Few days back, I published an article on the forex crises and the need to keep faith and hope alive.
In that article, I talked about the tipping point and said about 80% of the causative factors for the ‘yepa’ fall in the Naira were as a result of phycological reasons occasioned by the loss of confidence in the system, policies and leadership.
I had also said that when we get to the tipping point, demand will weaken, and the market will tip and reverse cos there are no real fundamentals beyond rabid speculation driving up the dollar.
I was very happy yesterday when I saw that the Naira gained a whooping 7.43% to close at N1750 the strongest showing in recent times.
Analysts have alluded to the shut down of the crypto and binance markets and also the actions of the EFCC against speculators and ‘mallam’.
For me, I think the psychological barrier has been touched and Nigerians plus speculators have started seeing that it no longer makes sense to hold the dollar. The fear is that it might not reach the IMF predicted N3, 000 so they have started releasing a bit to test the markets.
Now the CBN has to move fast to ensure this recovery is sustainable. It most open up more efficient monetary windows, tighten leakages and begin to push long term supply channels into the fray.
It must also engage all stakeholders with a view to attaining collective resolve to handle the situation.
Government must assist it by achieving a bit on the insecurity side of things so that food production could be impacted with the aim of bringing down the food inflation which is hovering above 40%
Luxury taxation should be ramped up, also we should institute ‘Japa tax’ . Let pple pay to leave so that we can ramp up revenues. The police already understand this m with their increment of the cost of police report from N5, 000 to a reported N40, 000.
These embassies are doing it with their visa fees. From the crowd outside the embassies, it is safe to say that the embassies are now covering their running costs independently. We should so same-let people pay to runs way.
Reduction in cost of governance significantly and then block leakages.
Push state Governments to replicate the Lagos State Governments robust welfare packages. Opening up food shelters will put pressure on food prices and most likely bring it down.
The selling of seized but fit for human consumption good stuff is brilliant. A bag of rice for N10, 000 will throw up a new form of competition but we must make sure they do not find their way back to the markets.
We can get the Naira back to sub N1, 000 but this will come from more push on the fiscal side and the real sector and not only on the monetary side.
So as the CBN is beginning to get a hang of the monetary side, the other side must ramp up activities – solid minerals, oil and Gas, agric must stabd up to be counted with the aim of shoring up revenues
It must also start the process of bring in more FDI with a concise look at the ‘ease of doing business’ model again. The NIPC must stop being lethargic and slow. They should lead the push.
But most importantly the Government must resolve to be more disciplined in expenditure, policy initiation and execution and then as a matter of fact, institute a cabinet change NOW.
Will release more tips for Government as the days pass by cos me I don’t know what its economic advisers have been telling them since.
This thing is not rocket science abeg!
Duke of Shomolu
