In the wake of this year, I described the things that we’ll find happening in the economic terrain in 2009. I described a story where the first sign in war led famine, was things becoming expensive. Well, we are not so far gone in the year and it’s happening already. I’m not merely writing a report of the state the nation, I’m writing to give you an idea of my analysis of what is happening, and to give you some guidance into what you can do to make the most of this time. I will offer guidance, no absolutes. Let’s say I’m learning not to put myself in the position where people hand me responsibility for their choices.
First, when you hear anything is happening, the first thing you ought to do is understand why. If it get’s resolved without your understanding why, if it happens again, you are in a fix. Let’s say for example you are trying to run a particular software, the software stops on a particular page and refuses to go forward. The average person begins to pound on different keys and “Wala!” the computer begins to work again. If it happens again, he’ll possibly waste a lot of time again, banging the keys without knowing which of the key combinations unlocked the page. He might even end up destroying the computer. We will never be able to accurately and efficiently solve our problems if we don’t take time to understand the root causes. So, why is the Naira sliding, where will the slide stop, how does it affect you and I? What can we do?
All we were hearing from the authoritative sources towards the close of last year, was first that there was nothing to fear that we will not be affected by the global economic meltdown, then after a while we heard that our currency will not be affected, then we finally heard, that it would be, and there were no clear solutions in sight. There have been many theories about why the Naira has suddenly moved from N117 to a $1 to N153 to $1 in less than 2 months. Those rates ate the decent ones that the bank uses, on the streets of Lagos, as at yesterday evening, $1 was being exchanged for N170. What’s all these about Naira and dollar, after all most of us don’t do any business that involves foreign currency, right? Well think again, the electronics shops have already started pricing up, manufactured products are following suit, our economy is mostly an import economy and that means the value of the Naira affects all of us. Think about it, look around you, how much of what surrounds you was made in Nigeria, with Nigeria made raw materials? Whatever it is that you saw around you, 80% of them was made outside our shores. Now imagine that their prices increased by 30%. That’s where we are now!
Why?
There are many reasons why the exchange rate of the Naira to the dollar is deteriorating so fast. Here are a few of them.
1. For the 9 years of Obasanjo’s administration, the country had been able to have good foreign reserves as a fall out of a booming oil market and very good prices for crude. The government had then ensured with the alignment of the CBN to ensure that the exchange rates were kept at a particular level by augmenting the supply of foreign exchange with our reserves. This worked well and served us in the past because we had good reserves. Today, our reserves are dwindling and are not being replenished because the price of oil is down, this limits the ability of the CBN to support supply. With supply down to what we can get, and demand as high as ever, the dollar as become a commodity and it’s price is being driven by the normal market forces of demand and supply.
2. There is a huge backlog of corporate demand with CBN for foreign currency. This is not being met due to short supply by the CBN.
3. A deliberate effort by the FG (Federal Government) to devalue the Naira. While I feel the argument is flawed, the argument for this outside of economic jargons is to devalue the Naira to a point where our cost price for our crude is small enough to make it competitive in dollars hence get us more demand and more sales, and more money for the government. Since exporting crude oil accounts for about 90% of our foreign earnings. In doing this however, the converse is that we are as individuals in this country import dependent, this means that we would be disadvantaged by the devaluation. Even something as common as exercise books and clothes are made outside Nigeria.
4. With the free fall of the stocks on the Nigerian Stock Exchange (NSE) and the collapse of oil prices that has led to many debtors and over N350 Billion exposure for the banking sector, Nigerian’s are looking for alternative investment vehicles. Today, many of our banks are no longer giving mortgages, the business dailies have started prophesying doom for the upper class property market. With so many of the conventional investment outlets closed, many of our top business people with ears closer to the ground have since December begun to buy currency as another source of investment, imagine, the dollar bought in December has appreciated by over 30% already now. People are also getting involved in a number of multi-level marketing programs that require dollars. I joined one international travel club for example at N30,000 and today because of the exchange rate it’s over N45,000. Because the word is out that the dollar and of course pounds prices are going up, and the CBN has not demonstrated their ability to apply any pegs, people are panic buying and investment buying it for the days it will go higher.
Where will the slide stop?
I’m hearing rumors that the CBN wants to peg it at N150. I also heard that we might witness a rise to N205 to $1 and then experience a quick down swing. The question I have however been turning around in my head is for how long can the $53Billion reserve last, and can the CBN actually peg it? If CBN Pegs it, will people panic sell? Does the country have enough to dictate the direction of the market. This is so exciting for me, because this is Forex Trading without a platform, and I only started doing it actively for myself late last year.
How does it affect you and I?
It affects us in a lot of ways. The prices of a lot of things will soon start reflecting it. The cost of replacement of goods bought will send some business men back to their villages, if they don’t adjust their prices immediately. As the value of the Naira needed to get a dollar rises, our buying power reduces, and the same salaries will not be able to get the same things anymore.
What can we do?
For many of us who dabbled into one investment or the other last year, particularly in the stock market, you have learnt one major thing, you have learnt to earn and also to lose. We have come to the point where though we are more careful not to put all our eggs in one basket, but we have also become stronger risk takers. I mean if you can watch millions disappear and not commit suicide what problems will a few hundred thousands pose?
For one, this is a good time to do work that gives you compensation in dollars. These opportunities are available and there are many people I know taking advantage of them. There are a number of freelance opportunities for writing, for web development e.t.c. This is an opportunity for you to no longer be local, but international – get a domain name and get a website. You can also participate in a credible international network marketing business – there are currently about 5 I’ve heard of recently, but I’m only marketing one product – Look well before you leap. You can also learn to trade Forex, I have learnt several times, interestingly late last year was the only time I actually got a strong sensing that the time had come, and it’s going so well. You can also get involved in export, and any business that gets you an opportunity to earn foreign currency directly and not be totally local. If you also work out of Nigeria and usually send money home, these are the times when your family will pray for you deeply…lol
In the event that you don’t understand anything in particular, my email is deolu@newnigeriaclub.net , feel free to give me a buzz so you can schedule a meeting. Or if you can gather yourselves in good numbers, you can book an event with me on the icon by the side bar – Deolu Speaks.
These periods of economic crisis is the best time to be a light and get a voice, I’ll be writing about strategies for being sought after in one of my next posts.
32 thoughts on “Naira Slide”
THe naira slide is sure affecting everyone. It is time for us to take action and leverage on it +vely instead of whining about it.
Concerning Freelancing…lol. Those with skills can get online and earn money in Dollars. This is a good time to do more research using http://www.Google.com
Bro Deolu, Nice piece again from you. Thanks for the exposition
Thanks Chairman for making things quite clearer. Some of us have mixed interests, both in naira and in foreign currency and are trying to balance things. This has been good education in the 30mins that I’ve spent to read and reread this. God bless you. We should have a chat very soon.
Thanks Deolu. You’ve done it again as always. I can never stop admiring you and your God endowed wisdom. May God continue to guide, protect and preserve you for our generation.
I also advise our people (Nigerians) to let us all wake up to our responsibilities of helping the Naira at this time. We can do this by structurally adjusting ourselves. What am I saying? I mean by simply trying to avoid imported materials, especially those ones we can get locally, at this time.
We should also pray for God’s divine intervention as a Nation. I’m sure we would come out of the present economic situation stronger and happier in Jesus name. AMEN.
Mr D, what can i say, you are a blessing and God will continue to bless you! Thanks so much for this.
Thanks so much Deolu for this educating and instructing piece. I have a request though but i will send you an email soonest, thanks for being who you are, Grace be multiplied unto you.
The econmic journey is full of ups and downs. Business cycles flunctuate from period to period. Understanding the times and deploying the right strategies is very essential to surviving and thriving. Thanks for sharing with us for free insights for living at a time like this.
Oluyemi Adeosun
http://www.yemiadeosun.blogspot.com
@All
Gbenga is actually an authority in Freelancing to make money online.
Maybe he can give us some tasters ahead of our actually organizing a meeting for him to address people on specifics
That will be great, if Oko-iyawo isn’t too busy
Really sound expose on the state of the nation’s currency. Bravo! My brother.
We are in the kingdom for such a time as this.
Deolu,
I quite agree with all that you have said but the truth is not far fetched.A different Economic future is about to emerge but how ready are we?
The Naira slide is an effect of the current economic depression which makes it necessary for us to find a safe haven.
One thing that has a distinct value and that have outperformed most currencies is Gold.Trading gold is one means to generate compensation in dollars.
Tomiwa
http://www.GoldTutorNg.com
My Prophet, thanks for the timely exposition! This is a must read for any person that wants to understand what is really happening with our Nation’s economy. I look forward to more on this and other related topics, you will bring our way…i have learnt a lot in the few minutes i took in reading and digesting this post and you have so simplified many technicalities that am just hitting my head and telling myself to think!think!think!lol! Omo, God has blessed you with unusual insight and wisdom!expect my email soon!
http://www.bridgetelesinspeaks.blogspot.com
Hmm,Deolu Akinyemi at it again.Well I have come to take you as a reference point for some insightful info. By the way, which neyork marketing opportunity are you invoved in? Please check my blogs here and here and leave comments to let me know what you feel.
Can you come to Jos?
Big Bros,
THIS INFO IS TRULY REVEALING. YOU JUST BLEW UP MY MIND ON THIS…Hmmh i just need to go into my thinking room and make the best use of this opportunity in disguise’
I pray that God will light our paths and help us to help others IJN.
Imagine a car driver with no clear sense of direction. Has Soludo lost the will power to head our financial team, maybe he should resign. He is appearing incompetent and unstable these days, but i cannot help but wonder why he did so well under Obasanjo. Abeg we need to pray for a quick revolution which is closer than we thought.
Soludo’s forsee all these last year when,they suggest that,the goverment revenue allocation should be paid in dollars,if this has been on, there would be less foreign exchange speculator in the forex market,although our politician may turn to bureau de change and may frustrate the effort of the government.
The last two weeks is a trial of CBN monetery policy,i foresee a downward trent of 1$=145-150 naira before 1st week in February.
Price of commodity would definetly go up since we are import dependent economy,must of the goods and raw material are imported and the Congestion in the port may not ease quickly since most of the importer are yet to balanced the supplier,in order to collect the neccessary document to clear thier goods before the Naira fell.
Government allowed the slide as a means of augumenting the budget shortfall.
It has however gotten out of hand and hence the need for direct interventrion
Let the truth be told, the Yaradua administration acted too slow too late. Now there is the clamour for increase in salary
GOD save Nigeria
bros, well done. that was a good eye opening, God bless you
Good piece from someone who holds others at heart.
Good piece from someone who holds others at heart. Thanks for the good work
Dear Financial Analyst,
Keep up the good works. The Lord is your strength.
Think International business; N35,000 invested 2 weeks ago is worth over 45,673.00 today.
http://www.holidaysandcash.com/ifects
I am so greatful to you Deolu.God bless you!
Just to let you know, your post on the wind that could make eagles soar high could be the same that makes the hens take cover…I’m sure you understand; That post was a blessing and its interwoven in this post.
Keep doing your thing sir!
this has been a very good period for me since my major business generates money in dollars .. this has increased my income with about 50%
thanks to the naira slide …. LOL
Chairman,
Network marketing is the way out! This is the time to make good money in dollars. Join me in making money. http://www.holidaysandcash.com/derrickemma to enjoy free quaterly HOLIDAYS and weekly cash REWARDS.
Thanks for the work of wisdom. This year, God will lead and we shall follow.
This is actually a challenging time for the world. But for those who love God, this is the time to manifest by demonstrating the wisdom of God.
It is t6ime arise and shine with the light of God.
Thanks Deolu for being a blessing.
For how long will this Naira Slide continue? God help us in this nation. Amen
thank yoy so much sir for this insight. its so sad that even with a new government, there seems to be no hope for the naira. it saddens my heart.when i heard that the dollar is now #175, i shed a tear and my sister hissed because to her it doesnt affect the common man.
i wasnt too suprised because you cannot continue to do the same thing over and over again in expectation of a different answer.that is what Niigeria is doing. we continue to import and as a resulf of inflation, the dollar and other foreign currencies keep rising.may God help our country.
I have come to understand that it’s in this period that we(the chosen ones) are expected to shine the most. When others are saying there is a casting down, we shall say there is a lifting up. Thank you for your efforts on shedding more light on this issue,sir.
@kilanko: you have made a cogent point. the righteous must flourish like the palm tree.
the global economic melt down is here and there is no doubt about that but the difference is clear between the godly and the ungodly
Oga sir, trying to sleep but couldn’t because of several burdens and thoughts in my heart. I decided to log on to your web site and read some articles. I saw this article, am just seeing it I guess and it is really instructive and very educative.
It’s really funny that almost all that you have mentioned in this article is happening or has happened in Nigeria now. Many of our are not so informed about the economic activity of Nigeria, the oil reserves, exchange rates e.t.c. You have painted the actually stated of Nigeria economy…. It’s really terrible but we have a lot of work as individuals and citizens of Nigeria… We need to speak up now… I remember my grand mother once told me that a dollar is exchange with one naira and a pound sterling with two naira….but Alas! the degradation is terrible, I mean worst. We need to act fast. The banking sector and the financial sector, mortgage, investment, stock. we need to rise up and very fast to rescue this nation and our dying economic value NAIRA.
Hello deolu,
Your post was very insightful and compelling. It is very disheartening to see that most Nigerians don’t know that having a presence online is the next cash cow. One just needs to have a thorough understanding of what business model to pursue.