Copied from businessdayonline

Article for a selected few who understand what it's about.

In November last year, during the Annual Bankers’ Dinner of the Chartered Institute of Bankers in Lagos, Godwin Emefiele, the Governor of the Central Bank of Nigeria had projected that the country’s external reserves would hit the US$40 billion psychological threshold ‘before the end of 2018’. He probably did not envisage that his prediction would materialize just few days into the new year.The welcome accretion in reserves does not only reflect increased inflows on the back of higher oil output, uptick in crude oil prices, proceeds from successful Eurobonds issuances, as well as improvement in Diaspora remittances and foreign investments (thanks to the Investors and Exporters forex window), but also the apex bank’s proactive forex demand management strategy.

The exchange rate is simply the price of the domestic currency in relation to a foreign currency determined by market forces except in rare cases of complete fixed exchange regimes. Against this backdrop, the unprecedented increase in the country’s external reserves toUS$40.4 billion on January 5, 2018 fromcirca US$26.7 billion in January 2017 according to data from CBN,raises the question as to whether the monetary authority should not seize the opportunity presented by the healthy reserves to significantly influence a lower exchange rate, at least one that narrows the wide gap between the official rate of N305 per dollar for priority transactions such as external debt service and the interbank rate of N360 per dollar which is used for a sizeable number of daily transactions.

It will be recalled that following a slump in crude oil revenue (derived chiefly from the proceeds of crude oil sales)and shrinking external reserves towards the end of 2014, the CBN was compelled to devalue the naira from N155 per dollar to N168 per dollar in November of that year. When the forex crisis persisted, the apex bank again in February of 2015 implicitly devalued the naira pegging it at N197-N199 per dollar which was later in June 2016 abandoned in favour of a managed floating exchange rate regime. Not long after, plummeting foreign reserves resulted in the depreciation of the naira to as low as N520 per dollar in the parallel market leaving a wide premium over the official rate of N305 per dollar that fuelled widespread speculation and round-tripping. It bears repeating that the depletion in reserves was largely on account of low crude oil price and output amidst high import bills.

Today, this narrative has changed.According to data from the NNPC, oil production is currently in the region of 2.25 million barrels per day (increasing from 1.69 mbpd in Q1 2017) due to relative peace in the Niger Delta region. Similarly, crude oil price has touched the US$70 per barrel psychological threshold while foreign reserves have surged to US$40.4 billion from about US$26.7 billion in January 2017. On the demand side,import bill is recorded to have dropped from over US$5 billion in 2015 to about US$1.5 billion in 2017. In view of these improvements and phenomenal growth in external reserves, is the naira not currently undervalued?What is more, headline inflation has been on the downward trend from 18.72 percent in January 2017 to 15.90 percent in November last year. Yet, there has been no marked improvement (appreciation) in the interbank exchange rate since May last year in the light of the rise in the United States inflation rate from1.87 percent (year-on-year) in May to 2.2 percent in November 2017. So even from a Purchasing Power Parity perspective which takes into account relative price levels between countries, the naira seems undervalued vis-a-vis the US dollar.

To be sure, the CBN needs respectable foreign reserves to be able to safeguard the value of the naira, manage exchange rate volatility through sustained interventions, meet international payment obligations (the federal government is expected to repay US$500million on the maturity of its July ’18 Eurobonds this year), as well as provide a buffer against external shocks such as the recent crude oil price crash that plunged the economy into recession.No doubt, an optimal level of international reserves improves acountry’s credit worthiness.But the big question is: what level of external reserves is considered optimal for Nigeria? A study by Tule et al in 2015, which sought to determine an optimal level of foreign reserves for the country,provided a clue when itestablished a minimum core foreign reserves level of US$32 billion (being the equivalent of 7.2 months of import).It is instructive to note that the IMF recommends 3 months of import cover as a minimum benchmark for reserve.

At present, the stock of the country’s foreign currency, largely denominated in dollars, is said to be sufficient to finance more than 14 months of merchandiseimports. By implication, the supply of dollars has improved considerably. On the demand side, the CBN through some proactive measures including the restriction of access to official forex in respect of 41 items of import have succeeded in halting the haemorrhaging of the country’s external reserves.It is against this backdrop that a lower exchange rate is justified to support economic development.

Indeed, a weak currency is not in the interest of a mono-product country such as Nigeria especially now that the federal government is turning attention to foreign borrowing to bridge budget gaps. It is often argued that a country can boost growth by weakening its currency because doing so promotes exports but this strategy is not a one-cap-fits-all recipe. For instance, the People’s Bank of China (the country’s central bank) currently holds overUS$3 trillion of foreign exchange reserves and can afford to keep the Yuan (also known as the renminbi or RMB) weak which explains why it will buy US currency and treasury notes in the open market in order to keep demand for the US dollar high and cheapen the Yuan thereby facilitating the United States’ growing trade deficit with China which gives the latter an advantage in the export market. So, unlike Nigeria with a shallow export base, China can afford to power her export economy via a weak Yuan.

In his reaction to a call by the IMF, following the Fund’s article IV Consultation with Nigeria, to have the naira devalued some time ago, the former CBN Governor, Lamido Sanusi, had told CNBC Africa television that “we do not believe that the naira is overvalued. We do not believe that at a time when the oil price is going up and output is going up we should be losing the value of our currency. We also do not think that it makes sense, if the IMF is concerned about inflation, to ask a country that is import-dependent to devalue its currency. So the advice given by the IMF, frankly, is not based on sound economic logic”. This assertion by Lamido Sanusi is as true today as it was in 2011. By implication, the way forward is to reduce the country’s import dependency and strive to join the league of net exporting countries led by China. In the meantime however, there is the likelihood that the country’s external reserves will continue to enjoy more accretion in the course of 2018 if the OPEC/Non-OPEC member countries’ output-cut agreement (which extends till the end of this year) coupled with increased optimism about the global economy is anything to go by.Therefore, having largely achieved exchange rate stability in the forex market, the concern of the CBN now should be geared towards managing the growing external reserves in a manner that supports a stronger domestic currency.

Uche Uwaleke

$40 billions in foreign reserve does not mean Uhuru

a double digit inflation means more harm on your exchange and cost of doing business

an artificial and unpredictable currency administration proves nothing.

I have been advocating for a stronger Naira for quite some time now on Nairaland. The current N365/$1 is no longer tenable. We need a stronger Naira so that Nigerians can start benefitting from the improving economy. Prices of basic commodities that went up in 2016 when the recession was biting very hard won't come down until the Naira that got weakened is strengthened back. I completely agree with the submission of prof. Uche Uwaleke.

^^ it is not the way you think

stop using dollars soo much....then it will automaticaly drop...cbn dont have to do anything....

seunmsg:
I have been advocating for a stronger Naira for quite some time now on Nairaland. The current N365/$1 is no longer tenable. We need a stronger Naira so that Nigerians can start benefitting from the improving economy. Prices of basic commodities that went up in 2016 when the recession was biting very hard won't come down until the Naira that got weakened is strengthened back. I completely agree with the submission of prof. Uche Uwaleke.

And you'd also be calling for increase in minimum wage.

Forget about the prices of basic commodities coming down. There's this thing called inflation. And it is in the double digits.

Seriously, look up the meaning of inflation.

And what's this urge to burn the reserve? What's wrong with us having $100b in reserves?

The state of the economy has very little to do with the naira currently. Budgets are not being implemented, there are no ongoing projects, there are no fiscal policies being put in place, millions are losing jobs, the economy is sleepwalking, and all you're concerned about is price of commodities. Prices that would inevitably keep increasing.

Talk about priorities.

-Lord

The OP has resided some salient points about the reserves being built at a time when the exchange rate could be better. But by suggesting that the CBN should instead focus on improving the exchange rate, the OP makes the terrible error of putting the chart before the horse. In fact building the forex reserves is helping to restore market and investor confidence which will eventually improve the exchange rate situation.

I thought the mantra in the early years of this administration was to allow free market determine the exchange rate of the naira Now that that has been done and some stability achieved and currently sustained, why advocating for upward valuation of the naira. How can that be done. Abeg, let us consolidate our position and put the necessary shock absorbers in place first before thinking of stepping out of our comfort zone. Afterall crude oil is an instable source of revenue. Impatience can be disastrous especially if you ain't sure of the other side.

LordAdam16:


And you'd also be calling for increase in minimum wage.

Forget about the prices of basic commodities coming down. There's this thing called inflation. And it is in the double digits.

Seriously, look up the meaning of inflation.

And what's this urge to burn the reserve? What's wrong with us having $100b in reserves?

The state of the economy has very little to do with the naira currently. Budgets are not being implemented, there are no ongoing projects, there are no fiscal policies being put in place, millions are losing jobs, the economy is sleepwalking, and all you're concerned about is price of commodities. Prices that would inevitably keep increasing.

Talk about priorities.

-Lord

Nigerians loves to spend money, if the Norwaygians are like Nigerians, that country will be in a big mess today.
Nothing is wrong with NIGERIA having a $200 billion dollars reserve.
Other countries that were smiling even with low oil price are not magicians, they only saved for the rainy day.

like I always say, increased foreign reserves does not mean much is the face of human per capital development indices & global perceptions.


a country might have hundreds of billions in FR but terrible policies & a rudderless socioeconomic plan will make it amount to nought.


its just like a man who lives in a dilapidated duplex with leaking roof, no doors, outdated furniture, an abode for all sorts of vermin, constantly harassed by thieves, has no basic amenities & is constantly borrowing 'toiletries'.. but he then brags that he has millions in his account.


pray tell, what is the essence of having so much money when you live like a tramp?


to put in in perspective, China, Saudi Arabia, Russia, Iran, Mexico & India have much bigger reserves than the US, UK, Canada & some western European nations. yet, the US, UK & Canada have the better economies (relatively) & have more people flocking to them.




in fact, Nigeria has a far bigger reserve than Ghana, yet, Ghana is steadily growing in leaps & bounds while Nigeria is in retrogression.



bottom line is that FR are more 'meaningful' when the economy is buoyant & self sustaining. racing to have huge reserves means your economy is still heavily dependant on others to survive & as such, you must always give them the impression that you have money even when 'hunger wants to kill you'.



having a well oiled economy & average reserves shows that even if the reserves are wiped out, the economy can function well above average because it doesn't need to totally depend on other nations to survive.

7lives:


Nigerians loves to spend money, if the Norwaygians are like Nigerians, that country will be in a big mess today.
Nothing is wrong with NIGERIA having a $200 billion dollars reserve.
Other countries that were smiling even with low oil price are not magicians, they only saved for the rainy day.

One can never satisfy them as they really do not know what they want.

When GEJ was using out of the reserve to fund projects; they said the projects were invisible, only on paper, or insignificant; and that he shouldn't use the reserves.

Now that Buhari has stalled most projects and is shoring the reserve; they say he should spend the reserve.

People should make up your mind?

This is what happens when a country is run without a master plan and everyone and their grandmother is an armchair economist and urban planning expert.

We can't have it both ways. How about we decide to shore up the reserve to $150b within the next 3 years, which will be accompanied by slow-paced or near non-existent capital projects. And afterwards devote most of our resources to plug our huge infrastructural deficit for the next four years while keeping the reserves stable at that figure + or - $20b.

Most people, educated and uneducated alike, have no idea how abysmal our current situation is. We need at least $300b to have stable power. Our per unit cost on road is consistently in the top 10 most expensive list in the world; so we overspend by a factor of 3-5 on roads. I'm talking legal, play by the rules spending here. Let's not talk about our schools and hospitals. Or our poor maintenance culture. Then we send 48% of all our revenue to state governments that are run as cartels without accountability.

The level of wastage in Nigeria at all levels of government is mind boggling. And I've not opened the can of worms called corruption.

-Lord

LordAdam16:


This is what happens when a country is run without a master plan and everyone and their grandmother is an armchair economist and urban planning expert.

-Lord

Like this comment , reason I stopped watching sunrise daily whenever that black peacock (babajide) is on. That data analyst clown is a snake oil salesman.

You can start spending your Biafran Pounds. Isi Ewu.

We speak so much grammar because we don't produce what we consume. if we produce what we consume and produce enough of it to increase supply, then demand for foreign currency to buy our needs (tomatoes and groundnut oil) elsewhere will reduce and that will naturally strengthen the Naira.
The advanced nations know this and don't play with industries that handle basic needs.

In the Bible when famine cut the supplies of Egyptians down, demand soared and it was recorded that money failed in Egypt.

Even if reserve hits 100 Billion USD, we still need to reduce our loses or leakages in Naira strength coming through funny imports of things like hair, toothpick, substandard gadgets.

LordAdam16:


One can never satisfy them as they really do not know what they want.

When GEJ was using out of the reserve to fund projects; they said the projects were invisible, only on paper, or insignificant; and that he shouldn't use the reserves.

Now that Buhari has stalled most projects and is shoring the reserve; they say he should spend the reserve.

People should make up your mind?

This is what happens when a country is run without a master plan and everyone and their grandmother is an armchair economist and urban planning expert.

We can't have it both ways. How about we decide to shore up the reserve to $150b within the next 3 years, which will be accompanied by slow-paced or near non-existent capital projects. And afterwards devote most of our resources to plug our huge infrastructural deficit for the next four years while keeping the reserves stable at that figure + or - $20b.

Most people, educated and uneducated alike, have no idea how abysmal our current situation is. We need at least $300b to have stable power. Our per unit cost on road is consistently in the top 10 most expensive list in the world; so we overspend by a factor of 3-5 on roads. I'm talking legal, play by the rules spending here. Let's not talk about our schools and hospitals. Or our poor maintenance culture. Then we send 48% of all our revenue to state governments that are run as cartels without accountability.

The level of wastage in Nigeria at all levels of government is mind boggling. And I've not opened the can of worms called corruption.

-Lord

The reserve will be under much lesser pressure if we produce enough of the things we consume. The article writer is advocating for cheaper Dollar by increasing Dollar supply for import. This will drain the reserve and take us back to our previous state where we ate the bulk of what we earned.
I expect the govt to build a gigantic refinery as a matter of urgency to reduce our monstrous import bill from petrol importation alone. if the govt can give funds for anchor borrower scheme to reduce rice import, what stops this same govt from building a gigantic refinery to stop petrol import as well? If Dangote didn't choosing to invest in rice but build a refinery what stop our govt from building a big refinery?

7lives:


Nigerians loves to spend money, if the Norwaygians are like Nigerians, that country will be in a big mess today.
Nothing is wrong with NIGERIA having a $200 billion dollars reserve.
Other countries that were smiling even with low oil price are not magicians, they only saved for the rainy day.

The problem isn't just spending. Everyone spends but the key is what are you producing to (1) reduce your spending and (2) increase your earning? We don't,t produce what we consume and don't, utilize what we have. we just sell and share oil proceeds.

989900:
Copied from businessdayonline

Article for a selected few who understand what it's about.

In November last year, during the Annual Bankers’ Dinner of the Chartered Institute of Bankers in Lagos, Godwin Emefiele, the Governor of the Central Bank of Nigeria had projected that the country’s external reserves would hit the US$40 billion psychological threshold ‘before the end of 2018’. He probably did not envisage that his prediction would materialize just few days into the new year.The welcome accretion in reserves does not only reflect increased inflows on the back of higher oil output, uptick in crude oil prices, proceeds from successful Eurobonds issuances, as well as improvement in Diaspora remittances and foreign investments (thanks to the Investors and Exporters forex window), but also the apex bank’s proactive forex demand management strategy.

The exchange rate is simply the price of the domestic currency in relation to a foreign currency determined by market forces except in rare cases of complete fixed exchange regimes. Against this backdrop, the unprecedented increase in the country’s external reserves toUS$40.4 billion on January 5, 2018 fromcirca US$26.7 billion in January 2017 according to data from CBN,raises the question as to whether the monetary authority should not seize the opportunity presented by the healthy reserves to significantly influence a lower exchange rate, at least one that narrows the wide gap between the official rate of N305 per dollar for priority transactions such as external debt service and the interbank rate of N360 per dollar which is used for a sizeable number of daily transactions.

It will be recalled that following a slump in crude oil revenue (derived chiefly from the proceeds of crude oil sales)and shrinking external reserves towards the end of 2014, the CBN was compelled to devalue the naira from N155 per dollar to N168 per dollar in November of that year. When the forex crisis persisted, the apex bank again in February of 2015 implicitly devalued the naira pegging it at N197-N199 per dollar which was later in June 2016 abandoned in favour of a managed floating exchange rate regime. Not long after, plummeting foreign reserves resulted in the depreciation of the naira to as low as N520 per dollar in the parallel market leaving a wide premium over the official rate of N305 per dollar that fuelled widespread speculation and round-tripping. It bears repeating that the depletion in reserves was largely on account of low crude oil price and output amidst high import bills.

Today, this narrative has changed.According to data from the NNPC, oil production is currently in the region of 2.25 million barrels per day (increasing from 1.69 mbpd in Q1 2017) due to relative peace in the Niger Delta region. Similarly, crude oil price has touched the US$70 per barrel psychological threshold while foreign reserves have surged to US$40.4 billion from about US$26.7 billion in January 2017. On the demand side,import bill is recorded to have dropped from over US$5 billion in 2015 to about US$1.5 billion in 2017. In view of these improvements and phenomenal growth in external reserves, is the naira not currently undervalued?What is more, headline inflation has been on the downward trend from 18.72 percent in January 2017 to 15.90 percent in November last year. Yet, there has been no marked improvement (appreciation) in the interbank exchange rate since May last year in the light of the rise in the United States inflation rate from1.87 percent (year-on-year) in May to 2.2 percent in November 2017. So even from a Purchasing Power Parity perspective which takes into account relative price levels between countries, the naira seems undervalued vis-a-vis the US dollar.

To be sure, the CBN needs respectable foreign reserves to be able to safeguard the value of the naira, manage exchange rate volatility through sustained interventions, meet international payment obligations (the federal government is expected to repay US$500million on the maturity of its July ’18 Eurobonds this year), as well as provide a buffer against external shocks such as the recent crude oil price crash that plunged the economy into recession.No doubt, an optimal level of international reserves improves acountry’s credit worthiness.But the big question is: what level of external reserves is considered optimal for Nigeria? A study by Tule et al in 2015, which sought to determine an optimal level of foreign reserves for the country,provided a clue when itestablished a minimum core foreign reserves level of US$32 billion (being the equivalent of 7.2 months of import).It is instructive to note that the IMF recommends 3 months of import cover as a minimum benchmark for reserve.

At present, the stock of the country’s foreign currency, largely denominated in dollars, is said to be sufficient to finance more than 14 months of merchandiseimports. By implication, the supply of dollars has improved considerably. On the demand side, the CBN through some proactive measures including the restriction of access to official forex in respect of 41 items of import have succeeded in halting the haemorrhaging of the country’s external reserves.It is against this backdrop that a lower exchange rate is justified to support economic development.

Indeed, a weak currency is not in the interest of a mono-product country such as Nigeria especially now that the federal government is turning attention to foreign borrowing to bridge budget gaps. It is often argued that a country can boost growth by weakening its currency because doing so promotes exports but this strategy is not a one-cap-fits-all recipe. For instance, the People’s Bank of China (the country’s central bank) currently holds overUS$3 trillion of foreign exchange reserves and can afford to keep the Yuan (also known as the renminbi or RMB) weak which explains why it will buy US currency and treasury notes in the open market in order to keep demand for the US dollar high and cheapen the Yuan thereby facilitating the United States’ growing trade deficit with China which gives the latter an advantage in the export market. So, unlike Nigeria with a shallow export base, China can afford to power her export economy via a weak Yuan.

In his reaction to a call by the IMF, following the Fund’s article IV Consultation with Nigeria, to have the naira devalued some time ago, the former CBN Governor, Lamido Sanusi, had told CNBC Africa television that “we do not believe that the naira is overvalued. We do not believe that at a time when the oil price is going up and output is going up we should be losing the value of our currency. We also do not think that it makes sense, if the IMF is concerned about inflation, to ask a country that is import-dependent to devalue its currency. So the advice given by the IMF, frankly, is not based on sound economic logic”. This assertion by Lamido Sanusi is as true today as it was in 2011. By implication, the way forward is to reduce the country’s import dependency and strive to join the league of net exporting countries led by China. In the meantime however, there is the likelihood that the country’s external reserves will continue to enjoy more accretion in the course of 2018 if the OPEC/Non-OPEC member countries’ output-cut agreement (which extends till the end of this year) coupled with increased optimism about the global economy is anything to go by.Therefore, having largely achieved exchange rate stability in the forex market, the concern of the CBN now should be geared towards managing the growing external reserves in a manner that supports a stronger domestic currency.

Uche Uwaleke

hehehe, when I remember how you used to campaign for buhari
Hahhahahha

ivandragon:
like I always say, increased foreign reserves does not mean much is the face of human per capital development indices & global perceptions.


a country might have hundreds of billions in FR but terrible policies & a rudderless socioeconomic plan will make it amount to nought.


its just like a man who lives in a dilapidated duplex with leaking roof, no doors, outdated furniture, an abode for all sorts of vermin, constantly harassed by thieves, has no basic amenities & is constantly borrowing 'toiletries'.. but he then brags that he has millions in his account.


pray tell, what is the essence of having so much money when you live like a tramp?


to put in in perspective, China, Saudi Arabia, Russia, Iran, Mexico & India have much bigger reserves than the US, UK, Canada & some western European nations. yet, the US, UK & Canada have the better economies (relatively) & have more people flocking to them.




in fact, Nigeria has a far bigger reserve than Ghana, yet, Ghana is steadily growing in leaps & bounds while Nigeria is in retrogression.



bottom line is that FR are more 'meaningful' when the economy is buoyant & self sustaining. racing to have huge reserves means your economy is still heavily dependant on others to survive & as such, you must always give them the impression that you have money even when 'hunger wants to kill you'.



having a well oiled economy & average reserves shows that even if the reserves are wiped out, the economy can function well above average because it doesn't need to totally depend on other nations to survive.

Am not disagreeing with you but I think you r mixing up issues

CodeTemplar:
The reserve will be under much lesser pressure if we produce enough of the things we consume. The article writer is advocating for cheaper Dollar by increasing Dollar supply for import. This will drain the reserve and take us back to our previous state where we ate the bulk of what we earned.
I expect the govt to build a gigantic refinery as a matter of urgency to reduce our monstrous import bill from petrol importation alone. if the govt can give funds for anchor borrower scheme to reduce rice import, what stops this same govt from building a gigantic refinery to stop petrol import as well? If Dangote didn't choosing to invest in rice but build a refinery what stop our govt from building a big refinery?

One word, "interests."

That's why OBJ and GEJ tried to sell the refineries. There are certain things that'd be difficult if not impossible to do within the current political structure.

The problem is that politicians who know of these constraints quite well will come on election year to promise the exact opposite just to get elected, and start making people feel like a magic wand would set things straight. The government has been talking about concessions since I can remember, why do you think it is being blocked?

-Lord

ideology:
hehehe, when I remember how you used to campaign for buhari
Hahhahahha

Don't mind him and others.

The way they campaigned for him like he was the savior and Nigeria will become el Dorado within 2 years. Grown men believing in fairy tales. I'm glad they've all had a reality check.

Or not?

Make we wait until 2019 sha. Never underestimate the extensiveness of human stupidity.

-Lord

LordAdam16:


Don't mind him and others.

The way they campaigned for him like he was the savior and Nigeria will become el Dorado within 2 years. Grown men believing in fairy tales. I'm glad they've all had a reality check.

Or not?

Make we wait until 2019 sha. Never underestimate the extensiveness of human stupidity.

-Lord

lol, he once compared China constructing a bridge within. Months, to Nigeria.

This is 3 years, Lagos /Ibadan expressway is still now near 50% completion neither is 2 Niger Bridge is.

Me no get strength to argue anything this time, na just to observe them.

But I have noticed that, some of them have gone underground

Including those that were paid are tired.

CodeTemplar:
We speak so much grammar because we don't produce what we consume. if we produce what we consume and produce enough of it to increase supply, then demand for foreign currency to buy our needs (tomatoes and groundnut oil) elsewhere will reduce and that will naturally strengthen the Naira.
The advanced nations know this and don't play with industries that handle basic needs.

In the Bible when famine cut the supplies of Egyptians down, demand soared and it was recorded that money failed in Egypt.

Even if reserve hits 100 Billion USD, we still need to reduce our loses or leakages in Naira strength coming through funny imports of things like hair, toothpick, substandard gadgets.

It takes money to make money.

We are 145 on the ease of doing business index out of 190 countries. Interest rate is 14+%. We only produce roughly 4,000 MW of electricity on average for the entire country when the current demand of manufacturers alone is 100,000 MW. Only about 11% of our population is in the middle class. And manufacturing already contributes roughly 10% to the GDP.

We aren't going to produce all that we consume very soon. It'd take time. A long time. And for every successful plastic or toiletries manufacturing company, there's a failed tinned tomato processing company. These loses and leakages you refer to would plug themselves as more people brave the tough terrain to set up plants. But that's only going to happen when all the indices point upwards. And I don't see how having $100b in reserves will stop these indices from pointing upwards.

As I've said Nigerians don't know what they want and are pathologically impatient; thanks in part to a chronic lack of understanding of how macroeconomics work. And then all that happens in social discussion is unintelligible noise.

That's how everyone was forming expert in 2008-2014 when GDP growth was in high single digits, inflation was in single digits, the economy was opening up net 1.2m jobs annually; people were claiming they are paper achievements and were not affecting the "common man." Today, when the chicken has come hope to roost and GDP growth is negative or less than 2%, inflation is in double digits, and the economy is losing net 1.5m jobs annually; and people can clearly see how that things are worse now than before, people are now saying let's do all we can to get those same paper achievements they lambasted just 2-3 years ago. Talk about epic ignorance.

Who is fooling who then?

We've just wasted 4 years and over N30t in FG budget alone because ppl couldn't see past their nose, and we're likely to waste another 4 years and tens of trillions if this inept government continues. Yet the one thing that should be excused from all the brouhaha, is the one thing everyone is fixated on with their pseudo- and quasi-analysis.

-Lord

ideology:
lol, he once compared China constructing a bridge within. Months, to Nigeria.

This is 3 years, Lagos /Ibadan expressway is still now near 50% completion neither is 2 Niger Bridge is.

Me no get strength to argue anything this time, na just to observe them.

But I have noticed that, some of them have gone underground

Including those that were paid are tired.

It's all make believe.

They know they were communicating with ignorant people who would believe anything and not do critical thinking.

China's Agricultural Bank has a market cap of $1 trillion. Meaning even if someone mortgaged the entire Nigeria, it still wouldn't pay up to half the amount to buy the bank. China can plan and start a major project in days/weeks; in Nigeria it has to go through FEC, budget has to be ratified by Senate, then open bidding process must take at least 6 months for transparency reasons.

The recent spectacle where a road was destroyed by over 30 excavators in China overnight to make way for a new road network can be constructed was a project approved and funded by a local authority, not even a provincial authority. In Nigeria, that same project would take 2 years to plan, approve, and fund because of bureaucracy.

Even at that, with the enormous financial resources at China's disposal, roads are three times cheaper to construct in China than in Nigeria.

Why would they not go into hiding after deceiving themselves and creating impossible milestones. Let them come and create 3m jobs a year with 14% interest rate let's see. Or pay all unemployed graduates N5k a month with a N2t budget deficit. Or make fuel price N45/liter, when it is N250+/liter in Cameroon.

Just watch, they'd re-strategize and come up with new far-flung promises in 2019. And unsurprisingly, millions of Nigerians, including several of the pseudo-intellectuals on this forum would gobble it up.

-Lord

seunmsg:
I have been advocating for a stronger Naira for quite some time now on Nairaland. The current N365/$1 is no longer tenable. We need a stronger Naira so that Nigerians can start benefitting from the improving economy. Prices of basic commodities that went up in 2016 when the recession was biting very hard won't come down until the Naira that got weakened is strengthened back. I completely agree with the submission of prof. Uche Uwaleke.

U cannot be advocating for a stronger naira if u are pro- export and pro-economic growth.

LordAdam16:


It's all make believe.

They know they were communicating with ignorant people who would believe anything and not do critical thinking.

China's Agricultural Bank has a market cap of $1 trillion. Meaning even if someone mortgaged the entire Nigeria, it still wouldn't pay up to half the amount to buy the bank. China can plan and start a major project in days/weeks; in Nigeria it has to go through FEC, budget has to be ratified by Senate, then open bidding process must take at least 6 months for transparency reasons.

The recent spectacle where a road was destroyed by over 30 excavators in China overnight to make way for a new road network can be constructed was a project approved and funded by a local authority, not even a provincial authority. In Nigeria, that same project would take 2 years to plan, approve, and fund because of bureaucracy.

Even at that, with the enormous financial resources at China's disposal, roads are three times cheaper to construct in China than in Nigeria.

Why would they not go into hiding after deceiving themselves and creating impossible milestones. Let them come and create 3m jobs a year with 14% interest rate let's see. Or pay all unemployed graduates N5k a month with a N2t budget deficit. Or make fuel price N45/liter, when it is N250+/liter in Cameroon.

Just watch, they'd re-strategize and come up with new far-flung promises in 2019. And unsurprisingly, millions of Nigerians, including several of the pseudo-intellectuals on this forum would gobble it up.

-Lord

Bros I wish I can dig up the thread.

I explained all these.

Including the project itself start from survey, consulting the land owners and reaching a deal to get ROW can take months before the community will approve.

The youths of the community is another wahala.

Before 2015 , dredging and construction of piles had gone to advanced stage. I showed him pictures too and videos from YouTube.

These guys just live all their lives in south west and assume nonsense and spread it on their TV stations without even travelling to see things for themselves

I even asked him, if he knows the total length of the bridge?
Guess what the bridge has 8 lanes
6 for cars and 2 for railway

This projects can't be completed in less than 5 years esp with funding issues or level of water rises.

Even the monorail project Fashola started is not even up to 50% near completion.

Its well sha

ideology:


Bros I wish I can dig up the thread.

I explained all these.

Including the project itself start from survey, consulting the land owners and reaching a deal to get ROW can take months before the community will approve.

The youths of the community is another wahala.

Before 2015 , dredging and construction of piles had gone to advanced stage. I showed him pictures too and videos from YouTube.

These guys just live all their lives in south west and assume nonsense and spread it on their TV stations without even travelling to see things for themselves

I even asked him, if he knows the total length of the bridge?
Guess what the bridge has 8 lanes
6 for cars and 2 for railway

This projects can't be completed in less than 5 years esp with funding issues or level of water rises.

Even the monorail project Fashola started is not even up to 50% near completion.

Its well sha

Yes ooo.

One way or another we'd progress even if it is at a snail pace.

The problem is all this lost time and wasted resources we'd never get back because of the silly brand of politics we play over here.

-Lord

Your biggest imports are refined petroleum products. This should not even be the case in a sane country exporting crude. When you fix your refineries or allow investors to build refineries, the demand for dollars will drop and naira will do down relative to the dollar.

Just shows how moronic the country really is and this has been going on for years.

What is the point of saving those huge sums in your foreign reserves when in actual fact you are still a consuming economy, what is the point of saving those huge sums when in all ramifications you are still going to dip your hands in there to offset some domestic challenges in the future because you refused to upgrade on your exports potentials over your import deficiencies. Get your PVC, Buhari must be kicked back to Daura.

7lives:


Nigerians loves to spend money, if the Norwaygians are like Nigerians, that country will be in a big mess today.
Nothing is wrong with NIGERIA having a $200 billion dollars reserve.
Other countries that were smiling even with low oil price are not magicians, they only saved for the rainy day.

Something is wrong with having $200bil reserve when there is hardly any infrastructural growth in the country. The reserves is to serve as a buffer when things go south (like in the case of crash in oil prices we witnessed last year). Reserves is not a plaque of honor to be hanged on the walls and appreciated.

You store up reserves to an extent but you must use your cash inflow to build and improve both human and infrastructures capacity else you will just be a 'buffoon' with plenty cash.

Those countries with plenty reserves started shoring up over time, and also ensured their human and infrastructural development was in sync with the growing reserves.

LordAdam16:


Yes ooo.

One way or another we'd progress even if it is at a snail pace.

The problem is all this lost time and wasted resources we'd never get back because of the silly brand of politics we play over here.

-Lord

One man was abusing GEJ when dollar rose from $145 - $185

Am wondering what that man will say now that dollar is $360

Hahahhahahhaha

MaziOmenuko:


Something is wrong with having $200bil reserve when there is hardly any infrastructural growth in the country. The reserves is to serve as a buffer when things go south (like in the case of crash in oil prices we witnessed last year). Reserves is not a plaque of honor to be hanged on the walls and appreciated.

You store up reserves to an extent but you must use your cash inflow to build and improve both human and infrastructures capacity else you will just be a 'buffoon' with plenty cash.

Those countries with plenty reserves started shoring up over time, and also ensured their human and infrastructural development was in sync with the growing reserves.

It is like a man with 6 figures in account but sleeping under the bridge and eating food without meat.

Hahhahaha

Is that no madness?

uzomagic:
The OP has resided some salient points about the reserves being built at a time when the exchange rate could be better. But by suggesting that the CBN should instead focus on improving the exchange rate, the OP makes the terrible error of putting the chart before the horse. In fact building the forex reserves is helping to restore market and investor confidence which will eventually improve the exchange rate situation.

I disagree. Improving exchange rate boosts investor confidence better. No one likes to do business where the exchanges rates of the country are unstable.