Your Excellency sir,
As a follow-up to my earlier published Strategic Report on Causes and Solution to Naira Fall against Dollar, i humbly appeal to the government to holistically evaluate and implement the following recommendations in order to restore the value of Naira against the dollar in view of the strategic importance of Foreign Exchange to a nation’s economy like ours.
Government should further look into the following to make Naira regain is value
1, Restoration of investor’s confidence
2, Over-supply i.e over printing of local currency
3, There is Likely-hood that the true state of health of commercial bank’s fiances/ operations are either un-reported or under-reported by the CBN
4, There is Likely-hood that a number of the commercial banks are not in good condition financially/ operationally
5, Liquidity crunch
Explanation of the above stated factors
1, RESTORATION OF INVESTOR’S CONFIDENCE
Mr. President, I want you to know that when it is evident that the government is foot-dragging in financing imports due to shortage of Forex in her monetary reserves and debt continues to aggravate, there will be loss of investor’s confidence and once this happens, what will follow is Capital Flights and this will eventually leads to currency crisis as we have now in the country with respect to fall in Naira against dollar.
The Capital Flights mentioned above simply means conversion of local currency to dollar in order to invest the converted dollars abroad.
Insufficient Monetary Reserves > Loss of Investors Confidence > Capital Flights > Fall in Naira i.e Currency Crisis
2, OVER-SUPPLY I.E OVER PRINTING OF LOCAL CURRENCY
Mr. President sir, it should also be noted that when a country prints more money i.e excess money in circulation than the rate at which the country is growing economically, it will result into inflation which simply means that more money is used to purchase few goods which is exactly what is happening in the country.
In the event of the existing inflation, it will lead to depreciation of local currency against foreign currency and consequently ground the economy as it is happening now.
Excess Money Supply into the System > Inflation > Depreciation of Local Currency against Foreign Currency > Grounded Economy
3, THERE IS LIKELY-HOOD OF POOR SUPERVISION OF COMMERCIAL BANK’S OPERATIONS BY THE CENTRAL BANK OF NIGERIA
If the Central Bank of Nigeria fails in its duty to appropriately supervise the operations of the commercial banks as it supposed to be done, which could likely be that the true state of health of commercial bank’s finances/ operations are either un-reported or under-reported by the CBN.
This development, could lead to banking crisis that is hidden away from the public and banking crisis could as well leads to Naira fall against dollar as we are currently having in the country.
Poor supervision by the CBN > Indiscipline by the Commercial Banks to flout statutory regulations > Banking Crisis > Currency Crisis i.e Naira fall against Dollar
4, THERE IS LIKELY-HOOD THAT A NUMBER OF THE COMMERCIAL BANKS ARE NOT IN GOOD CONDITION OPERATIONALLY
There is no doubt that if the banks are in crisis, it could also lead to currency crisis i.e fall of local currency against foreign currency as we have it now in the country.
Mr. President, it should be noted that first, if the private sector has over-borrowed from the commercial banks in dollars; and secondly, extended the length of loan payment unreasonably beyond normal time when the economy would have started being in dire need of the loan to replenish the system in return to avoid it to monetarily go hungry noticeably, this will consequently leads to economic crunch as obtainable.
And thirdly, high rate of default with respect to loan repayment spurred by presentation of little or no collateral could negatively affect the value of local currency against foreign currency.
5, LIQUIDITY CRUNCH
Mr. President, I want you to know that Liquidity crunch i.e when there is shortage of inflow of funds into the country to finance its much needed expenditure to abate the situation of the economy could also lead to fall in the value of Naira against dollar.
I guessed we are affected in this area with respect to bombing/ breaking of pipelines in the Niger Delta area, which has affected the crude oil production output and consequently revenue accruable to the country to that effect.
Mr. President, I want you to critically look into all these factors to rectify, may be it could help in restrengthening our local currency, in addition to my previously published Strategic Report on this subject matter in order to restore the value of our national currency, the Naira, back to its pride of place.
I can also strategically tell you that the factors stated in Numbers 2, 3 and 4 that might be affecting the present government as highlighted above, were primarily given birth to during the immediate past administration, while the number 1 factor that the present administration is also facing is a function of the aftermath effect of the factor number 1 in question, as caused by the last administration.
On number 5 factor, with respect to breaking of pipelines, emanated during your administration, as immediate past administration had an holiday with respect to that.
In view of this, you must, by all means, in a peaceful way, dialogue with the people of the Niger Delta to ensure the breaking of pipelines stops, in order to put an end to the Liquidity crunch with a multiplying effect across all sectors of the economy, while not also excepting the immediate past and previous administrations from the Number 5 factor of Liquidity crunch in its entirety bedeviling the country. However, all the problems must and would be resolved by this administration GOD-WILLING.
Note: These analysis was done not to malign any administration but to enable the present government know the likely source of the challenges in order to actually aid her in finding a lasting solution to our challenges.
Last published Report on restoration of value of Naira against Dollar
To President Muhammadu Buhari: Strategic report on causes and solution to Naira fall against dollar
May God guide our leaders aright.
NIGERIA SHALL BE GREAT
A strategist/ Publisher
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