What goes up will come down…., but when???
The laws of gravity tell us that whatever goes up must come down, literally meaning that the good times do not last forever and also bad times are not in perpetuity.
For Nigerians, who are facing a confluence of economic hard times, they are not interested in the theories of gravitational forces. They are dealing with kitchen table realities. The annual inflation according to the NBS reading is at 17.71% whilst the market prices are pinching households at a rate(83.50%) much higher than is reported. The power supply situation has gone from bad to hopeless and the price of diesel is up 290% to N800 per litre, if and when you can get it.
Political Choices are not great for 2023 (But it is what it is)
In the midst of all these, Nigeria is at the cusp of what is likely to be a life-defining election. The choices are not great, because the challenges are far beyond the capacity of the bench (but it is what it is). The historical triangle of power amongst civilian governments since independence in Nigeria has been the North West, South West and North East. This is now being extended to include the South East (a new quadrangle of power).
The cost of any electoral victory in a country plagued by abject poverty (83 million people) makes the purchase of votes a lucrative transaction for willing buyers and sellers. Our crude electoral cost matrix including the price of placating loosing opponents is at an outrageous figure in excess of N3 trillion (approx. 16% of the annual FGN budget). The electoral cost recovery process could undermine the effectiveness of government in the next dispensation.
Naira in a crawling peg (N428 official – N618 parallel)
The CBN seems to have slowly allowed the official rate to slide by 1.75% (N8) from 420 to 428 in the last week. Since the supply did not increase correspondingly, we have also witnessed the Naira plunge in the parallel market to N618. We believe that Naira will appreciate slowly in the parallel market in the weeks ahead as the CBN releases additional forex and allows the crawling peg (official) to adjust towards N235/$.
All of these policies, challenges and political developments are leaving analysts bemused (puzzled), markets confused (scratching their heads) and speculators amused (having a field day).
In this edition of the LBS Breakfast Session, Bismarck Rewane and the FDC Think Tank analyze the current developments in the market, the economy and its impact on your business and strategy.
Read more HERE