1. Last administration of Goodluck Ebele Jonathan handed over the largest economy in Africa.
2. Last administration also handed over an economy that was listed by CNN Money as the third fastest growing economy in the world
3. So what happened? Oil prices crashed and this administration refused to respond in a timely manner.
4. Naira is technically tied to crude oil price, when oil crashed we should have immediately devalued the Naira, like we did in 2007, this administration said NO.
5. By not devaluing, the Naira was made artificially “strong”.
6. A “strong” Naira DOES NOT encourage capital importation. its simple, if I have $100 and Naira is N1 to $1. what i can get is only N1 if I invest in Nigeria as a foreign investor, but if its N10 to $1, I get N1,000 for every $1 invested. simple
7. Everyone warned this administration to devalue or respond, the IMF Largard came here, JP Morgan cautioned, they refused
8. JP Morgan took Nigeria off the Government Bond Index, this resulted in a loss of confidence in Nigeria bonds, we could no longer attract portfolio investment, in Quarter one 2016, Nigeria got less than $300m in Foreign Portfolio Investment, the lowest level since records were kept.
9. Our response? we started a silly policy of capital controls, we started to cut trees in Abuja to “defend the naira”, again the Business community warned, Lagos Chamber of Commerce warned, Unilever warned, Charles Soludo warned, this administration did not listen.
10. Capital control and refusal to devalue is what has made foreign exchange cash not to enter Nigeria through the Central Bank of Nigeria official channels.
11. There is NO scarcity of dollars, there is a scarcity of Dollars in CBN, remember CBN said there was $20b lying “idle” in bank domiciliary vaults, that dollar cash is in Nigeria. To give you a perspective, that 40 months of current forex earnings…
12. No one will give CBN dollars at N199, no one, when black market rate is N350, there why CBN has NO dollars
13. Sell $1 trillion oil a day, as long as you insist on remittance at official N199 exchange rate, we will struggle.
2. Last administration also handed over an economy that was listed by CNN Money as the third fastest growing economy in the world
3. So what happened? Oil prices crashed and this administration refused to respond in a timely manner.
4. Naira is technically tied to crude oil price, when oil crashed we should have immediately devalued the Naira, like we did in 2007, this administration said NO.
5. By not devaluing, the Naira was made artificially “strong”.
6. A “strong” Naira DOES NOT encourage capital importation. its simple, if I have $100 and Naira is N1 to $1. what i can get is only N1 if I invest in Nigeria as a foreign investor, but if its N10 to $1, I get N1,000 for every $1 invested. simple
7. Everyone warned this administration to devalue or respond, the IMF Largard came here, JP Morgan cautioned, they refused
8. JP Morgan took Nigeria off the Government Bond Index, this resulted in a loss of confidence in Nigeria bonds, we could no longer attract portfolio investment, in Quarter one 2016, Nigeria got less than $300m in Foreign Portfolio Investment, the lowest level since records were kept.
9. Our response? we started a silly policy of capital controls, we started to cut trees in Abuja to “defend the naira”, again the Business community warned, Lagos Chamber of Commerce warned, Unilever warned, Charles Soludo warned, this administration did not listen.
10. Capital control and refusal to devalue is what has made foreign exchange cash not to enter Nigeria through the Central Bank of Nigeria official channels.
11. There is NO scarcity of dollars, there is a scarcity of Dollars in CBN, remember CBN said there was $20b lying “idle” in bank domiciliary vaults, that dollar cash is in Nigeria. To give you a perspective, that 40 months of current forex earnings…
12. No one will give CBN dollars at N199, no one, when black market rate is N350, there why CBN has NO dollars
13. Sell $1 trillion oil a day, as long as you insist on remittance at official N199 exchange rate, we will struggle.
Its about a macroeconomic response, not dollar earned via oil sales. The past administration had an economic team that was listened to, I fear the present team does not team play.
I have taken time to explain this, not because I really want to join issues, but because its important we understand the issues.
Devaluation is not a magic wand, we CANT devalue our way to economic prosperity, but we cant ignore reality, we cant say NO to devaluation as oil prices have fallen simply because we made a campaign promise to have a strong naira.
