 1999 oil was less than twenty dollars a barrel, even under Yar'adua oil price dropped to 30 dollars a barrel and production dropped to less than one million barrels a day yet the naira did not go on a free fall till Buhari brought is outdated and failed command style economic management. The real problem is that this government lacks sound economic policies neither do they have competent people managing the economy.

So u know the effect of forex reserve on the local currency on an importing economy? ?

Do I even understand currency exchange rate??

Please pick a sound economics textbook and stop embarrassing urself

There is only one fundamental rule of economics and it is called "Demand and Supply"

Our balance of trade is deficit against us, that means that we require more dollars right now that we are getting. That is because of 2 reasons:
1: Our income source has reduced drastically (this one needs no explanation)
2: We are a consumer nation that import virtually everything. This results in a heavy craze for the few available dollars.

The best time to solve a problem was yesterday, the next best time is today. If we for example did not need to import fuel by getting them from our refinery, that would have freed up that aspect of the forex sourcing, if all our rice factories were working, we would not import rice and forex from there will be available for something else. If we were not importing clothes and our textile mills were working we would have freed up that forex.

There is no magic that any economics will generate that will solve any of the dollar problem as long as our income is low and our import remains high. Its that simple and yet hard.

mrvitalis:

So u know the effect of forex reserve on the local currency on an importing economy? ?

Do I even understand currency exchange rate??

Please pick a sound economics textbook and stop embarrassing urself

Stop this arrogant expression of ignorance, when Obj came into power we had only 3billion dollars in foreign reserves and the naira was doing far better than it's doing now. It's obvious you didn't read the article or you are not intellectually capable of comprehending it else you would have realized the baseless points you raised were already thoroughly addressed in the article.

9jatriot:
There is only one fundamental rule of economics and it is called "Demand and Supply"

Our balance of trade is deficit against us, that means that we require more dollars right now that we are getting. That is because of 2 reasons:
1: Our income source has reduced drastically (this one needs no explanation)
2: We are a consumer nation that import virtually everything. This results in a heavy craze for the few available dollars.

The best time to solve a problem was yesterday, the next best time is today. If we for example did not need to import fuel by getting them from our refinery, that would have freed up that aspect of the forex sourcing, if all our rice factories were working, we would not import rice and forex from there will be available for something else. If we were not importing clothes and our textile mills were working we would have freed up that forex.

There is no magic that any economics will generate that will solve any of the dollar problem as long as our income is low and our import remains high. Its that simple and yet hard.

Nice contribution but you did not address the critical issue of capital flight occasioned by the poor economic management /policies of this government.

MrPristine:


Nice contribution but you did not address the critical issue of capital flight occasioned by the poor economic management /policies of this government.

"In the end, foreign investors took over $80B out of the economy within a short period and everything went down to free fall"

Are you sure you know what $80 billion is?

Do you know that oil export accounts for up to 90% of Nigeria's monthly forex inflow?.... Are you aware the amount of forex inflow has reduced by up to 60% courtesy of oil price plunge and reduced oil output (thanks to NDA and co)?... Now if you studied elementary economics you should know the demand and supply laws and you should know what happens when supply of forex drops dangerously but the demand almost remains constant?

Are you aware that within 6 months between November 2014 and May 2015, Nigeria's forex reserves dropped by a whooping $10billion from $38.5 to $28.5bn?... This was when we still had the so called world class economic team and economic managers and this was even when the oil crash was still at the early stages and still selling above $65/barrel (as at May 2015). Due to the negative balance of trade (less forex inflow than outflow), reserves dropped by $10billion in 6 months and this didn't still prevent the Naira from crashing from N160 to N220. The first thing the new administration did was to impose restrictions on the release of forex by the CBN to prevent it dropping to zero (Venezuela).

Of course the restrictions (which was indeed a life saving inevitable venture) eventually caused dollar price to increase rapidly (demand and supply theory) and the restrictions also forced several foreign investors to unfortunately leave. But would you have rather had the vault of the CBN forex reserves opened to those investors and watched Nigeria instantly drop down to a Venezuelan situation?....

And finally, whatever capital flight that may have occurred due to foreigners leaving is just a scratch on the surface compared to the damage done by the crash in oil prices and the NDA driven reduction in production. Don't let politicians or sentimentally angry people distort the simple narrative, a spade must be called a spade. If oil price doesn't come back up miraculously, diversification is the only way out of the current situation and it takes time 9years) and money to diversify an economy.

Very insightful article, I have always said it that buhari is clueless about how the economy works neither does it interest him very much otherwise how do you explain it taking him over a year to appoint an economic adviser even though the country was facing an economic crisis even when he appointed four aides on media and publicity to take care of his propaganda. That is apart from the fact that he appointed a colourless man with suspect credentials to fill the critical role of an economic adviser.

MrPristine:


Stop this arrogant expression of ignorance, when Obj came into power we had only 3billion dollars in foreign reserves and the naira was doing far better than it's doing now. It's obvious you didn't read the article or you are not intellectually capable of comprehending it else you would have realized the baseless points you raised were already thoroughly addressed in the article.

The numerical value of forex reserve is not really important what is important is how long will that support the importation of the nation

A country that has 2bn and has a demand of 50m per month is better than a country that has 100bn with 20bn demand in a year

Hope u get now

obailala:
"In the end, foreign investors took over $80B out of the economy within a short period and everything went down to free fall"

Are you sure you know what $80 billion is?

Do you know that oil export accounts for up to 90% of Nigeria's monthly forex inflow?.... Are you aware the amount of forex inflow has reduced by up to 60% courtesy of oil price plunge and reduced oil output (thanks to NDA and co)?... Now if you studied elementary economics you should know the demand and supply laws and you should know what happens when supply of forex drops dangerously but the demand almost remains constant?

Are you aware that within 6 months between November 2014 and May 2015, Nigeria's forex reserves dropped by a whooping $10billion from $38.5 to $28.5bn?... This was when we still had the so called world class economic team and economic managers and this was even when the oil crash was still at the early stages and still selling above $65/barrel (as at May 2015). Due to the negative balance of trade (less forex inflow than outflow), reserves dropped by $10billion in 6 months and this didn't still prevent the Naira from crashing from N160 to N220. The first thing the new administration did was to impose restrictions on the release of forex by the CBN to prevent it dropping to zero (Venezuela).

Of course the restrictions (which was indeed a life saving inevitable venture) eventually caused dollar price to increase rapidly (demand and supply theory) and the restrictions also forced several foreign investors to unfortunately leave. But would you have rather had the vault of the CBN forex reserves opened to those investors and watched Nigeria instantly drop down to a Venezuelan situation?....

And finally, whatever capital flight that may have occurred due to foreigners leaving is just a scratch on the surface compared to the damage done by the crash in oil prices and the NDA driven reduction in production. Don't let politicians or sentimentally angry people distort the simple narrative, a spade must be called a spade. If oil price doesn't come back up miraculously, diversification is the only way out of the current situation and it takes time 9years) and money to diversify an economy.

@ the end, u still arrived @ the same thing. On your second to last paragraph.

The OP, did not under estimate other factors leading to decline in both on our external reserves and scarcity of Fx.

The op just singled what u had on ur 2nd to last paragraph as one of the core reasons.


But, I still want to understand one thing here. Why did our external reserve got reduced by $10 billion in that 6months, between, 2014 and 2015?

Secondly, why didn't the naira fall between those periods? I mean, what did that administration do to prevent such situation?

Why is it that there is so much demand on fx now, even when over 40 commodities has be delisted from getting fx on importation, ( I mean, as a layman, their quota shouldn't be in consideration now).

Does our total budget, revenue and it's projections contribute or determine how much fx that is needed by the economy, both private sectors?( assume that our 2016 budget is pegged @ 6trillion naira, and projections based on sale of crude for 2016 is about that 6trillion naira, having in mind that oil accounts for over 90% of the total budget if not less. Does it mean that we can only have access to fx equivalent of 6trillion, I mean in all sectors, both importers?) having in mind the revenues from non oil sectors dropped by N134 billion in just 3months, what could be d cause? Is it associated with oil sales?

because our external reserve right now is around 30billion usd, which is equivalent to about 6trillion. As @ the time this administration took over the wheels of this economy.



Oga please, I be novice, but I go like get some things clearer.

chigoizie7:



@ the end, u still arrived @ the same thing. On your second to last paragraph.

The OP, did not under estimate other factors leading to decline in both on our external reserves and scarcity of Fx.

The op just singled what u had on ur 2nd to last paragraph as one of the core reasons.

Me I be novice too but will only give the little explanation I understand. The Op simply tried to downplay the contribution of the drop in oil price to the current recession. He tried to insinuate that the main reason behind the recession is bad policies by govt which forced foreign investors to pull away. That is a very flawed and absurd conclusion because whatever capital those foreign investors pulled away from Nigeria makes up less than 5% of the total income Nigeria is losing currently due to the oil crash.

But, I still want to understand one thing here. Why did our external reserve got reduced by $10 billion in that 6months, between, 2014 and 2015?

Secondly, why didn't the naira fall between those periods? I mean, what did that administration do to prevent such situation?

Nigeria is an import dependent nation which imports almost all our basic needs from fuel to food to clothing to even raw materials like polythene used in everyday packaging. FOr every single item we import, it requires forex spent from the forex reserves. The forex reserves balance is maintained by the money we make from exportation. Nigeria exports primarily crude oil to earn this forex but now the value of crude has dropped drastically (over 60%). The implication of this is that the money we spend for importation is far more than what we presently make from export, i.e. we have a negative balance of trade (more forex going out than is coming in). That was the reason behind the rapid drop in the external reserve in those months.

Why is it that there is so much demand on fx now, even when over 40 commodities has be delisted from getting fx on importation, ( I mean, as a layman, their quota shouldn't be in consideration now).

Now with the dangerously rapid reduction in the external reserves, the govt had to implement restrictions in forex supply to several items we normally import (41 items). CBN also stopped granting forex requests easily and this on one hand helped to greatly reduce the rate of depletion of the external reserves (reduced the rate, didn't totally stop the reduction cos we still have a negative balance of trade), but it also killed several businesses that depend on forex and also strangled foreign businesses who couldn't evacuate their profits back to their home countries (this forced several foreign businesses to close and exit). Once again I ask, would you have preferred the CBN to grant forex to everyone and risk running our external reserves to zero?...

Does our total budget, revenue and it's projections contribute or determine how much fx that is needed by the economy, both private sectors?( assume that our 2016 budget is pegged @ 6trillion naira, and projections based on sale of crude for 2016 is about that 6trillion naira, having in mind that oil accounts for over 90% of the total budget if not less. Does it mean that we can only have access to fx equivalent of 6trillion, I mean in all sectors, both importers?) having in mind the revenues from non oil sectors dropped by N134 billion in just 3months, what could be d cause? Is it associated with oil sales?

because our external reserve right now is around 30billion usd, which is equivalent to about 6trillion. As @ the time this administration took over the wheels of this economy.

I doubt if I understand your question here. Budget and reserves are 2 different things completely. The fx reserves is a stockpile of forex the CBN uses to facilitate foreign transactions for Nigerians. Every time you purchase something from beyond the shores of Nigeria, you may use your naira denominated debit card for the purchase but the CBn receives your Naira, and pays the international seller the dollar equivalent; now the dollar equivalent being paid by CBN is drawn from the CBN foreign reserves. That's why it is very important that the foreign reserves dont drop to zero, cos if that happens, we cant even import simple necessities like petrol or rice to feed; if the reserves are zero, it means the Naira is worthless and even if you bring a million naira, it wouldn't be able to get you even a plate of rice.

Meanwhile regarding the drop in non-oil revenue, that is just a collateral effect of the forex scarcity issue; if manufacturers cant get foerex to import raw materials, it means they will produce less, and if they produce less, it means less profit and less profit means they pay less tax and less tax paid means less revenue (non-oil) for govt.

mrvitalis:

The numerical value of forex reserve is not really important what is important is how long will that support the importation of the nation

A country that has 2bn and has a demand of 50m per month is better than a country that has 100bn with 20bn demand in a year

Hope u get now

Being a trained economist myself I understand the point you are trying to make but it does not take away from the issue this article is trying to address and that is that Buhari 's utterances and lack of sound economic planning and management is aiding capital flight thereby making the naira suffer additional beating. As at today the naira is undervalued and that's due to capital flight and not just excessive demand for financing imports after the supply side as diminished based on the fall in oil prices.

MrPristine:


Being a trained economist myself I understand the point you are trying to make but it does not take away from the issue this article is trying to address and that is that Buhari 's utterances and lack of sound economic planning and management is aiding capital flight thereby making the naira suffer additional beating. As at today the naira is undervalued and that's due to capital flight and not just excessive demand for financing imports after the supply side as diminished based on the fall in oil prices.

Bro thank u very much... capital flight are mostly from investors who just want to come and make a quick kill and go. .. real investors are still here

we too get longer throat for foreign things.

mrvitalis:

Bro thank u very much... capital flight are mostly from investors who just want to come and make a quick kill and go. .. real investors are still here

But real investors are shutting down their operations too. According to the NBS three million jobs were lost in the economy in the last one year.

MrPristine:


But real investors are shutting down their operations too. According to the NBS three million jobs were lost in the economy in the last one year.

Give me example??
Nigerian investors always want to baby feed by the government... If u can find dollar and u can use local demand shut down please u are not ready for business
At these times every wise business should know vertical integration is the way to go till the supply chain become strong
This is a capitalist economy and u as an economist should know what comes with it

mrvitalis:

Give me example??
Nigerian investors always want to baby feed by the government... If u can find dollar and u can use local demand shut down please u are not ready for business
At these times every wise business should know vertical integration is the way to go till the supply chain become strong
This is a capitalist economy and u as an economist should know what comes with it

Business is not just about what the manufacturer can produce or supply but about meeting the demands of your customers. Now the big problem is nigerian's appetite for foreign goods and products. I think by now the government should have started a massive and sustainable campaign to re orientate nigerian's towards patronising local goods and encourage local production.

annunaki2:


Business is not just about what the manufacturer can produce or supply but about meeting the demands of your customers. Now the big problem is nigerian's appetite for foreign goods and products. I think by now the government should have started a massive and sustainable campaign to re orientate nigerian's towards patronising local goods and encourage local production.

Lol this is capitalism.. Give them same quality at cheaper or same price.. .. y dont we buy foreign noodles? ?
Why don't we buy foreign wires??
That's the truth

mrvitalis:

Lol this is capitalism.. Give them same quality at cheaper or same price.. .. y dont we buy foreign noodles? ?
Why don't we buy foreign wires??
That's the truth

And who is going to 'give' them Is it not fellow Nigerians? We must collectively rise up to salvage our economy as Nigerians but we also need mentoring, enabling environment, good infrastructure, motivation and committed leadership but only the government can do all these and that is why the buck stops at their table.

mrvitalis:

Give me example??
Nigerian investors always want to baby feed by the government... If u can find dollar and u can use local demand shut down please u are not ready for business
At these times every wise business should know vertical integration is the way to go till the supply chain become strong
This is a capitalist economy and u as an economist should know what comes with it

I doubt u do business!

Kk

I can not exactly say the best way out of this forex mess, but I like to bring your attention to something worse than fall in crude price and production. That is Round Tripping, a situation where people get forex cheaper at a first tier market and sell it higher at the parallel / black market. In this case N315/usd and N480/usd. This is a big threat and will encourage hoarding to create artificial scarcity thus hike in exchange rate. And trust Nigerians are quick to take advantage of loops in any system.

MrPristine:


When Obj came into power in 1999 oil was less than twenty dollars a barrel, even under Yar'adua oil price dropped to 30 dollars a barrel and production dropped to less than one million barrels a day yet the naira did not go on a free fall till Buhari brought is outdated and failed command style economic management. The real problem is that this government lacks sound economic policies neither do they have competent people managing the economy.

And who told you we were not in recession under Yar'adua? How soon do you forget? Question is, in the years of plenty, what exactly did we do with our earnings?

Oil sold for over 120 dollars for over 2 years under le shoeless, what was done with it? And before you say the governors opposed him from saving, tell us first what he did with the federal government's own savings?
Le shoeless and not Buhari got us into this mess.

This is exactly the problem. He ruined us. He had plenty but plunged us into debt. Figures below will do justice.

2. UMARU MUSA YAR ADUA (2007 - 2009)

EXTERNAL DEBT:
Inherited: $3,348.22 billion

Left: $3.94 billion Dollars

http://www.dmo.gov.ng/oci/News/docs/Fact%20on%20%20Nigeria%20External%20Debt%20Stock.pdf

EXTERNAL RESERVE
Inherited: $45.0 billion

Grew To: $63 billion in September, 2008
http://www.nigerianmuse.com/20090102021223zg/nigeria-watch/nigeria-s-foreign-reserves-dip-to-52-7-billion/

Left : $47. 7 billion (As at Dec 31st 2009 when Jonathan took over as "Overseer" )
http://www.vanguardngr.com/2011/03/state-of-nigerias-external-reserves-worrisome-cipm-president/#sthash.cXXdNcoU.dpuf

N/B:
The reserve grew when the price of Crude Oil was $147 per barrel
It Slided in Mid 2008 during the recession, when the crude price fell to $35 per barrel in 2009, till his death



3. PRESIDENT GOODLUCK JONATHAN:
EXTERNAL DEBT
Inherited: $3.94 billion Dollars

As At Now: $9.3 billion Dollars

http://www.dmo.gov.ng/oci/edebtstock/docs/External%20Debt%20Stock%20as%20at%2030th%20June_%202014.pdf

FOREIGN RESERVE:
Inherited: $47. 7 billion (As At December 31st, 2009)

As At Now: $38.2BILLION http://www.cenbank.org/intops/Reserve.asp

N/B:
Of the $9.3 billion EXTERNAL DEBT, Federal Government’s owes $6.36b, while ALL 36 States plus FCT owes $3.0 billion

As at 2010, Oil Price was at $89 per barrel

As at 2011, It was $103 per barrel - During Le shoeless' regime.

As at November 2014 it is $100 per barrel http://en.wikipedia.org/wiki/World_oil_market_chronology_from_2003

Meaning, Jonathan have access to more more money than Yar Adua, but he depleted the Foreign Reserve and Still Purge Us into Further Debt With NOTHING to show.

Le shoeless was producing more oil and was selling for more than Buhari, almost 4 times more. Got us into debt to the ton of over $5 billion. Depleted the reserve from $47. 7 billion to $38.2 billion and this is despite selling our crude for more and without militrants unrest.

Now go on and defend your boss.

amagunnerfan:
And who told you we were not in recession under Yar'adua? How soon do you forget? Question is, in the years of plenty, what exactly did we do with our earnings?

Oil sold for over 120 dollars for over 2 years under le shoeless, what was done with it? And before you say the governors opposed him from saving, tell us first what he did with the federal government's own savings?
Le shoeless and not Buhari got us into this mess.

This is exactly the problem. He ruined us. He had plenty but plunged us into debt. Figures below will do justice.

2. UMARU MUSA YAR ADUA (2007 - 2009)

EXTERNAL DEBT:
Inherited: $3,348.22 billion

Left: $3.94 billion Dollars

http://www.dmo.gov.ng/oci/News/docs/Fact%20on%20%20Nigeria%20External%20Debt%20Stock.pdf

EXTERNAL RESERVE
Inherited: $45.0 billion

Grew To: $63 billion in September, 2008
http://www.nigerianmuse.com/20090102021223zg/nigeria-watch/nigeria-s-foreign-reserves-dip-to-52-7-billion/

Left : $47. 7 billion (As at Dec 31st 2009 when Jonathan took over as "Overseer" )
http://www.vanguardngr.com/2011/03/state-of-nigerias-external-reserves-worrisome-cipm-president/#sthash.cXXdNcoU.dpuf

N/B:
The reserve grew when the price of Crude Oil was $147 per barrel
It Slided in Mid 2008 during the recession, when the crude price fell to $35 per barrel in 2009, till his death



3. PRESIDENT GOODLUCK JONATHAN:
EXTERNAL DEBT
Inherited: $3.94 billion Dollars

As At Now: $9.3 billion Dollars

http://www.dmo.gov.ng/oci/edebtstock/docs/External%20Debt%20Stock%20as%20at%2030th%20June_%202014.pdf

FOREIGN RESERVE:
Inherited: $47. 7 billion (As At December 31st, 2009)

As At Now: $38.2BILLION http://www.cenbank.org/intops/Reserve.asp

N/B:
Of the $9.3 billion EXTERNAL DEBT, Federal Government’s owes $6.36b, while ALL 36 States plus FCT owes $3.0 billion

As at 2010, Oil Price was at $89 per barrel

As at 2011, It was $103 per barrel - During Le shoeless' regime.

As at November 2014 it is $100 per barrel http://en.wikipedia.org/wiki/World_oil_market_chronology_from_2003

Meaning, Jonathan have access to more more money than Yar Adua, but he depleted the Foreign Reserve and Still Purge Us into Further Debt With NOTHING to show.

Le shoeless was producing more oil and was selling for more than Buhari, almost 4 times more. Got us into debt to the ton of over $5 billion. Depleted the reserve from $47. 7 billion to $38.2 billion and this is despite selling our crude for more and without militrants unrest.

Now go on and defend your boss.

This is a gross arrogant display of ignorance for you to assume that anyone that criticize Buhari is a Jonathan supporter. I do not in anyway support Jonathan's disastrous regime that was notorious for looting our economy. However that does not take away the fact that Buhari has a lot of short comings especially were the economy is concerned. Buhari's economic policy direction is almost none existent neither as he deemed it fit to put a crack economic team in place to steer the country out of this mess. Rather his indecision based on his cluelessness is causing panic with the resultant effect being capital flight and undue pressure on the naira. I put it to you that as we speak this government is yet to take any decisive action that will stimulate the economy and enhance growth even after being in power for sixteen months and this does not promote confidence in the economy.

Hmnn

MrPristine:


This is a gross arrogant display of ignorance for you to assume that anyone that criticize Buhari is a Jonathan supporter. I do not in anyway support Jonathan's disastrous regime that was notorious for looting our economy. However that does not take away the fact that Buhari has a lot of short comings especially were the economy is concerned. Buhari's economic policy direction is almost none existent neither as he deemed it fit to put a crack economic team in place to steer the country out of this mess. Rather his indecision based on his cluelessness is causing panic with the resultant effect being capital flight and undue pressure on the naira. I put it to you that as we speak this government is yet to take any decisive action that will stimulate the economy and enhance growth even after being in power for sixteen months and this does not promote confidence in the economy.

You didn't even address amagunnerfan's points. He clearly laid out the financial situation of the country during Yar Aduas time up to GEJ taking over after his death. Yet you couldn't refute any of the financial evidence provided that clearly indicate that GEJ mismanaged our economy. Please prove it wrong.....

obailala:
"In the end, foreign investors took over $80B out of the economy within a short period and everything went down to free fall"

Are you sure you know what $80 billion is?

Do you know that oil export accounts for up to 90% of Nigeria's monthly forex inflow?.... Are you aware the amount of forex inflow has reduced by up to 60% courtesy of oil price plunge and reduced oil output (thanks to NDA and co)?... Now if you studied elementary economics you should know the demand and supply laws and you should know what happens when supply of forex drops dangerously but the demand almost remains constant?

Are you aware that within 6 months between November 2014 and May 2015, Nigeria's forex reserves dropped by a whooping $10billion from $38.5 to $28.5bn?... This was when we still had the so called world class economic team and economic managers and this was even when the oil crash was still at the early stages and still selling above $65/barrel (as at May 2015). Due to the negative balance of trade (less forex inflow than outflow), reserves dropped by $10billion in 6 months and this didn't still prevent the Naira from crashing from N160 to N220. The first thing the new administration did was to impose restrictions on the release of forex by the CBN to prevent it dropping to zero (Venezuela).

Of course the restrictions (which was indeed a life saving inevitable venture) eventually caused dollar price to increase rapidly (demand and supply theory) and the restrictions also forced several foreign investors to unfortunately leave. But would you have rather had the vault of the CBN forex reserves opened to those investors and watched Nigeria instantly drop down to a Venezuelan situation?....

And finally, whatever capital flight that may have occurred due to foreigners leaving is just a scratch on the surface compared to the damage done by the crash in oil prices and the NDA driven reduction in production. Don't let politicians or sentimentally angry people distort the simple narrative, a spade must be called a spade. If oil price doesn't come back up miraculously, diversification is the only way out of the current situation and it takes time 9years) and money to diversify an economy.

Very good analysis

MrPristine:
Forwarded as received : Do you agree?

I still find it funny that most people don't know why Nigeria economy went into recession, they love the incompetent lies of Lai Mohammed about the past government ruining everything. It's also myopic to think that if Jonathan were to still be in power, we would be worse off.

The truth about Nigeria's recession is this; it was caused by the president's unguided rhetoric and uncultured body language.

Firstly, there is nothing we are buying today that we weren't buying 5 years ago, therefore it's not our purchase that put pressure on Naira but withdrawal of funds by foreign investors.

After the election, the president created instability with his unguided statements about how everyone is corrupt and how everyone is going to jail. The instability made foreign investors to liquidate their investment and change their money to dollars. In the process of trying to flee, they were willing to buy dollars at any price, which lead to high exchange dollar rate.

Even though some of them were not ready to run away, but want their money in dollars to save their investments from devaluation, the president gave a bad signal by banning deposit of foreign currency into dormiciliary accounts. That was enough for free market believers to see the draconian handwriting on the wall, that was the beginning of dollar rush.

To make matters worse, the president came up with another outrageous policy of rationing dollar to certain sectors and blocking many sectors out. That was the nail in the coffin which facilitated the emergence of free FALL.

In the end, foreign investors took over $80B out of the economy within a short period and everything went down to free fall.

To those who believe it will be worse if Jonathan is still there, you are all wrong. Policy continuity and political stability will not let billions of dollars leave our shores within such tiny time frame. Even though the government might have income shortag: The private sector will weather the storm with there confidence.

The fear of the unknown created by PMB is responsible for the economic downturn not low oil price. Interest rate in America is currently at 0.5% while it is 12% in Nigeria. JP Morgan Chase will not mind borrowing $50 billion from Feds at 0.5 and put in Nigeria for return of %2000 profit. Citi bank will do the same, likewise US Bank Corp. Chase gave Buhari warning about the repercussions of his fixing policy before they pulled out, but his illiterate cyber warriors and misseducated e-soldiers said JPMORGAN can go to hell, they no longer believe in economic metrics since their messiah is in charge. Funny enough they are all suffering today because of the stupid policy, but they find relief by blaming it on past administration and Gucci appetite of average Nigerians.

For your information, if your president "kontunu" with his unguided rhetoric, Naira will go down to N1000/1 $. But we thank God, he is no longer talking.

[size=13pt]Buhari and APC thugs are busy looting and ruining Nigeria, while some jobless yoots clap for them.

Buhari and most of those basterds controlling Aso rock aren't even Nigerians in the first place.
Most of them are immigrants from Zinder and Diffa areas of Niger Republic.

Buhari knows his ancestral origin is in Zinder.[/size]

amagunnerfan:
And who told you we were not in recession under Yar'adua? How soon do you forget? Question is, in the years of plenty, what exactly did we do with our earnings?

Oil sold for over 120 dollars for over 2 years under le shoeless, what was done with it? And before you say the governors opposed him from saving, tell us first what he did with the federal government's own savings?
Le shoeless and not Buhari got us into this mess.

This is exactly the problem. He ruined us. He had plenty but plunged us into debt. Figures below will do justice.

2. UMARU MUSA YAR ADUA (2007 - 2009)

EXTERNAL DEBT:
Inherited: $3,348.22 billion

Left: $3.94 billion Dollars

http://www.dmo.gov.ng/oci/News/docs/Fact%20on%20%20Nigeria%20External%20Debt%20Stock.pdf

EXTERNAL RESERVE
Inherited: $45.0 billion

Grew To: $63 billion in September, 2008
http://www.nigerianmuse.com/20090102021223zg/nigeria-watch/nigeria-s-foreign-reserves-dip-to-52-7-billion/

Left : $47. 7 billion (As at Dec 31st 2009 when Jonathan took over as "Overseer" )
http://www.vanguardngr.com/2011/03/state-of-nigerias-external-reserves-worrisome-cipm-president/#sthash.cXXdNcoU.dpuf

N/B:
The reserve grew when the price of Crude Oil was $147 per barrel
It Slided in Mid 2008 during the recession, when the crude price fell to $35 per barrel in 2009, till his death



3. PRESIDENT GOODLUCK JONATHAN:
EXTERNAL DEBT
Inherited: $3.94 billion Dollars

As At Now: $9.3 billion Dollars

http://www.dmo.gov.ng/oci/edebtstock/docs/External%20Debt%20Stock%20as%20at%2030th%20June_%202014.pdf

FOREIGN RESERVE:
Inherited: $47. 7 billion (As At December 31st, 2009)

As At Now: $38.2BILLION http://www.cenbank.org/intops/Reserve.asp

N/B:
Of the $9.3 billion EXTERNAL DEBT, Federal Government’s owes $6.36b, while ALL 36 States plus FCT owes $3.0 billion

As at 2010, Oil Price was at $89 per barrel

As at 2011, It was $103 per barrel - During Le shoeless' regime.

As at November 2014 it is $100 per barrel http://en.wikipedia.org/wiki/World_oil_market_chronology_from_2003

Meaning, Jonathan have access to more more money than Yar Adua, but he depleted the Foreign Reserve and Still Purge Us into Further Debt With NOTHING to show.

Le shoeless was producing more oil and was selling for more than Buhari, almost 4 times more. Got us into debt to the ton of over $5 billion. Depleted the reserve from $47. 7 billion to $38.2 billion and this is despite selling our crude for more and without militrants unrest.

Now go on and defend your boss.

Very educalive

mrvitalis:

So u know the effect of forex reserve on the local currency on an importing economy? ?

Do I even understand currency exchange rate??

Please pick a sound economics textbook and stop embarrassing urself

shut up and keep your ignorance hidden