Let’s stop the panic and focus on how to #build. Give the manufacturers support. Give our working professionals support. And Naira will rise. I believe; Nigeria has tools to fix itself and we can do it
Ekekwe
The Chairman of Tekedia Capital, Prof. Ndubuisi Ekekwe has explained that the only Nigeria could make its currency, the ₦aira rise is to support manufacturers and professionals.
He gave the suggestion in a tweet on his X handle @ndekekwe on Saturday.
According to him, even if the ₦aira recovers for three months, it could “still crash because the fundamental problem has not been fixed, which is improving production, to deepen the balance of trade and payment for Nigeria.”
Read the tweet below:
Three friends visit a bank with each having $1,000 in USD dollars. They deposit the funds in their respective USD domiciliary accounts in Nigeria. When they check their bank accounts that night, they will each see $1,000. But it is important to note that the bank is not expected to keep the $3,000 in their vaults in perpetuity. Rather, the playbook is to have a model, assuming these three people do not come at once to demand for their $1,000 each, to keep say $1,000 in the vault, and get to work with the balance of $2,000.
That $2,000 could be given as dollar denominated loans to companies in both local and international markets. The bank could, where allowed, trade, and do many things with that $2,000. In an efficient banking system, banks convert Money into Capital, funding expansion for telco infrastructure, airport construction, etc.(Nigerian banks gave loans to Etisalat before it became 9Mobile; in that loan book, some dorm holdings were used.)
Where am I going? If you read that Nigeria has $30 billion in the dorm accounts, NEVER think that banks have $30billion cash in the vaults. I doubt if they have more than $5 billion in cash or near cash instruments. Most are outside Nigeria in correspondent banks and in investments. So, if anyone tells you that the Nigerian government wants to convert the funds to Naira, ask the person how? You can turn the wallets into Naira from USD, but that does not mean you have USD! Why do that when you can ask CBN to create more Naira?
And most importantly, even if you take and convert $30 billion, does that solve the Naira gyration problem in the forex market? Possibly, the Naira will recover for three months and still crash because the fundamental problem has not been fixed, which is improving production, to deepen the balance of trade and payment for Nigeria.
Let’s stop the panic and focus on how to #build. Give the manufacturers support. Give our working professionals support. And Naira will rise. I believe; Nigeria has tools to fix itself and we can do it.
