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Nairaland Forum / Nairaland / General / Politics / Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation (875 Views)
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Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by jumper524(m): 11:00pm On Nov 15, 2018 |
After remarks from former vice president Atiku on his plan to risk inflation to win huge foreign investment, financial gurus across the nation has taken up their analysis. Here's the analysis from financial experts of the university of Abuja.(Banking/finance) From umar musa: In my own opinion, the removal of regulations and conditionalities is a welcome idea, however the introduction and presence of inflation in an underdeveloped economy like Nigeria, could have devastating effects. Although you could say that a country such as USA which is a free market economy (an economy where the forces of demand and supply determine the prices of goods and services) is doing well, it is already a developed nation which cannot be compared to Nigeria. Let us also not forget the fact that no nation in its entirety operates a pure economic system of one form or the other, it just varies as to the degree of which they practice each type of socialism or capitalism. To address the issue relating to Nigeria, first, we have a two-case scenario, what happens to the *already existing investors* and the *new investors* that the economy wants to attract by risking inflation. Remember that inflation can be said to be a consistent increase in the price of goods and services, this would make companies flourish, manufacturers and suppliers joyful as well due to the fact that there seems to be more money in circulation from excessive demand, in time supply must meet this demand and when it can't, inflation sets in. 1. Companies profitability is affected in the sense that there will be increased cost of production which may or may not lead to lower profits. 2. Borrowers tend to enjoy more, and lenders which are existing investors tend to suffer more due to the relationship between the nominal interest rate and the real interest rate. Quite alright, you may be able to attract foreign investors in the short run by huge foreign reserves due to an increase in exchange rate caused by inflation but also have it in mind that when the investors start getting their returns on investment, this is what happens: Let's say for example an investors invests #1,000,000 in the country and has a rate of return 10% as at 2018, the nominal interest rate as at this time is the same with the real interest rate, but what happens when he receives the returns on investment in 2019, he makes #1,100,000 but the real interest rate must have surely dropped to about 6% meaning that the value of that investment no longer worth the same as of 2018 now in 2019. The investor will realize this in the long run because the face (nominal) value of his investment is far greater than the intrinsic (real) value of his investment. This could drive away investors and could plunge the economy into deeper crisis and trust me it would get worst as the years rolls by. cc: lalsticlala mynd44 pls come show the world just how financially and economically useful my department is. Banking and finance(Unibuja chapter) 1 Like 1 Share
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Re: Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by Nobody: 11:05pm On Nov 15, 2018 |
9ja |
Re: Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by MXrep: 11:55pm On Nov 15, 2018 |
Adventurous people take risks |
Re: Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by jumper524(m): 12:16am On Nov 16, 2018 |
MXrep:successful business men take calculated risk. atiku taking a risk as big as this with the entire nation at stake is a wrong one. especially when the chances of winning is low.. 1 Like 1 Share |
Re: Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by MXrep: 12:32am On Nov 16, 2018 |
jumper524:Atiku is a successful business man so you can be sure he already calculated well. |
Re: Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by jumper524(m): 12:48am On Nov 16, 2018 |
MXrep:Personal business differs from national issues. 1 Like 1 Share |
Re: Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by greatdreamer(m): 2:07am On Nov 16, 2018 |
jumper524:every investment opportunity comes with a risk. In every investment it is ether you gain or you lose. |
Re: Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by NigerDeltan(m): 4:26am On Nov 16, 2018 |
The day i saw Chief Tom Ikimi in his economic team, that was the day i realize how serious Atiku is in revamping the economic fortune of Nigeria Truely, Nigeria will be great again! 1 Like 1 Share |
Re: Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by jumper524(m): 4:34am On Nov 16, 2018 |
greatdreamer:what Atiku is planning on doing is pure gambling.. the end result is highly forecast able to be doom.. read this. [b]Quite alright, you may be able to attract foreign investors in the short run by huge foreign reserves due to an increase in exchange rate caused by inflation but also have it in mind that when the investors start getting their returns on investment, this is what happens: Let's say for example an investors invests #1,000,000 in the country and has a rate of return 10% as at 2018, the nominal interest rate as at this time is the same with the real interest rate, but what happens when he receives the returns on investment in 2019, he makes #1,100,000 but the real interest rate must have surely dropped to about 6% meaning that the value of that investment no longer worth the same as of 2018 now in 2019. The investor will realize this in the long run because the face (nominal) value of his investment is far greater than the intrinsic (real) value of his investment. This could drive away investors and could plunge the economy into deeper crisis and trust me it would get worst as the years rolls by.[/b] 1 Like 1 Share |
Re: Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by amaechi1: 4:57am On Nov 16, 2018 |
Most people commending what Atiku said, would not even dare doing so in their personal life, talk more of taken such suicidal adventure with the destiny of a nation. We may not live to witness the worst economic crisis. Even with 50k as minimum, workers will not only suffer but miserable. Talking is cheap with a man that is desperate! 1 Like 1 Share |
Re: Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by Nemesis001: 5:06am On Nov 16, 2018 |
amaechi1: We want to see that cheap talk in action. ![]() Atiku/Obi 2019 issa goal 1 Like 1 Share |
Re: Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by ivandragon: 6:06am On Nov 16, 2018 |
Atiku's plan is much better than we presently have. the present administration supposedly spent money to get out of recession which means money was pumped into the economy to kick start it... atiku's plan is to simply ensure that it is private businesses that would be at the forefront of making the economy run & while regulations would be relaxed, it would not be relaxed at the detriment of creating chaos in the 'market'. to fully mitigate the repercussions of floating the naira, atiku should make sure that not only is FDI coming in, there should be a commensurate transfer of technology which would provide more sustainability in the long run. |
Re: Unibuja Banking Students Fires Warning To Atiku On His Plan To Risk Inflation by bantudra: 6:34am On Nov 16, 2018 |
atiku is a moroon....he is old school....atleast buhari is a warrior to combat boko haram....maybe he is not good in economic stuff but he is a fighter.....the only thing he understands he does it well...... we should be thinkin after buhari is gone like people like sowore,okorocha or osibanjo....atiku is old school that will introduce back stomach infrastructure......... dont make that mistake voting people like atiku,jonathan or fayose......... 2 Likes 1 Share |
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