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Should interest rates be legislated?

The promise to diversify Nigeria’s revenue source and reduce the nation’s dependence on dollar income from oil exports was sustained by earlier administrations. Curiously, however, as with previous administrations, there seems to be a convenient denial of the reality that, competitive production output, cannot be sustained in any sector, if critical monetary indices challenge the creation of vibrant economic activities and job creation opportunities.

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Indeed, Naira devaluation is probably the most potent weapon against the prosperity of Nigerians. Nigeria’s migration from a potential industrial power house with bustling social affluence, to a subdued and stumbling economy clearly began with the adoption of IMF’s Structural Adjustment Programme during Babangida’s regime: the chorus from International Agencies, at that time, was also that falling oil prices with an unserviced debt burden and the consequent restriction of trade credit to Nigeria, were the products of an allegedly overvalued Naira exchange rate.

The inevitable choice between N10,000 note and redenomination

Households across the Nation have become severely traumatized by the escalating prices of goods and services, particularly in the last six months or so. The uneasy feeling that one’s pocket has been picked has probably become common after every visit to the market, while the smallest available plastic sachet may be all that is needed to pack your N10,000 purchase(s) from the ubiquitous corner street medicine stores in our cities.

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NNPC

Fuel Price: The bone in NNPC’s Throat

The nagging question for any close observer of the market is whether or not diesel can sell above petrol and kerosene prices in a deregulated market space? If it cannot be so, how then does NNPC account for the present huge price differentials for both products, when diesel sells for over N200/litre? The following is a summary of an article published in May 2016, titled “Why Petrol will exceed N200/litre this year…unless”; nevertheless, with NNPC’s seeming helplessness and confusion with petrol and kerosene prices, “Fuel price: the bone in NNPC’s throat” seems a more appropriate title. Please read on:

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buhari-Naira

An economy on the brink

A close study of our recent economic history would suggest that the present policies adopted by government, particularly with regard to Naira devaluation, and fuel price increase, are not different from the same strategies that triggered the oppressive serial abuse of the Naira exchange rate in the era of former President Babangida and sustained Nigeria’s steady slide in the rankings of the World’s poorest nations. Invariably, therefore, the ill advised rehash of those same options to resolve our present economic logjam will unwittingly deepen our poverty.

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Emefiele CBN Governor

Economy: Kaleidoscope of recent media reports

“I was reading a story recently that there was SME intervention fund in CBN that was grossly underutilized. Why should that be when we have a lot of SMEs looking for funds to develop products? If we want to assist the SME, we must make sure that interest rate on their loans is not more than 5%. That is why Lagos State has used the benchmark of 3% interest rate for the SMEs …”

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naira money

Nigeria’s debt creation office

In a recent document titled “Nigeria’s Debt Management Strategy 2016-19″, the Debt Management Office (DMO) expressed concern on the high risk collateral of servicing and refinancing the nation’s N8.54tn domestic debt which reportedly excludes over N2.4tn outstanding obligations on CBN’s sales of Treasury Bills. The DMO is clearly worried that refinancing of about 30% (N2.56tn) of the domestic debt, which will fall due, in the next 12 months, poses a threat to the economy because maturing debts will have to be refinanced at market rates which could be oppressively higher than the almost 11% average of existing debt.” Furthermore, the projected N984bn domestic loan in the 2016 budget, would raise this already disturbing domestic debt level by over 10% to propel debt service charges, dangerously beyond the current 35kobo from every one Naira of internally generated revenue by government.

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Indeed, Naira devaluation is probably the most potent weapon against the prosperity of Nigerians. Nigeria’s migration from a potential industrial power house with bustling social affluence, to a subdued and stumbling economy clearly began with the adoption of IMF’s Structural Adjustment Programme during Babangida’s regime: the chorus from International Agencies, at that time, was also that falling oil prices with an unserviced debt burden and the consequent restriction of trade credit to Nigeria, were the products of an allegedly overvalued Naira exchange rate.

This devaluation ‘be like’ 419

The ‘419’ scam is well known in Nigeria for boasting empty promises of stupendous returns which induce victims to willingly part with their valued possessions. The perpetrators of this fraud, ply their trade nationwide with targets which cut across the social spectrum and include otherwise, successful businessmen and highly educated professionals, who are usually gullible and driven by the unreasonable expectation of clearly unrealistic returns on their ‘investments’. Ultimately, the bubble would burst and much pain and sorrow would follow.

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The N10m exhibit displayed by the EFCC.

Economy: The floodgates have been breached

The CBN’s decision to float the Naira in response to dollar demand and supply, in such austere times, will probably be primarily remembered as another policy shift that breached the gates and unleashed devastating floods that swept away any flickering hope of economic diversification or credible inclusive growth. The serial devaluations dictated by the 1985 Structural Adjustment Programme (SAP) was another such event that disenabled our economy, traumatised our people and challenged our traditional value system in many ways.

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Buhari

Collegiate presidency and national harmony

There can be no end in the foreseeable future to a do-or-die fight to be President of our nation. The unbridled struggle for the position of top dog is seemingly motivated by the prospect of exercising almost absolute power over our lives and our nation’s resources, particularly the oil proceeds from the Niger Delta. Indeed, if income derived from oil is removed from the federal purse, the federation may have to survive on less than 30% of annual budgets. Furthermore, the underbelly of the arbitrarily created 36 states and 774 local governments would also be exposed, as most of them would literarily collapse without, what some people have described as ‘blood money’ from the Niger Delta.

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•Pandora’s Box

The economy and Pandora’s Box

“Poverty will clearly deepen nationwide and severe level of unemployment will persist with serious social consequences, if the preferred strategy for rescuing our economy implies further Naira devaluation and outright deregulation of fuel price, as recommended by the IMF and other likeminded experts. (see “Devalue Naira, Remove Subsidy and Kill Nigerians” Rational perspectives: 02/11/2015 www.lesleba.com).

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fuel-pump

Why petrol will exceed n200/litre this year, unless…

The Honorable Minister for Petroleum Resources, Mr Ibe Kachikwu, recently, announced a new petrol price of N145/litre; the NNPC GMD, was however, clearly cautious to avoid a definite declaration that the petroleum downstream sector has now become fully deregulated with the almost 60% increase in petrol price; nonetheless, this seeming dictatorship of a price cap, is clearly inconsistent with a deregulated market.

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Indeed, Naira devaluation is probably the most potent weapon against the prosperity of Nigerians. Nigeria’s migration from a potential industrial power house with bustling social affluence, to a subdued and stumbling economy clearly began with the adoption of IMF’s Structural Adjustment Programme during Babangida’s regime: the chorus from International Agencies, at that time, was also that falling oil prices with an unserviced debt burden and the consequent restriction of trade credit to Nigeria, were the products of an allegedly overvalued Naira exchange rate.

“Of exchange rate mechanism, exchange rate and devaluation”

Industry, Commerce, as well as employment opportunities, unexpectedly, flourished for the greater part of Abacha’s four year reign, despite Nigeria’s pariah status and the stupendous treasury rape by the dictator. The question, therefore, is how Abacha’s Economic team sustained the erstwhile elusive enabling environment, despite the dysfunctional economy that was inherited. Fortunately, Chief Anthony Ani, an insider in that team, answered this question, in his keynote address, at ICAN’s injuction ceremony on May, 112016.

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FUEL-Price-change

The mother and father of fuel prices

In the wake of deregulation of petrol prices under Obasanjo in 2004, and the unfolding anxiety of Labour and the Nigerian public on the adverse impact of rising fuel prices, this column published two articles titled “The Mother and Father of Fuel Prices”(22.11.2004) and “Only a Stronger Naira Will Stop Rising Fuel Prices”(22.08.2005) The solution proposed in both articles remain solidly valid today as it was over 12 years ago; for this reason, a summary of both articles is again presented in the hope that the authorities will one day heed our counsel and resolve our dilemma.

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