The Bricklayer’s Explanation to Oil Price Fall, Naira Devaluation & Everything Else

So I logged onto Nigerian Twitter yesterday afternoon and found people abusing economists and financial analysts for speaking in jargons about the CBN’s actions. So for those who’re still confused about what’s going on with Nigeria’s economy and are trying to understand the implications, here’s a simplified version. No bricklayers were insulted in the writing of this post…at least, not explicitly.

So How Did This All Start?

First thing first, oil price fell. Why? Everyone’s increased their production of oil and no one plans on cutting back. In the US, shale oil’s getting cheaper, so there’s more oil out there…and we all know what happens when you have a lot more of a product — price falls. When the price falls, consumers are happy and producers are unhappy. Consequently, nations that are consumers of oil have a lovely time, and oil producer countries …a not so lovely time.

So? What Does This Have to Do With the Naira?

Before we go on, a little info on currency and exchange markets. It’s important to note that our currency doesn’t exist in a vacuum. Essentially, a unit of our currency is exchanged for a unit of another currency. Hence the term, Foreign Exchange or Forex or FX, for short. When we buy products from outside Nigeria, we have to exchange our Naira for Dollars. Your Naira is useless outside of Nigeria. It’s why you convert your Naira to Dollars before you travel. Do you want to test it? Travel to Dubai with only Naira.

Back to the question you raised. Nigeria is fortunate(?) to be an oil producing nation…when oil prices are high. Presently, oil prices are not high and that’s bad for us. Nigeria’s economy is dependent on oil revenue: about 75% of Government revenue comes from our crude oil sales. So when oil prices fall, oil revenue falls too, and that’s bad for the economy.

In the currency market, exchange rates are often centered on the health of a country’s economy. When the economy of a country is strong, its currency is also strong in the foreign exchange market. When the economy appears to be weak, its currency loses value in the currency exchange rate. Nigeria’s dependent on oil, so when oil prices are weak, so our currency loses value in the foreign exchange market. This loss of value of Naira is called a ‘depreciation’ in currency value.

Here’s a simple example. If we began with a dollar exchange for a Naira, both are in a sense equal. However, once I have to give out 2 of my Naira for just 1 of your dollar then the value of Naira has fallen. In the past months, the exchange rate was $1 dollar to roughly N150. Thanks to depreciation and eventually devaluation (we’ll get to that later), it’s now $1 to N168.

Alright. I Get the Currency Part, But What Do Our External Reserves Have to Do with our Naira Value?

To explain this, we’ll have to look into what the External Reserves is and why it exists. Think of your External Reserves as a Savings account where you put some portion of your salary every month. That money gets saved for something later: paying your children’s university fees, buying a house, or importantly, in case things get bad in the future (perhaps you lose your job).

Likewise, countries keep these reserves, but mainly to safeguard the value of their domestic currency, boost their credit worthiness, protect against external shocks and provide a cushion for a rainy day when national revenue plummets. When Nigeria earns revenue from oil, it gets paid in dollars, so we simply stash a portion of the money in our reserves.

Moreover, the reserves of oil producing countries like Nigeria tend to benefit economically from higher oil prices. The higher the price of oil, the more money oil producing countries like Nigeria get to earn and save.

So if We Have an External Reserve, Why are We Worried?

Well, having a bank account doesn’t mean you have money. We have a reserve, but our money no plenty. Nigeria has been dancing shoki with its reserves. When oil price was high, we apparently weren’t saving that much into our reserves. In fact, our reserves have been on a downward trend for years. We’ve been using our External Reserves to keep the value of Naira stable for months. When our currency appears to be falling, we take out some dollars from our external reserves and purchase Naira. Increased demand for Naira leads to increased value of Naira, and that’s how we stabilize our currency.

However, we sacrifice a portion of our External Reserves to pull this off. For instance, “while the central bank stepped in Nov. 7 to send the Naira to its biggest one-day gain in three years, intervening in the market has reduced foreign reserves to a four-month low of $37.8 billion.” In the last few months, even Russia with their large reserves had to devalue their currency by 23%.

So is This why Everyone Was Making Noise About CBN Devaluing the Naira?

Yes. Now there’s only so much spending from the reserves that the CBN can do, especially given that we’ve really sucked at growing our reserves when oil price was in the $100 range. It’s like when your office was paying you N100k, you were clubbing every weekend rather than saving some money. Then the minute your office decided to increase your income tax, that’s when your jobless relative comes to live with you too. So now, your salary is not only less, it’s burning faster cause there’s an extra mouth to feed.

The drop in oil price does not only send our currency downwards, it also makes it difficult for the CBN to defend our currency. It’s a double whammy. Essentially, if the CBN keeps trying to defend the rate at N150, it’ll burn through the reserves pretty fast and then we’ll be screwed. So relaxing this currency threshold to N168 means they can relax a bit. They don’t have to keep using as much of the reserves to prop up the Naira. If you’re still curious on how it all works, Feyi goes into the intricacies of devaluation in his fantastic post here.

Okayyy! I Think I Understand Now, But How Does This Affect Me?

Like many other economic events, devaluation creates winners and losers. Let’s start with the losers. If you generate revenue in Naira and incur costs in dollars, this is a bad time for you. Any activity that has you converting Naira for Dollars will hurt you way more than a few months ago.

Let’s have a moment of silence for our Igbo brother who will be ‘importing containers’ this Christmas. Life just got harder for them. Given that importers have to pay for their imported goods in dollars…and dollars just got more expensive, the cost of their goods have increased overnight.

Same thing happens to those tush parents who’ve got their kids in Nigerian schools that only accept their fees in dollars or Nigerians that have children schooling abroad. If you like flying, shopping or doing anything abroad, your cost of doing so has risen. On the contrary, if you earn in dollars and pay in Naira, life is looking pretty good at the moment.

Exporters also benefit. The fall in the value of Naira means more exports because our exports have gotten cheaper. But erm…what exactly are we exporting?

Phew. So It Doesn’t Affect Me Like That

Don’t be so sure. Nigeria’s an import-dependent nation, which means that most of what you purchase are produced abroad.  If the prices of imports have risen, trust your Nigerian brothers and sisters to increase their prices too…leading to what’s popularly known as inflation.

I Was Hearing All These Oversabies Saying CRR, MPR. What Does This Mean?

CRR stands for Cash Reserve Ratio. It’s the proportion of what a bank can lend, to what it has in its coffers. So if the bank has N1000 and its ratio is 50%, can only use 50% of that money (N500) for business. Given that awon banks do not mess around with profit making, they will make sure that N500 brings back maximum profit. Banks are like the servant in Jesus’ parable that got 10 talents from his master, not the lazy one that got 1 talent. So to make max profit off the N500, they will raise interest rate if you want to borrow their money.

MPR stands for Monetary Policy Rate. The Central Bank uses the MPR to control base interest rate. The higher the rate, the less money in circulation. How? If the interest rate is higher, will you borrow money from the bank knowing that you’ll pay much more later on? Nope. Instead, you’ll take your money from your pocket and give it to the bank, so they’ll make you more money.

Remember that thanks to devaluation, awon boys will be increasing prices left and right. The general price increase in a given period leads to inflation. To tackle this, CBN increases CRR and MPR to reduce demand for money. This way, they prevent inflationary rise.

Okay. I think I Understand That Part, So What’s This Austerity Thing Aunt Ngozi was Talking About?

That one is another long story. So, we’ve all been in situations when we’re broke. Ok, maybe just some of us. We adjust our lifestyle around the middle of the month when our salary hasn’t been paid. You go from eating jollof rice to drinking garri. When friends tell you to come out and party, you form ‘I’m very busy’.

Nigeria’s proposed austerity measures are similar…except on a grander scale. To cushion the effect of the falling crude oil prices, we have to cut back on spending and quite literally tighten our belts. The Government is cutting back on wastage (less government traveling and all that sort). The Government’s also raising taxes on luxury goods such as private jets, yachts, and champagne. Somewhere in this luxury tax is the amusing observation that the revenue from taxes on the rich will still go back to the rich.

For the proletariat, the sweet subsidy you enjoy when you fuel your car will also get cut. Prepare to pay more for fuel. This is a good thing. Subsidy has to go anyways.

Wow. That was Long. So, Any Lesson to Learn from All This?

Yes. First lesson: Nigeria is the most reactive and least proactive nation you could’ve been born into. This isn’t the first time oil prices have fallen. Government should’ve gotten used to fluctuating oil price and prepared accordingly. And, since oil is the figurative oil in Nigeria’s economic engine, judicious and prudent management of oil revenue should’ve been practiced. However, we largely mismanaged our wealth during the time of booms and we’re now trying to behave ourselves in the time of slump. Let’s see how that goes.

The second lesson to be learned is that we should’ve diversified our economic sources of revenue a long time ago to prevent price shock of primary products from affecting us drastically. Also, State Governments should’ve been pressured to increase their internally generated revenue much sooner. We can’t keep reacting to every economic shock that hits us.

Anyways, this is getting too long and no one probably got to the end, so no need for a witty or wise ending. But, if you reached this point, congrats! After spending all that time reading this, make sure you show off your new macroeconomic knowledge to your friends. And please, stop abusing econ-nerds. We have feelings too. Selah.

  • Isabellaemike

    I read it to the end because it’s a fresh perspective on “ecomomics” which has never been my favorite subject. I lean more towards humanitarian issues which are greatly influenced by economics. So thanks for thé explanation. I love Nigeria and look forward to her bright, prosperous future. feeling ” “economically empowered” now.

    • Anonymous

      Well, I expected some explanation on how corruption plays a negative role in th use of our reserve. For instance, we learn the Abuja Carnival attended by only 7 states cost N600mn.

  • Akin

    Thanks Chubs 😉 . It’s clearly explained…

  • Ok I agree… Macroeconomics is quite boring, when its about Nigeria its frustrating…

    This bricklayer’s explanation is quite enlightening, only that NOI and her counterparts at CBN did not have the bricklayers in mind while simultaneously blowing up our reserves and de-valuing the naira…

    Nice piece… Well done Chuba…

  • Very good.
    It does not affect me anyways

    That means that we will be importing for less which is good news for me.

    • Anonymous

      Not sure u got it correctly! Imports will be more expensive! Chubs explain for us o!

      • Anonymous

        She is probably not in Nigeria. She imports from Nigeria.
        Hope you are cleared now @ anonymous

    • johnny paige

      I thought he made it clear that the cost of import will increase too

    • mwest

      @tessadoghor – 2 very wrong comments (1) that it doesn’t affect u (2) that u wld be importing for less???
      Obviously – u either didn’t read or u simply do not have the mental capacity to comprehend the simplicity in the explanations! Smh!!!

      • Thanks for the insult Mr Einstein/Curie/Boyle put together
        You are very smart by the way but I still will not be experiencing that.
        I operate from somewhere higher.

    • Anonymous

      I think you should read once more.

    • junaid

      Nice one! I have never read a simplified economics as this. Thumbs up

  • Great piece sir. The issue of us not producing much of what to export still surprises me. I wonder if industrialisation is a big deal that can’t be achieved. All we do is to fund government agencies that don’t add much to the economy.
    This really needs to be looked into so we can become an export nation.

    • mwest

      @Emeka D Azubuike – It doesn’t take an economist to make u see that Nigeria will never export. Michellin, Dunlop, Cadbury, Ovation Magazine, Guinness… All the textile giants – everyone is cutting down or shutting down production capacity in Nigeria and moving their factories to other countries simply because Naija no get lite! Aside this, Naija exports no dey meet international standards except in its crude form! Cocoa, Rubber, our minerals – Everything, even Oil gets exported in its crude/ raw unprocessed form. If to say power dey, perhaps…. Just perhaps…

      • @mwest I expected everyone in this new generation(young) to be optimistic that we would surmount our challenges. Light is an issue when it comes to industrialisation but that doesn’t mean we can’t achieve steady electricity.

        We have the resources to make it work by this I mean mineral resources and other renewable energy sources. I believe is left to the next generation of leaders to start thinking of ways to achieve this, since the passing one(generation) has probably failed to.

  • hezekiah

    As always, illuminating. Thanks Chuba. I get to send this explanation to anyone asking about or interested in the peculiar mess the economy is in. I hope as Feyi said…things will turn up.

  • Reblogged this on onyinyechicynthiaigodo and commented:
    This is very informative….If you are still confused as to the fall-out from the MPC meeting, this would be a great help….

  • Honestly, thanks for this. I gerrit now *smiling*
    Seriously though. I appreciate the time you took to break it down and add is some humour.
    Any chance you do something that will help me understand the history of politics in Naija…You know, how did we get here? Lol!
    God bless you!

  • Tannie

    Beautiful! I finally can make sense of all that is happening now.

  • Very very Enlightening. First time reading Economics without getting the urge to snooze.

    • Sonya, I’m so with you on that one. Thanks abunch, Chuba.

  • Babamusa Dannasir

    I like your piece my brother. A good break down of the ripple effects of the fall in oil price. As an Economics major, my memories were well well refreshed. Well simplified with common examples to help a layman understand. Good job.

  • Ogle

    Interesting one CHUBA!, I wished someone really taught me economics using this same language and style first, before using all the economic jargon that just gets one so confused to the point of hating economics,economics profs, etc… but thankfully its taking an econ-nerd to change all that( take a bow CHUBA) …..

    My take on this current economy “show” is that Nigerians and our economy managers that includes the technocrats and politicians they never learn – I believe it because crude oil money = government money is too sweet – just see the Abuja, Ikoyi, VI and Lekki living of these folks? lets even leave out their London, New York, Dubia living

    President Obama said this in 2009 “We (the US Government )will commit ourselves to steady, focused, pragmatic pursuit of an America that is freed from our energy dependence, and empowered by a new energy economy that puts millions of our citizens to work”.- should this not have been taken more serious by a nation like ours depending on oil for 75% of its revenue from oil consumed by an energy hungry nation like the US? shouldn’t Nigerian Government also had ” committed it self to steady, focused, pragmatic pursuit of a Nigeria that is freed from our crude oil income dependence, and empowered by a new diversified economy that would equally put millions of our citizens to work”. ?

    • Well said. Diversification is necessary. Thanks for reading and commenting. 🙂

      • Chinwe

        Thanks Chuba for the witty way you explained how the fall in oil price affects us etc. I thoroughly enjoyed and understood it.
        I don’t think the lady importing stuff got it though.
        You were hilariously brilliant! Thanks

  • Lade

    I read it to the end, even though I have a pretty good understanding of the concepts. I just think the work you’re doing is great for the layman who wants to understand, and have RTed it to the followers of the handle that I manage.
    Our government is definitely a reactive one, and a verbose one at that too. Let’s see what 2015 holds.

  • Great read. It simplifies all the talk that’s been making the rounds, with the many economics nerds who are reveling in this new opportunity to flaunt their knowledge and kill us with big words.
    Nigeria however needs to diversify its revenue sources and not lean too heavily on oil. One would wish that long term plans and concrete action would come out of this current situation but it is not likely to happen. We need more far-reaching cuts in spending and the growth of other revenue streams.

  • This is very helpful and i see the need to read your book cause i am certain its gonna make an interesting read. You writing is more interesting though still on the same level of succintness with Steven Levit. You have to really expand your scope bro cause as a bricklayer myself, this is not traditional. I would have appreciated it alot more if you told me how it affected first, my daily bread and beans purchase and more importantly my “lebuke” work.
    Boss, it would be nice if you can become a visiting guest lecturers at universities in Nigeria. As an undergraduate myself i find that we are stuck with old curricula. We gass update fast.
    Baba welldone…buh, your work still plenty shaa.
    Thank you for your efforts.

  • bolade

    Chuba, great job as usual explaining our profligacy as a nation. Thankfully 2015 elections are around the corner. Let’s hope we elect a Joseph who can manage the years of “burst” ahead of us

  • Kolade Ogunbanjo

    Great piece Chuba… analytical nd insightful .

  • david

    Lovely use of words to ignite our understanding. Wish they’d (all those blood sucking government – STATE AND LOCAL GOVT INCLUSIVE) never been sharing all the “EXCESS CRUDE” funds which should have gone into our reserves. Now we (the whole country) are facing the shocks whilst they have adequate shock absorbers lining their pockets!

  • Chuks

    I am a banker who hitherto understands how it works but chuba’s bricklayers view point is a masterclass. Bigger issues should be broken down in this manner too

  • missojugo

    Read it to the end. Great job

  • Wash

    Nice piece, I have heard b4 now that the price of petroleum product or Petrol will increase due to the need for removal of subsidy but I am finding it hard to believe this. I have my reasons. Firstly, we were told by this Govt(FG) that we(Masses) buy petrol @ international price not minding we(Nigeria) is a producing nation that’s what warrant subsidy in the 1st place, Now that Crude Oil is Cheap in the international market what re they still subsidizing? Even if they stop subsidizing it, it will still be @ a low price which should not be more than the present price!

    • Wash

      I think this was the situation we were during the administration of Late Yar’adua that necessitated the reduction of pump price of petrol

    • midemide

      We no dey hear anything now…

  • Ucheckwu Nebeolisa

    This is one of the best writeups on Economics I have read in a long while. Chuba really broke in down in laymen terms. Methinks that more policies of Government should be brought down to the understanding of the “Brick layer”. Congrats Chuba. I will be watching you

  • Always wanted a blog where I can fund answers to my numerous questions in the field of economics. I must say this site has answered some of my questions and look forward to reading more of your posts. Thanks for having we the brick layers in mind…

  • Ayanbode Ope

    Great one Chuba. Can’t have it better explained. Macroeconomics made easy.

  • OK. Can I moan? Thanks Chubs for the lessons.
    For all the that the interest rate increase portend for the masses- cost of goods and services wise – I think that would be enough. Nigerians have been subsidising this government for quite a while it won’t be too much for them to ask FG to contribute something even if it’s fuel money. I’m talking about “sweet subsidy”.
    I’ll be blunt like a badly formed Naijamerican “Ya can’t ask me to provide me own electricity, my own water and still pay tax and you don’t get to do jack***. Whatchu gon ask me to do next? Build ma own road?”
    Government needs to remove the pervasive corruption manifestly endemic in public procurement and be seen to be accountable before removing sweet subsidy.

  • Foluke

    Cool stuff. Well-done boss.

  • Aisha Yesufu

    For a microbiologist who never did economics it finally made sense. I got to the end and expecting the witty ending. So the things these people do affect my life so thoroughly and here I am thinking they are doing their thing and not being bothered. Wow! Time to spend more time following policy making.
    Well done chub a you did great

    • geoxef

      Now you get it, I am an engineer too I submitted a bid two months ago for a project, that commences first quatre of next year, with the “awilo dancing” of our currency procurement of equipments from OEM may hit the project bottom line, this another way of telling how it affects us, good one sis, be a part of the policy process. It will help us all.

      • Femo

        You need to start thinking about re-negotiations once the project has been awarded or if you can afford to employ Hedge funds, let them help mitigate your FX risks.

  • Don’t want to be there when the story of Nigeria economy will be writing. fresh view though.

    • dave

      This is awesome! i enjoyed getting educated

  • James Alex Adekunle

    My heart is heavy, my face filled with tears with this reality of the devastating state of our economy that this article has shown. At the same time, my face is filled with smiles as Prof Chuba has comically expressed and presented it. God bless Nigeria anyways.

  • mayor

    This really lovely! Financial education is key to prosperity. Tnx n God bless u

  • mayor

    Can I get pdf format of ur articles or any form of download?

  • Samson

    Great piece….nice job…Well done.

  • Heph

    Intelligent. iLike.

  • DavidTheGear

    Chuba, this is the first time I’m reading your blog. This is quite an interesting read.
    This Nigerian situation is gonna get worse. I’m looking back at the oil boom period where Gowon the Head of state with just military education proclaimed that Nigeria’ problem wasn’t money but how to spend the money. That clearly portrayed an ideology of waste and irresponsibility. Fast forward to now. We haven’t had any better leaders. It’s all been about waste, waste and more waste. A few good deeds here and there but nothing compared to the waste of resources. Nigeria has no actual dream and no goals for the long term. All we have are four year or eight year jibberish that cause audience aggregation and never fall through because of poor planning and implementation. Nigeria as a country, we are suffering for the wrong reasons.
    If we are to suffer then let us suffer for the right reasons. Let’s adopt measures that will delay instant gratification but in long term bring grand rewards. China did it. Korea did it. India did it. Now these countries are the better for it. Nigeria need a global goal and plan. Something that every Nigerian will key into and run with. And it won’t be hampered by different regimes of government or ruling parties. Even Rwanda did it. Ghana did it. These countries though smaller and easier to manage succeeded, it’s not a difficult task for Nigeria. I agree with you that subsidy has to go. This is an example of things we need to suffer for our country to move ahead. We need rigorous turn around in our local manufacturing and export industry. Agriculture is going through a revamping process and that is good. We need to buy more local and local industries need to be empowered to international standards of quality to do well outside this country.
    Nigeria will not get better until we are ready to suffer for a period so the next two generations will reap the rewards. And “the labours of our heroes past shall never be in vain” will be sung for us.

  • Rynie

    Wheewww,that was long. Atleast I understand what’s happening now to an extent. Economocs was never really my best subject

  • Lawson

    Great wriite up.God bless u

  • Ugo

    Chuba thanks for this piece. Simple for a bricklayer like me to grasp and powerful for an eco- nerd to assimilate. Thanks for presenting economics in a humanistic angle, the first time economics just made sense to me for years. We sure need a Leader that is proactive, that will manage our affairs wisely. And it is high time Nigeria diversify.

  • Isaac

    The reality is bleak but nothing bad yet. we have the power to change things for better. “old heads” should be voted out for a young and visionary leader revolutionary minds who thinks about the youth and the future generations. Its enough to complain about corruption, wastefulness, nepotism and the likes.

  • Reblogged this on feignedidentity.

  • Good read. I hope our government can be a bit more responsible. Not to take anything away from FG they have been trying but our State Governments really need to be responsible. I don’t understand how i’d be paying this much on PIT, yet still have to pay additional tolls on roads I use and then I also here the state is still in a lot of debt upon all the money it’s earning. God help us.

    • Government at all tiers are not doing enough. Pervasive corruption all levels. All Aunt NOI moans about has been State Government insisting on ‘shearing’ funds in the ECA but FG collects its share and have not in the real sense accounted for how they utilized their share or have I missed anything. It is a pathetic situation and we are between the devil and deep blue sea. Head or Tail, we lose????? We must wake up and refuse the divisive tendencies of the ruling class and those who from time to time break into that class! Chin up and do what is right for posterity

  • Aisha Saheed

    There are still numerous opportunities of export to serve as second source of income. Agriculture! But if the money from agric sef enter, na shoki dem go still take am do.

  • Femo

    Great piece, but let me add the part where we spend money printing Naira to allocate through FAAC, to the states monthly, only to go back buying that same Naira under Excess liquidity mop up, and Inflationary protection, at a regulated Dollar price that is lower than the Parallel Market price, which gives incentive for speculators to have a fill day at the FX Trade Black Market. Which of course increases demand for the dollar within our economy and puts further pressure on the Reserve and Naira. Also, since states receive only Naira, they have to come to the DAS to buy dollars to meet their $ responsibilities, where as, it’ll make more sense to allocate Dollars through FAAC, allow states to mop up their Naira needs through IGR, Lower MPR So that Industrialisation is promoted through SMES, as well as keep CRR tight so that banks seek other alternatives of making money rather than just re investing Idle cash sitting in their vaults in Money market instruments that are meant to be for private individuals, thereby promoting an organic growth of the NSE.

    *deep breath*

    Basically we need tough MPC policies as well as educated, deep thinking Politicians who can make this Organic constitution as organic and dynamic as possible, to move us quickly away from this dependence on a monolithic economy.

    Sorry if I ruined your Brick layer level discussion.

    • yinka

      Indeed you did.

    • david

      Lovely. Looks reasonable enough…but could there be an angle the CBN is seeing that you are overlooking? Allocation of FAAC in dollars might be counterproductive in either the short or long term…nonetheless I’d like to see this ideas you have properly broken down for easy digestion. Cheers femo.

  • Never been a fan of Economics, even though I have a subtle affection for it. I blame my teachers. Reading this excites me. If I had these kind of explanations in high school, I’ll have followed my Mum’s professional dream for me.

    I think a focus on Agriculture is a way out from this messy maze.

  • Reblogged this on johanneswojuola's Blog and commented:
    Exceptional and self-explanatory on our present economic predicament.

  • vitalis

    Chuba, you must be a grounded economist. I am proud of you.I have always known that Nigerians also need to know how our economy works so they can make rational choices. The issues you simplified here have been raised in 2008 during global financial crisis. Prof Chukwuma Soludo took similar measures to cussion the shock of falling oil price. MPR, CRR were raised. Exchange rate bidding system was changed from WDAS to RDAS, naira was devalued.then our reserve was about $60bn dollars, our excess crude account was quite ok.Shortly after the global financial crisis was over, we went back to business as usual. So if you ask me I will say it’s a similar circumstance and a similar outcome. Nigeria can never learn. Develoment only comes with deliberate effort. Let’s keep praying that our government sees the need to diversify our economy and alsoprovide the basic infrastructures to enable them run well.

  • Ayodotun

    Great write up. Now I feel like an expert on an issue I was clueless about 1 week ago.
    If our refineries ain’t producing and fuel is largely imported, does that not suggest cheaper imported fuel and less subsidy? Can we advocate for a reduction in gas prices or at the minimum, not be fed with details of crippling subsidy costs.
    Secondly we need an honest expenditure analysis of government recurrent expenditure costs. How much goes into wages? Classification of wage costs; civil servants vs public servants vs politician etc.? How much does it cost to run government offices etc.
    My guess is that we will find a low hanging fruit to pluck and save the entirety of the nation from these austerity measures.
    Thanks for this write up. I am sharing with my friends.

  • Adisa Olawale

    This is really an informative piece, honestly a lay man can grasp the whole gist clearly, and yes We Economists have feelings.

  • kopiko

    I feel like an economist now tbh! well put sir! you sabi the thing!! na to save this URL for interview time. lool

  • Fantastic job there! Thanks for setting things out in such simple yet very enlightening terms.

  • Reblogged this on Amoscp's Blog and commented:
    Point, Set, Match

  • nwachristgold

    Thanks Chuba,
    That was a great piece.

  • Anonymous

    you are pretty brilliant

  • uchenna

    This is very lovely piece. Can’t be simpler than this.

  • Thank you for this very simplified explanation.
    Nigeria though.

    I don’t even know what to say.

  • midemide

    Well written piece.
    We’re at roughly N190 to $1 now!

    How come some oil and non-oil producing states with far less smaller economies, have a better dollar exchange rate?

  • Pingback: The Bricklayer’s Breakdown of Nigeria’s Proposed 2015 Budget | Naijanomics()

  • Anonymous

    I think you should have a column in BusinessDay newspapers. Help simplify the plenty grammar

  • Dideolu

    Great Piece in great style. What are your projections for the first two quarters of 2015 especially on the value of the Naira?

  • very, very, very brilliant and witty. thank you so much for this very informative and educative post. you have made economics learning real fun. you should probably write a book. i’ve noted your name, Chuba. i’ll be looking for more of your writings. Please keep the good work up. God bless you.

  • Anonymous

    Nice one bro. You nailed it!

  • Pingback: Bricklayer’s Explanation of N10 Reduction in Fuel Price | Naijanomics()

  • Reblogged this on paulbenameh's Blog and commented:

  • Anonymous

    Brilliant piece.

  • christine

    AMazing..This article is fantastic.. Read everyword.. You explained economics in a lame man’s languge that i could understand… My brother nigeria needs prayers and action..It’s people like you who should be in charge of the economic section in 9ja.. The high rate hit me bad. I’m a student who relies soley on my parents income.. I get the same allowance as b4 but due to high exchange rate they have to dig into their pockets more.. Olorun sa nu wa.. Ma je ka su kun

  • Gbenga

    Someone once said “You do not really understand something unless you can explain it to your grandmother”. You have shown a thorough understanding of the subject. Thank you so much. This whole economic thing just made sense to me.

  • Charlie Aus

    Well done! You made it better and simpler for non-economist.
    I would suggest if the FG would reduce or even remove the all the Allowances allocated to government officials, supposedly their will be money to boost our economy instead of borrowing or removing the subsidy.
    Only in Nigeria that their Allowances are higher than their salaries.
    I would ask, how money for excess crude oil is been spent and the $20bn that got lost, its whereabouts?

  • #BringBackOurGirls

    great job for we bricklayers