Oil price fall put Nigeria’s economy in quagmire, but Naira devaluation and MPR raise would boost the Economy IF!: MONOECONOMIC ISSUES

ECONOMIC/BUSINESS TOPICS CURRENT TRENDS (NEWS):

Oil price fall put Nigeria’s economy in quagmire, but Naira devaluation and MPR raise would boost the Economy IF!: MONOECONOMIC ISSUES

Nigeria’s Economy suffering from the oil price fall would be effectively managed with CBN’s policy of Naira devaluation and MPR raise, if we have good export base, our non oil exports goods would be cheaper in relative to other countries, provided, the  majority of the raw materials for this non oil export produce are locally sourced. This would increase productivity, create jobs and at the long run strengthen the Naira as demand for Naira would increase due to foreign demands for our exports. But reverse would be the case if our export base is small, source raw materials abroad. So the governments are to aggressively market Nigeria products abroad, bilateral trade relationships strengthened with aggressive export promotion drive.

The Monetary Policy Committee (MPC) raised the benchmark interest rate from 12 to 13 per cent, and in­creased of private sector Cash Reserve Ratio (CRR) from 15 to 20 per cent. For the raise, in interest rate from 12 to 13 per cent, it would bring Foreign Direct Investment (FDI) if we have structured Nigeria assets that would attract foreign investors at a higher interest rate. The investors in government securities would gain but borrowers (in real sector investors) would not find it funny.

Crude oil accounts for 95 percent of our foreign exchange. It is time for full diversification of the economy with export promotion drive which would benefit the country with this devaluation policy drive, reducing over dependency on crude oil. We can do it! It is possible!

Guide and immune yourself and take advantages on the followings:

1. Political Risk
2. Oil price fall
3. High inflation
4. High Unemployment