Every other day, we come to this space to talk about the current state of Nigeria’s economy and honestly, it’s become a tad… well, not tiring. We won’t stop until we get it right as a nation so here’s yet another solution thread provided by this oh so benevolent social columnist @sleezebreeze88.
The message he’s shared is way more convincing than his Twitter handle, so please learn from this thread and share accordingly:
Before I start, I would like to state that it would literally be impossible to talk about Nigeria's Economy while isolating her Politics.
— Fölarin (@sleezebreeze88) September 21, 2016
But I promise to do my best to make this talk as apolitical as possible.
The reason is not farfetched, so let's move on then.— Fölarin (@sleezebreeze88) September 21, 2016
Another asked me what could be done to get the nation out of recession.
Before I answer these questions, I feel I would be justified…— Fölarin (@sleezebreeze88) September 21, 2016
By stating a few of the reasons why the Nation is in an economic recession in the first place.
— Fölarin (@sleezebreeze88) September 21, 2016
Contrary to Twitter beliefs, Recession isn't just a word. Its an actual thing that happens to economically mismanaged states.
— Fölarin (@sleezebreeze88) September 21, 2016
And as far as economical mismanagement goes, Nigeria is right there at the very top of the list of these type of states.
— Fölarin (@sleezebreeze88) September 21, 2016
Lease let me quickly point out that this mismanagement didn't start 1year ago.
It is financially impossible to hit recession in 24months
— Fölarin (@sleezebreeze88) September 21, 2016
It's a gradual process of social, infrastructural & financial decay.
Where that cue takes us, I'll leave for now.
Because this is politics.— Fölarin (@sleezebreeze88) September 21, 2016
Let's take Subsidies for example.
Nigeria subsidies foreign consumables to the detriment of domestic producers.How, you ask?
— Fölarin (@sleezebreeze88) September 21, 2016
Petroleum Products, Rice, Wheat, Fertilizer, Cassava.
These are all products produced here, in Nigeria, but we still import the end produce
— Fölarin (@sleezebreeze88) September 21, 2016
Take Cassava for instance.
Nigeria is the leading producer of Cassava but we import Ethanol.
— Fölarin (@sleezebreeze88) September 21, 2016
How about Rice?
We have Abakaliki, Epe & the likes & yet in 2014, spent $2billion on rice importation alone.
— Fölarin (@sleezebreeze88) September 21, 2016
How about Tomatoes?
We have a vast Tomato belt in the North but we're the highest imported of Tomato Paste the world over!
— Fölarin (@sleezebreeze88) September 21, 2016
And then there's Petroleum!
The 6th highest oil producing nation in the world with d highest import of Petroleum Products!
Need I say more?— Fölarin (@sleezebreeze88) September 21, 2016
Subsidies in Nigeria come in the form of a guaranteed fixed price on an internationally valued commodity
Regardless of the price difference
— Fölarin (@sleezebreeze88) September 21, 2016
What this simply means is, we are providing middle to high income earners extra jobs & financial security in foreign countries
— Fölarin (@sleezebreeze88) September 21, 2016
When you subsidize a consumable, you're saying “bring it & sell it for 30kobo, even if they're selling it for 90kobo"
— Fölarin (@sleezebreeze88) September 21, 2016
Anything your marketer makes on this margin is free money.
I could go on a detailed analysis of this, possibly later on as we proceed
— Fölarin (@sleezebreeze88) September 21, 2016
Anything your marketer makes on this margin is free money.
I could go on a detailed analysis of this, possibly later on as we proceed
— Fölarin (@sleezebreeze88) September 21, 2016
What I'm saying however in essence is simple.
Don't subsidize the consumable.
Subsidize the potential domestic producer of such a product!!— Fölarin (@sleezebreeze88) September 21, 2016
Translation: DO NOT SUBSIDIZE RICE IMPORTATION!
SUBSIDIZE LOCAL RICE FARMERS WITH LOANS & FERTILIZER!!!!!!!!!
— Fölarin (@sleezebreeze88) September 21, 2016
DO NOT SUBSIDIZE OIL MARKETERS UPON IMPORTATION!
SUBSIDIZE THE BUILDING OF AN INDIGENOUS REFINERY!!!!
— Fölarin (@sleezebreeze88) September 21, 2016
Nigeria's present financial recession was caused by two simple things.
Just two.
Its Banking Sector (Capital Market) & Oil & Gas Market!
— Fölarin (@sleezebreeze88) September 21, 2016
Any Twitter handle who says its Buhari's is deliberately unintelligent.
Or a tool in the PDP led propaganda system
Both are bad either way
— Fölarin (@sleezebreeze88) September 21, 2016
This last point again, I would deliberately avoid expanding on.
But focus on the points I've chosen to speak on
— Fölarin (@sleezebreeze88) September 21, 2016
Banks failed simply because they were not being monitored.
Most were found to be in the practice of stock speculation.
— Fölarin (@sleezebreeze88) September 21, 2016
Anyone who knows his onions in the Banking industry knows this is highly unethical.
Most went as far as using depositors' money to do this
— Fölarin (@sleezebreeze88) September 21, 2016
It was literally Zero Risk investment.
If the stocks rose, they made a killing. If it crashed, they were safe, because depositor's funds.
— Fölarin (@sleezebreeze88) September 21, 2016
Most would have forgotten now, but this particular trend led to the jailing of a certain Bank CEO & the sack of many others.
— Fölarin (@sleezebreeze88) September 21, 2016
So just in case you're tempted to yell “Na Buhari cause am" just remember that Okonjo Iweala was the finace minister at the time.
— Fölarin (@sleezebreeze88) September 21, 2016
For the sake of just being petty, I remember someone referring to her as the Financial Sir Alex Ferguson.
What trite bullshit!
— Fölarin (@sleezebreeze88) September 21, 2016
That aside.
The second main reason behind the recession was our Petroleum market, which I have given a brief intro on.
— Fölarin (@sleezebreeze88) September 21, 2016
How, you ask?
Let's use Aunty Ngozi's faulty figures for a second as an illustration.
— Fölarin (@sleezebreeze88) September 21, 2016
They at the time claimed Nigeria was consuming anywhere between 35 to 36 million litres of petrol daily.
Assuming this is correct.
— Fölarin (@sleezebreeze88) September 21, 2016
and you do the numbers, Nigeria would be consuming 13.14Billion Litres of petrol a day!
I won't argue with this logic. Let's stick with it
— Fölarin (@sleezebreeze88) September 21, 2016
Pre-subsidy removal, this would have amounted to a daily subsidy fee in the excess of #392.4Million Naira!
Yes. 392Million Naira Daily
— Fölarin (@sleezebreeze88) September 21, 2016
With a yearly figure of about 143.23Billion Naira!
Just for subsidy to some few already ridiculously rich Billionaires!
— Fölarin (@sleezebreeze88) September 21, 2016
And this went on for 16years!
Need I remind you that the one person who advocated for its removal was sacked by GEJ before election?
— Fölarin (@sleezebreeze88) September 21, 2016
My apologies. I'm going political.
Its hard work not to mix the two, because the policy makers are all politicians.
So cause & effect.
— Fölarin (@sleezebreeze88) September 21, 2016
In a but shell, Nigeria pays a ridiculous amount of money on subsidizing fuel products to marketers who then resell these same products…
— Fölarin (@sleezebreeze88) September 21, 2016
.. To neighbouring nations like Cameroon & Chad at the standard market value of a 140naira on the litre.
Talk about classic Arbitrage!
— Fölarin (@sleezebreeze88) September 21, 2016
This steady fund deprivation within the economy led to the steady collapse of the nation's capital market.
— Fölarin (@sleezebreeze88) September 21, 2016
Which was made worse by the fact that the country doesn't have a say in determine the market value of Crude Oil.
— Fölarin (@sleezebreeze88) September 21, 2016
Neither do we have any substantial foreign commodity to help balance the books in terms of sales in the event of an Oil price collapse.
— Fölarin (@sleezebreeze88) September 21, 2016
This is still the case as we speak.
Hence my reason for starting this discussion by defining subsidization & where it should be applied.
— Fölarin (@sleezebreeze88) September 21, 2016
Now we're in a recession, how can the money market recover?
This is no easy feat to explain, but once again I would do my best to explain
— Fölarin (@sleezebreeze88) September 21, 2016
Nigeria's economy is not self sufficient.
Understand this in all totality. Our main means of value is determined by people we never see.
— Fölarin (@sleezebreeze88) September 21, 2016
Our GDP is predominantly determined by Crude Oil & we do not determine its pricing.
So if there's a price dip, we're in trouble.
— Fölarin (@sleezebreeze88) September 21, 2016
This is also the same for our Forex.
External forces determine the value of the Naira. So when the CBN set an exchange rate of 199…
— Fölarin (@sleezebreeze88) September 21, 2016
…it doesn't mean its the actual value of the naira to the dollar.
It means its the benchmark they can set to absorb the price difference
— Fölarin (@sleezebreeze88) September 21, 2016
A proof of this is the prevalence of a fully functional Parallel Market.
The naira is not as strong as its made to seem.
— Fölarin (@sleezebreeze88) September 21, 2016
Because the economy is not autonomous.
But we live in a country where Naira valuation to the dollar is used as a campaign slogan.
— Fölarin (@sleezebreeze88) September 21, 2016
“We left the economy at 180 to the dollar"
Yen yen yen!
Sit down & learn!— Fölarin (@sleezebreeze88) September 21, 2016
The CBN is an autonomous regulatory body responsible for Nigeria's fiscal policies & reforms.
So when the set a value, its based on the…
— Fölarin (@sleezebreeze88) September 21, 2016
…market indications.
Take the subsidy reforms for example, the CBN provides the Forex to these marketers to buy Petroleum products…
— Fölarin (@sleezebreeze88) September 21, 2016
But all of this is a discussion for another day.
The ficus here is recession & its possible solutions.
— Fölarin (@sleezebreeze88) September 21, 2016
With an Inflation rate of 18% & an Interest rate of 14%, the economy is at an all time low
Once, it used to be a case of low risk high yield— Fölarin (@sleezebreeze88) September 21, 2016
But the exchange rate and unstable oil prices is causing a bigger problem than we know.
We need to take the safer route of self production
— Fölarin (@sleezebreeze88) September 21, 2016
Nigeria wants to sell more oil to drive up revenue.
This is unwise considering the current market trend.
— Fölarin (@sleezebreeze88) September 21, 2016
The safer bet would be to source alternative income lines while they restructure the Oil & Gas sector.
— Fölarin (@sleezebreeze88) September 21, 2016
Anything beyond this is simply a case of “Quicker rewards, higher risk for the foreseeable future", and there are limitless proofs for this
— Fölarin (@sleezebreeze88) September 21, 2016
Another thing I would like to touch on briefly behind our many problems is the power players in the elite section who profit from the chaos
— Fölarin (@sleezebreeze88) September 21, 2016
Solution?
This is simpler than we've been led to believe in truth. And I'll never understand for the life of me why we ignore it.
— Fölarin (@sleezebreeze88) September 21, 2016
DIVERSIFICATION!!! DIVERSIFICATION!!! DIVERSIFICATION!!!
Diversify the Economy!
Its so Obvious!— Fölarin (@sleezebreeze88) September 21, 2016
And also drive the GDP up.
Not to mention job creation, product availability & price reductions because of competition.
— Fölarin (@sleezebreeze88) September 21, 2016
A capital project must be set up for a major EPC company for the building & maintenance of local refineries.
— Fölarin (@sleezebreeze88) September 21, 2016
Lord knows we have more than enough Chemical Engineering & Petroleum & Gas Engineering graduates in the country.
— Fölarin (@sleezebreeze88) September 21, 2016
So in case you have 300 Billion Dollars you're not using, set up a Refinery here in Nigeria.
The economy would thank you for it.
— Fölarin (@sleezebreeze88) September 21, 2016
While the BoI & BoA can intensify their efforts to support small, medium & large scale industries & agricultural setups!
— Fölarin (@sleezebreeze88) September 21, 2016
The main reason why people are discouraged is because for farmers, there are poor storage facilities & manufacturers, foreign competition!
— Fölarin (@sleezebreeze88) September 21, 2016
Please note that my subtle hints at the failures of the last dispensation were not for the sake of partisan politics.
— Fölarin (@sleezebreeze88) September 21, 2016
…but rather to dispel the baseless & uninformed propaganda making the rounds about the present dispensation.
— Fölarin (@sleezebreeze88) September 21, 2016
Nigeria's economy didn't fail 15months ago.
That seed was planted long into the military regime.
— Fölarin (@sleezebreeze88) September 21, 2016
But make no mistake about it, that seed was well watered by every single PDP dispensation that ever ruled this nation in the last 16years.
— Fölarin (@sleezebreeze88) September 21, 2016
Cheers everyone…
— Fölarin (@sleezebreeze88) September 21, 2016
This was quite a lengthy yet well-articulated read and no details were missed. Now, we need someone who can submit it to the Finance minister…
Your pop culture/entertainment go-to. Music head. Wallflower. I do not like to write. On a mission to decipher covfefe.
Leave a reply