The problem with most Nigerians, is lack of understanding between monetary and fiscal policies


If interest rate is lowered, borrowing will increase which in turn will increase spending and investment.

But there are issues which you guys are overlooking

Once money supply increases as a result of reduction in interest rate without a corresponding increase in production of goods and services,

1) Inflation will set in as more naira chases few goods and services.

2) Exchange rate against the naira will strengthen as our people demand more for foreign goods as a result of the inability for our local production to meet our demand.


With increase in inflation and exchange rates, depression will set in 6months after its implementation.

So What is the Solution.?

1) Increase in local production of goods and services


What are the things that can be done to boost local production.?

1) Cost of doing business must be reduced by reducing taxation, electricity and fuel costs

2) Commercialization of graduates and undergraduates Technological innovations/reinventions/inventions by reintroducing YOUWIN specifically in institutions of higher learning. YOUWIN staff should be posted permanently to each institution to scout for each project and check the commercialization potential of each graduate and undergraduate project that can be financed by the Government and Private Sector

YOUWIN financial support should be increased from 10million to 30million naira minimum due to the present value of money.

3) Investment in non oil sector by the Government to boost local availability of raw materials and reduce dependence on foreign raw materials which tend to increase the cost of doing business and put lots of pressure on our foreign exchange.



These things can help take Nigeria out of recession in 6months time.

Once we are out of recession, we can then reduce interest rates so as to make more money available for our people to spend and invest in our economy in order to sustain our local industrial and economic activities.





https://www.nairaland.com/3365622/external-reserves-drop-24bn

Ok

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Can't you see the irony in your post?

Investment in non oil sector by the Government to boost local availability of raw materials and reduce dependence on foreign raw materials which tend to increase the cost of doing business and put lots of pressure on our foreign exchange.

Were will this money come from if not by borrowing which is expensive right now or by raising taxes which is counter productive?

YOUWIN financial support should be increased from 10million to 30million naira minimum due to the present value of money.

Same as above.

Cost of doing business must be reduced by reducing taxation, electricity and fuel costs

1) Reduce taxation and government can't get the money it needs for salary talk less of infrastructure.
2) Electric companies are businesses too and right now, it's not a profitable business. The companies also need cheap loans to be able to expand.
3) Do you want subsidy brought back?

In summary, you want government to spend money it doesn't have by reducing taxes, which it would further reduce government revenue, then it should cover that short fall by borrowing expensively thereby plunging us into further debts with astronomic interest rate which would have to be paid from the reduced revenue, then we would have to borrow more....... Rinse repeat

AZeD1:
Can't you see the irony in your post?

Were will this money come from if not by borrowing which is expensive right now or by raising taxes which is counter productive?


Same as above.



1) Reduce taxation and government can't get the money it needs for salary talk less of infrastructure.
2) Electric companies are businesses too and right now, it's not a profitable business. The companies also need cheap loans to be able to expand.
3) Do you want subsidy brought back?

In summary, you want government to spend money it doesn't have by reducing taxes, which it would further reduce government revenue, then it should cover that short fall by borrowing expensively thereby plunging us into further debts with astronomic interest rate which would have to be paid from the reduced revenue, then we would have to borrow more....... Rinse repeat

Government don't have money but Buhari has spent 2bn naira on food alone.

What of the presidential jets run by Buhari.? Has he not overspend there.


Don't let this government deceive you that money doesn't exist in the national purse.

sounds very excellent but i gotta admit, economics and banking is not one of my strong fields so I cant speak intelligently on the issue. I am a science guy. but I will be reading so I can get pointers in nation building

This write up is what is called beautiful nonsense..Where does the writer expect the funds that would be used to diversify the economy to come from if interest rates are pegged at 14 percent ..The writer also wrongly assumed that most bank loans wouldn't be put into what they where designated for ..Govt has no choice but to reduce interest rates on loans directed at areas the govts seeks to stimulate and not personal loans to buy pampers or milk . History has shown is that the best way put of a recession is to out spend the recession in capital manner

Funny guys

idupaul:

This write up is what is called beautiful nonsense..Where does the writer expect the funds that would be used to diversify the economy to come from if interest rates are pegged at 14 percent ..The writer also wrongly assumed that most bank loans wouldn't be put into what they where designated for ..Govt has no choice but to reduce interest rates on loans directed at areas the govts seeks to stimulate and not personal loans to buy pampers or milk . History has shown is that the best way put of a recession is to out spend the recession in capital manner

Despite reduction of interest rate last year October and November 2015, inflation rates kept rising at a time when Forex Scarcity was forcing price up.


What you failed to ask yourself is why didn't we escape recession despite CBN reduction in interest rate.

[b]Your fall into the fallacy of living in your own illusion, as govt policies wouldn't be reduced to one single policy but several whose efficacy lies in each other, hence it is not just about cutting interest, cutting interest rates in tadem with several other policies will result to economic growth.

You say govt should cut the price of fuel with which money? Cut Taxes how will they fund themselves, cut electricity bill, discos complain current tariffs are too low for investment? So who would pay for all you wishful thinking? Like I tell people PMB can create a illusion for everyone that everything is well by simply borrowing and borrowing like GEJ did in 2014, but eventually you will simply create a black hole for all to fall into.

Cutting interest rate will result iin consumers have more money to spend, causing the economy to grow and inflation to increase. The opposite holds true for rising interest rates. As interest rates are increased, consumers tend to have less money to spend. With less spending, the economy slows and inflation decreases

Currently we are in a recession to leave this situation, cutting interest remains key to achieving this as clearly economies growth is declining and even the average man on the street feels this is largely due to money not circulating as for taxes, we have one of the lowest VATs in the world, but govt has already plans to create new enterprises, meaning more jobs, a robust social system[/b]

EternalTruths:
The problem with most Nigerians, is lack of understanding between monetary and fiscal policies
If interest rate is lowered, borrowing will increase which in turn will increase spending and investment.
But there are issues which you guys are overlooking

Once money supply increases as a result of reduction in interest rate without a corresponding increase in production of goods and services,

1) Inflation will set in as more naira chases few goods and services.
2) Exchange rate against the naira will strengthen as our people demand more for foreign goods as a result of the inability for our local production to meet our demand.

With increase in inflation and exchange rates, depression will set in 6months after its implementation
So What is the Solution.?
1) Increase in local production of goods and services
What are the things that can be done to boost local production.?
1) Cost of doing business must be reduced by reducing taxation, electricity and fuel costs
2) Commercialization of graduates and undergraduates Technological innovations/reinventions/inventions by reintroducing YOUWIN specifically in institutions of higher learning. YOUWIN staff should be posted permanently to each institution to scout for each project and check the commercialization potential of each graduate and undergraduate project that can be financed by the Government and Private Sector
YOUWIN financial support should be increased from 10million to 30million naira minimum due to the present value of money.
3) Investment in non oil sector by the Government to boost local availability of raw materials and reduce dependence on foreign raw materials which tend to increase the cost of doing business and put lots of pressure on our foreign exchange.
These things can help take Nigeria out of recession in 6months time.
Once we are out of recession, we can then reduce interest rates so as to make more money available for our people to spend and invest in our economy in order to sustain our local industrial and economic activities.

I believe interest rates should be reduced for SMEs. Morgage plans should be activated for them. Strictly for SMEs that can prove how successfully they have been over the years and not potential so as to minimise risk. Government can't achieve all these things you're asking for alone. In fact government only need to focus on providing basic amenities like 247 electricity and good roads. Increase tax and tax everything taxable so as to prevent people without the means from living above their ability.

For your information: Buhari’s 1 Year + In Office.

Buhari was handed over:
– $30billion in our Foreign Reserves,
– $2.5billion Sovereign Wealth Fund,
– $1.4billion in the ECA,
– $4.65b back taxes from NLNG.
– Buhari met an approved budget of N4.5trillion

Buhari received within a year:
– $2.7billion collected by Inland Revenue in his first 8 months.
– $2.1billion world bank loan.
– $850million Grants from UK, USA and Europe.
– Excluding crude oil sales, Joint Venture profits, Royalties, Income from Customs, NIMMSA, NPA, NACHO ……
– 3trilion on STA

More than a year has passed:
1] Not a kilometer of road constructed,
2] Not a watt of Electricity generated,
3] Not a Ward added to any Hospital in Nigeria.
4] Not a job space created, except the CBN job he shared with his cronies.
5] Not a grain of corn or tomato seed was provided to farmers. [Fertilizer subsidy taken away and handed back to ex-military men] 6] 41 foreign companies mostly in service industry have left Nigeria
7] 4.3 Million jobs lost in 10months – National Bureau of Statistics.
8] Food scarcity last experienced in Nigeria between 1983 to 1985 returned back.
9] War on Corruption turned into war against his perceived enemies. Convictions by EFCC were cases meticulously started by previous govt(s). Buhari wins cases only on the pages of Newspapers.
10] Nigeria dropped from No.1 Investment destination in Africa to No.27 before South Sudan.
11] African Biggest economy shrink from a GDP of about 7% to -0.36%, the fastest decline in the world since record began.
12] No.3 fastest growing economy in the world to No.83 in 365days.

And I wonder why the president keeps giving the impression that the country is broke. The problem is not lack of funds, but lack of qualified individuals in the govt.

AZeD1:
Can't you see the irony in your post?

Were will this money come from if not by borrowing which is expensive right now or by raising taxes which is counter productive?


Same as above.



1) Reduce taxation and government can't get the money it needs for salary talk less of infrastructure.
2) Electric companies are businesses too and right now, it's not a profitable business. The companies also need cheap loans to be able to expand.
3) Do you want subsidy brought back?

In summary, you want government to spend money it doesn't have by reducing taxes, which it would further reduce government revenue, then it should cover that short fall by borrowing expensively thereby plunging us into further debts with astronomic interest rate which would have to be paid from the reduced revenue, then we would have to borrow more....... Rinse repeat

EternalTruths:
The problem with most Nigerians, is lack of understanding between monetary and fiscal policies


If interest rate is lowered, borrowing will increase which in turn will increase spending and investment.

But there are issues which you guys are overlooking

Once money supply increases as a result of reduction in interest rate without a corresponding increase in production of goods and services,

1) Inflation will set in as more naira chases few goods and services.

2) Exchange rate against the naira will strengthen as our people demand more for foreign goods as a result of the inability for our local production to meet our demand.


With increase in inflation and exchange rates, depression will set in 6months after its implementation.

So What is the Solution.?

1) Increase in local production of goods and services


What are the things that can be done to boost local production.?

1) Cost of doing business must be reduced by reducing taxation, electricity and fuel costs

2) Commercialization of graduates and undergraduates Technological innovations/reinventions/inventions by reintroducing YOUWIN specifically in institutions of higher learning. YOUWIN staff should be posted permanently to each institution to scout for each project and check the commercialization potential of each graduate and undergraduate project that can be financed by the Government and Private Sector

YOUWIN financial support should be increased from 10million to 30million naira minimum due to the present value of money.

3) Investment in non oil sector by the Government to boost local availability of raw materials and reduce dependence on foreign raw materials which tend to increase the cost of doing business and put lots of pressure on our foreign exchange.



These things can help take Nigeria out of recession in 6months time.

Once we are out of recession, we can then reduce interest rates so as to make more money available for our people to spend and invest in our economy in order to sustain our local industrial and economic activities.

Good Points.

I watched a recapitulated segment of a TV broadcast involving the minister of finance being hosted by the house of rep for interpallations relating its policies that were at aimed mitigating the aggrandising rate of recession.

A lawmaker proposed and adjured the minister to make efforts to translate the policy explications into a pellucid like in unofficial languages so that the laymen, especially those in the northern part of Nigeria can understand the govt programs and policies since they have challenges trying to understand in its crude form.

The minister nodded her head in affirmation, which signified that she bought the idea.

But hitherto, I am yet to see any move made by her to implement such idea.

My point is that, this govt is clueless, and still, they decline any handy opinion from its citizens. They are not open to ideas.

EternalTruths:
The problem with most Nigerians, is lack of understanding between monetary and fiscal policies


If interest rate is lowered, borrowing will increase which in turn will increase spending and investment.

But there are issues which you guys are overlooking

Once money supply increases as a result of reduction in interest rate without a corresponding increase in production of goods and services,

1) Inflation will set in as more naira chases few goods and services.

2) Exchange rate against the naira will strengthen as our people demand more for foreign goods as a result of the inability for our local production to meet our demand.


With increase in inflation and exchange rates, depression will set in 6months after its implementation.

So What is the Solution.?

1) Increase in local production of goods and services


What are the things that can be done to boost local production.?

1) Cost of doing business must be reduced by reducing taxation, electricity and fuel costs

2) Commercialization of graduates and undergraduates Technological innovations/reinventions/inventions by reintroducing YOUWIN specifically in institutions of higher learning. YOUWIN staff should be posted permanently to each institution to scout for each project and check the commercialization potential of each graduate and undergraduate project that can be financed by the Government and Private Sector

YOUWIN financial support should be increased from 10million to 30million naira minimum due to the present value of money.

3) Investment in non oil sector by the Government to boost local availability of raw materials and reduce dependence on foreign raw materials which tend to increase the cost of doing business and put lots of pressure on our foreign exchange.



These things can help take Nigeria out of recession in 6months time.

Once we are out of recession, we can then reduce interest rates so as to make more money available for our people to spend and invest in our economy in order to sustain our local industrial and economic activities.

I believe this should be the solution: CBN should instruct banks to negotiate and cut interest rates for manufacturers only, then they can prevent people from spending the loans on consumer goods, that may propel inflation.

Lol.

You don't even understand what you're talking about. And you keep contradicting yourself from line to line. Anyway, I'm going to be your student and I'll ask you a couple of questions based on what you posited.

1). How are you going to increase the local production of goods if the interest rates aren't reduced and the players in the manufacturing/production sector are struggling?

2). You cited the government's investment in the non oil sector. How's that feasible since the government is finding it difficult to borrow locally due to the interest rates and that's the reason why Kemi wants the apex bank to reduce the interest rates (something that should have been done as soon the country got into the recession)?

Just take it one step at a time and your answers will lead to further questions.

Shym3xx:
Lol.

You don't even understand what you're talking about. And you keep contradicting yourself from line to line. Anyway, I'm going to be your student and I'll ask you a couple of questions based on what you posited.

1). How are you going to increase the local production of goods if the interest rates aren't reduced and the players in the manufacturing/production sector are struggling?

2). You cited the government's investment in the non oil sector. How's that feasible since the government is finding it difficult to borrow locally due to the interest rates and that's the reason why Kemi wants the apex bank to reduce the interest rates (something that should have been done as soon the country got into the recession)?

Just take it one step at a time and your answers will lead to further questions.

Sanusi Foresees Rebound of Economy, Backs CBN on Rate Retention http://www.thisdaylive.com/index.php/2016/09/22/sanusi-foresees-rebound-of-economy-backs-cbn-on-rate-retention/

People please lets us get the facts straight the inflation Emefiele is talking about is not about too much naira chasing few goods(people let us use our brain, think now, if federal and state govt wages are very low at the moment and everyone is saying that there no money in town how come is there too much Naira runing about?) if you read Emefiele statement some of the reasons the CBN will not reduce their rates is becos past lessons have shown that the banks
1. Never reciprocated the action by lowering their interest rates to the public
2.They did not increase their lending to the general public
3.They took advantages of the extra cash derived from low CBN rates to engage in speculative currency manipulation
Emefiele.....
“Our own view at the MPC, which was exhaustively discussed, is that in the past, there was a time when the MPC took the decision to reduce the policy rate and the cash reserves. These were intended to lower rate and encourage spending to the private sector. After we did that, the following meeting we said because we did not see the impact of credit to the private sector that we needed to further reduce the CRR.”
Now the inflation Emefiele is talking about is the speculative activites in the currency market which is control by the banking sector
The CBN governor said the committee was of the view that in the past when the rates were reduced to achieve these objectives, it was later discovered that rather than deploy the available liquidity to provide credit to agriculture and manufacturing sectors, it provided opportunities for lending to traders who deployed the same liquidity in putting pressure on the foreign exchange market

So people the task at hand is to find a way to make cheap money available to manufacturing agricultural sectors any ideals? anybody?

Shym3xx:
Lol.

You don't even understand what you're talking about. And you keep contradicting yourself from line to line. Anyway, I'm going to be your student and I'll ask you a couple of questions based on what you posited.

1). How are you going to increase the local production of goods if the interest rates aren't reduced and the players in the manufacturing/production sector are struggling?

2). You cited the government's investment in the non oil sector. How's that feasible since the government is finding it difficult to borrow locally due to the interest rates and that's the reason why Kemi wants the apex bank to reduce the interest rates (something that should have been done as soon the country got into the recession)?

Just take it one step at a time and your answers will lead to further questions.

Answer to question 1

There are 6 major things that affect cost of production and in turn increases or decreases production

A) Taxation
B) Forex
C) Interest Rate
D) Salaries
E) Electricity
F) Fuel

If you reduce interest rate without reducing others, it becomes null and void with time.

So the best thing to do is to cut down cost on Taxation, Electricity and Fuel.

Electricity and Fuel costs can be reduced by continuing the amnesty program and avoid issues that makes that region volatile eg 97% 5% comment, attack against Jonathan Tompolo Patience etc.

When these things are done, the cost of doing business will decline.

Now 14% interest rate according to CBN attracted $1bn in the month of june. Meaning that our ability to meet our Forex demand increased by $1bn from FDI.

So tell Buhari to stop giving Hausa Fulani politicians scarce dollars to finance foreign trips eg A particular Hausa Fulani governor financed Aisha's trip overseas just because he has interest in Zahra. For Christ sake were did he get $1m from and why spend it on foreign trip that gave us no return in dollar inflow.


So when all these are implemented, Interest Rate should then be lowered after considering if it will impact positively at that time.


Answer to Question 2

Who ever tells you that we don't have money is lying especially when you consider how Buhari and his friends have being spending dollar on non essential things.

How can the government get money to finance itself

1) Make peace with the ND people in order to achieve full oil production

2) With peace returned and dollar inflow increased, use that extra money to finance our non-oil sector starting with 4 major things and these are:
A) Agriculture
B) Processing of Solid Minerals from Medium Scale to Large Scale eg Nickel Bauxite Iron(Ajaokuta should start from Medium Scale)
C) Commercialization of any Technology developed in our higher institutions in order to minimize foreign import
D) Creating a National Educational platform like Nairaland whereby the Technologies developed in our higher institutions are taught to local businesses in all states eg Aba Onitsha Nnewi online and offline. This will help spread technological knowledge necessary to help us produce advanced indigenous technologies that can replace foreign ones.

When these things are done, the multiplier effect will lead to more revenue for government in 2 - 5 years time.

By then, you don't need to tell CBN to reduce interest rate. The Banks will ginger them

vedaxcool:
[b]Your fall into the fallacy of living in your own illusion, as govt policies wouldn't be reduced to one single policy but several whose efficacy lies in each other, hence it is not just about cutting interest, cutting interest rates in tadem with several other policies will result to economic growth.

You say govt should cut the price of fuel with which money? Cut Taxes how will they fund themselves, cut electricity bill, discos complain current tariffs are too low for investment? So who would pay for all you wishful thinking? Like I tell people PMB can create a illusion for everyone that everything is well by simply borrowing and borrowing like GEJ did in 2014, but eventually you will simply create a black hole for all to fall into.

Cutting interest rate will result iin consumers have more money to spend, causing the economy to grow and inflation to increase. The opposite holds true for rising interest rates. As interest rates are increased, consumers tend to have less money to spend. With less spending, the economy slows and inflation decreases

Currently we are in a recession to leave this situation, cutting interest remains key to achieving this as clearly economies growth is declining and even the average man on the street feels this is largely due to money not circulating as for taxes, we have one of the lowest VATs in the world, but govt has already plans to create new enterprises, meaning more jobs, a robust social system[/b]

Have you asked yourself if it is local or foreign products the consumers will spend their money on.?

If it is foreign products, have you asked yourself the pressure it will exert on Forex.?

If dollar increases, have you asked yourself the impact it will have on the low economic activities.?


So when you think left please think right

The only true solution, is to take our technological education serious

@TopHand good point showing the CBN itself is slack in its business.
Few things are to me critical in this discuss:
1. What often give rise to speculations? That should be eliminated. Allow market to determine the naira value so naira will exchange at d same value everywhere, no spread.
2. Introduce a 22 working day window for banks to hold on to 20% of TSA fund though must be reported to help their liquidity, you may say govt will be starved but that is a sacrifice.
3. Reduce CRR from 22.5 to 22
4. Create a window of a single digit interest rate say 8-9% for SME and allocating such fund under CBN special recovery program which must represent 20% of all lending by banks
5. Bring MPR to 11% to release more funds into d market.
6. Sell off all refineries, and Ajaokuta steel company, FG abandoned structures in Lagos,concession airports and leave the profit making LNG company
7. Open easy and construct bid for refineries signifying when fuel imports will end
The more political decision is the over bloated civil service, government should seek to reduce cost.
A more pragmatic approach is to begin the implementation of regional government transformed into 16 states, that will cut down loads of recurrent expenditures

Nigeria banks have huge NPL and huge credits concentration but CEOs aren't getting fired even when they contravene regulatory policies, govt need to stand its feet to bring the economy back, change perspectives, moderate its languages and support youths empowerments

like i said earlier in d oda thread, cbn is begginning to assert their independence from d executive. cbn's argument was dat if interest rate is reduced, inflation will increase via rise in price of goods n services n d naira will become worthless. their refusal to cut down interest rate is a strong message to d dullard to buckle up on diversification to reduce d pressure on d naira.

drss2:
like i said earlier in d oda thread. Cbn is begginning to assert their independence from d executive. cbn' argument was dat if interest rate is reduced, inflation will increase via rise in price of goods n services. their refusal to cut down interest rate is a strong message to d dullard to buckle up on diversification to reduce d pressure on d naira.

Emefiele simply saved us from depression.

People pretend not to know that most things we use are foreign products and for that reason, more money supply in a period like this when our Forex strength is low, will lead to inflation on a long run leading to DEPRESSION as demand for foreign products diminish our Forex

JAkpayen:
Intelligent economic suggestion from EternalTruths. Those saying that CBN should lower interest rate should examine the 2016 Budget and see how much is allocated to capital expenditure, just a mere ₦1.8T from budget proposal of ₦6.07T. FG will still service debts running into trillions of ₦. If interest rate is reduced, governments (including States) will borrow to pay salary arrears thus making inflation go up.

The truth is that FG does not have sound fiscal policy to drive the GDP growth rate projection of over 4%

exactly d point. d last 3 quarter statistics from nbs has shown cbn dat buari's govt is not serious about d economy, which is why they refused to reduce interest rate. d executive failed to allocate more funds for fiscal economic investment programs in their ova bloated 2016 budget, yet expect cbn to perform functions of d executive. there is a big difference btw monetary policies n fiscal policies.

EternalTruths:



Answer to question 1

There are 6 major things that affect cost of production and in turn increases or decreases production

A) Taxation
B) Forex
C) Interest Rate
D) Salaries
E) Electricity
F) Fuel

If you reduce interest rate without reducing others, it becomes null and void with time.

So the best thing to do is to cut down cost on Taxation, Electricity and Fuel.

Electricity and Fuel costs can be reduced by continuing the amnesty program and avoid issues that makes that region volatile eg 97% 5% comment, attack against Jonathan Tompolo Patience etc.

When these things are done, the cost of doing business will decline.

Now 14% interest rate according to CBN attracted $1bn in the month of june. Meaning that our ability to meet our Forex demand increased by $1bn from FDI.

So tell Buhari to stop giving Hausa Fulani politicians scarce dollars to finance foreign trips eg A particular Hausa Fulani governor financed Aisha's trip overseas just because he has interest in Zahra. For Christ sake were did he get $1m from and why spend it on foreign trip that gave us no return in dollar inflow.


So when all these are implemented, Interest Rate should then be lowered after considering if it will impact positively at that time.


Answer to Question 2

Who ever tells you that we don't have money is lying especially when you consider how Buhari and his friends have being spending dollar on non essential things.

How can the government get money to finance itself

1) Make peace with the ND people in order to achieve full oil production

2) With peace returned and dollar inflow increased, use that extra money to finance our non-oil sector starting with 4 major things and these are:
A) Agriculture
B) Processing of Solid Minerals from Medium Scale to Large Scale eg Nickel Bauxite Iron(Ajaokuta should start from Medium Scale)
C) Commercialization of any Technology developed in our higher institutions in order to minimize foreign import
D) Creating a National Educational platform like Nairaland whereby the Technologies developed in our higher institutions are taught to local businesses in all states eg Aba Onitsha Nnewi online and offline. This will help spread technological knowledge necessary to help us produce advanced indigenous technologies that can replace foreign ones.

When these things are done, the multiplier effect will lead to more revenue for government in 2 - 5 years time.

By then, you don't need to tell CBN to reduce interest rate. The Banks will ginger them

You clearly have no idea what you are talking about.
1) IF you want to start a business, access to funds is your first problem not taxation. Economics 001
2) There's no way the government can reduce the price of electricity. The people who supply electricity are saying they are making a loss, yet you want to impound their problems?
3) You keep on saying the government has money when common sense dictates that if Oil which is selling at less than half the price from 2 years ago with a reduction of about 25% production there would be a shortfall in revenue.
4) Companies that make a loss don't pay tax so how do you reduce taxes when companies bleeding money left and right? Part of that bleed is from the high cost of borrowing.
5) You keep on saying diversify the economy but you've not said how you are going to get the money to do that.
6) How do you solve unemployment when the interest rate is so high, companies cannot borrow to expand?

EternalTruths:



Emefiele simply saved us from depression.

People pretend not to know that most things we use are foreign products and for that reason, more money supply in a period like this when our Forex strength is low, will lead to inflation on a long run leading to DEPRESSION as demand for foreign products diminish our Forex

exactly. wat cbn did was a ''wait n see'' approach to see how far d economy will respond to buari's economic policies in d last quarter of d year before they take any action on interest rate.
but as far am am concern, as long as buari is d president of dis con3, there is no hope for d economy.

My stand on this issue remains solidly the same.

1) interest rates should be reduced
2) personal tax rate should remain as it is
3) depending on how the economy improves after lowered interest rates, there should be more quantitative easing introduced to balance things
4)corporation tax should be reduced slightly as relief to struggling companies
5)tax breaks to new investors with viable business ideas provided they meet and fulfil certain criteria such as providing employment opportunities (which must be audited/proven). Such companies must compulsorily source all their raw materials locally
6)EMEFIELE MUST BE SACKED


I also think once we sort out the ongoing issue with forex, there should be a dip in the current high rate of inflation. It will take a while to get this reduced but slowly and surely, we will get there.

Please check my posts on the other thread

helovesme:

6)EMEFIELE MUST BE SACKED


I also think once we sort out the ongoing issue with forex, there should be a dip in the current high rate of inflation. It will take a while to get this reduced but slowly and surely, we will get there.

Please check my posts on the other thread

if i was emefiele i would have sacked myself since from buari's directionless govt. buari can sack emefiele n replace him with his northern daura brother if he likes, but it will not change anytin on d economy.

The op is just full of assumptions like all the other economic analysts that has been blabbing over these economic issues.

No one, I say no one has been able to come up with any clear and objective solutions, even if the interest rates have been lowered some one will come up to say that if the govt have done this earlier, things will not get this bad. Now the interest rates have been retained and all we hear is that the cbn now has full autonomy and that they are right not to lower interest rates.

Nigeria I hail thee, let's keep confusing ourselves with all these assumptions.

EternalTruths:


Despite reduction of interest rate last year October and November 2015, inflation rates kept rising at a time when Forex Scarcity was forcing price up.


What you failed to ask yourself is why didn't we escape recession despite CBN reduction in interest rate.

you are very funny. You don't even understand what it means to reduce interest rate. All developed countries have interes rate lower than 0.5% and in 2015 Nigerian reduced her interest rate to about 9%.
Even a blind man would figure the difference. For Nigeria to compete with other countries our interest rate must be reduced to 0.5%.

With very high interest rate we are already in recession, the only way to reverse it is very low interest. Common sense 101

EternalTruths:
The problem with most Nigerians, is lack of understanding between monetary and fiscal policies
If interest rate is lowered, borrowing will increase which in turn will increase spending and investment.
But there are issues which you guys are overlooking

Interest rate was lowered in the last quarter of 2015 and increased by the first quarter of 2016. Borrowing increased this year brother. Are you reading textbook or what is happening live? When you say people are overlooking issues, are you not also overlooking things that would happen if the interest rates is lowered?

Once money supply increases as a result of reduction in interest rate without a corresponding increase in production of goods and services,
1) Inflation will set in as more naira chases few goods and services.

Inflation has already set in and is enjoying itself. We have increased interest rates twice already this year, so what are you saying? And why do you assume that money supply would increase but production of goods and services would not increase? Who assumes that way?

2) Exchange rate against the naira will strengthen as our people demand more for foreign goods as a result of the inability for our local production to meet our demand.
With increase in inflation and exchange rates, depression will set in 6months after its implementation.

This is laughable really, all these already happened and are steady with increased interest rates. The strength of the naira this year is one of the worst in the continent, remember we INCREASED interest rates twice this year.

So What is the Solution.?
1) Increase in local production of goods and services
What are the things that can be done to boost local production.?
1) Cost of doing business must be reduced by reducing taxation, electricity and fuel costs

Agreed, Buhari himself has been shouting diversification even before election. All the parties seem to agree on that, but do the people will to? Are we truly ready to produce? The stick approach used to try and cut rice importation and encourage local production backfired for instance. Instead of imported engine oil, we claim we can make. Are you ready to buy? What we have in the market is known brand containers, with made in Nigeria content, but foreign price. At the end of the day, the root issue is not really local production increase, but but how to get the people off the foreign. We also need some out of this country quality control, that's one suggestion.

2) Commercialization of graduates and undergraduates Technological innovations/reinventions/inventions by reintroducing YOUWIN specifically in institutions of higher learning. YOUWIN staff should be posted permanently to each institution to scout for each project and check the commercialization potential of each graduate and undergraduate project that can be financed by the Government and Private Sector
YOUWIN financial support should be increased from 10million to 30million naira minimum due to the present value of money.

YOUWIN is still ongoing and similar schemes. The impact i very debateable though.

3) Investment in non oil sector by the Government to boost local availability of raw materials and reduce dependence on foreign raw materials which tend to increase the cost of doing business and put lots of pressure on our foreign exchange.
These things can help take Nigeria out of recession in 6months time.

This is pure rhethoric that we have been saying since 1990.

Once we are out of recession, we can then reduce interest rates so as to make more money available for our people to spend and invest in our economy in order to sustain our local industrial and economic activities.

INCREASE in interest rate guaranteed recession in my opinion. We increased the rates in the first two quarters, remember.