Not sure we should celebrate N1,200/$ since it took Naira about 50 years to get from about N1/$ to N415/$, only to crash to N1,600/$ in 9 months: “Goldman Sachs analysts Andrew Matheny and Bojosi Morule have projected a significant turnaround for Nigeria’s currency, foreseeing a remarkable appreciation to N1,200 against the US dollar within the span of 12 months.” Naira is currently hovering around N1,600/$.

Indeed, anything more than N600/$ should be considered a monumental bad policy in the annals of history. Also, do not waste your time thinking that Wall Street banks understand what is happening in Nigeria. From JP Morgan to GS and even IMF, all of them called it wrong after the floating:

“Also, in June 2023, JP Morgan projected that the naira, which was at N755/$1 then, would appreciate in the coming months, trading around N600 to a dollar. A statement by the institution said: “While it will take a few days for USD/NGN spot to settle, we fully expect an initial overshoot towards the parallel market rate of -750 or higher, after which, we expect USD/NGN to settle in the high 600s over [the] coming months.”

Their assumptions about Nigeria are off by miles and those predictions have no real values. I mean they should not be wasting their time sharing opinions on where the Naira will settle, since the $billions we were promised will come from investors, after floating the Naira are yet to arrive.

If Nigeria had attracted say $50 billion post-float, things would have normalized. But the problem is that the floating has depressed investments, triggering a paralysis across the nation. If the government can find how to adjust for that, at least Naira will stabilize.

Nigeria’s problem now is not even Naira as the abduction of students has returned at scale, with more than 400 under the control of terrorists in the last 6 days.

Early this week, reports of mass abduction of residents across communities in Borno and Kaduna states by armed groups, compounded an existing insecurity and economic hardship in Nigeria under the watch of President Bola Tinubu.

The communities in Borno and Kaduna where the kidnappings occurred are some of the most insecure communities in the troubled states and have witnessed repeated terror attacks in the past. The insecurity in the areas also means limited access to non-residents including journalists, making real-time information difficult to get.

Goldman Sachs Analysts Forecast Naira Appreciation to N1,200/$ in 12 months

Goldman Sachs analysts Andrew Matheny and Bojosi Morule have projected a significant turnaround for Nigeria’s currency, foreseeing a remarkable appreciation to N1,200 against the US dollar within the span of 12 months.

This optimistic forecast marks a monumental shift from the prevailing narrative of the naira’s undervaluation, promising a substantial recovery for the embattled currency.

The crux of this forecast rests on Nigeria’s transition away from volatile monetary policies and deeply negative real interest rates, factors that have contributed to the naira’s prolonged depreciation. According to the analysts, the past nine months have witnessed a staggering 60-70% cumulative weakening of the naira, signaling the urgency for a strategic intervention to reverse this trend.

However, amidst this gloomy backdrop, there emerges a glimmer of hope. The analysts assert that the trajectory of Nigeria’s currency crisis is poised for a pivotal transformation, propelled by the emergence of positive real interest rates and a shift towards more orthodox policy frameworks.

This transition, they note, marks the inception of Nigeria’s journey towards economic recovery, albeit with the caveat of sustained and concerted efforts for enduring macroeconomic stability.

Yet, amidst the optimism, lurks the specter of uncertainty. The success of Goldman Sachs’ forecast hinges on the unwavering commitment of Nigerian authorities to uphold orthodox monetary policies and enact stringent measures to attract vital capital inflows. Any deviation from this trajectory could pose a formidable risk to the projected appreciation of the naira.

The recent monetary policy reforms under President Bola Tinubu’s administration have garnered commendation from Goldman Sachs analysts, who view the adoption of inflation targeting and a more flexible exchange rate regime as positive strides toward economic rejuvenation. However, the initial implementation phase of these reforms was marred by criticisms of inadequate depth, underscoring the imperative for a steadfast execution of policy adjustments.

In their report, the analysts highlight the indispensable role of positive real interest rates and external financing in mitigating Nigeria’s currency and liquidity crisis. While acknowledging recent policy adjustments and bill issuances by the central bank as steps in the right direction, they emphasize the exigency for more decisive rate increases and a resolute confirmation of policy shifts to galvanize meaningful foreign inflows.

Addressing skepticism surrounding their forecast, the analysts assert that Nigeria’s currency and external liquidity crisis necessitate immediate remedial measures, including the attainment of positive real interest rates and capital inflows. They posit that the current undervaluation of the naira, coupled with a burgeoning current account surplus, lays a robust foundation for the projected appreciation to N1,200/$ within the ensuing 12 months.

The report reads partly:
“We argued that addressing Nigeria’s currency and external liquidity crisis required positive real interest rates and capital inflows, conditions that were both present – at least in a limited form – for the first time last week on the back of the central bank’s monetary policy adjustments and bill issuance.

“In our view, this is the cue to turn constructive on the FX outlook, even if more decisive rate increases and confirmation of the policy shift are likely required to attract meaningful foreign inflows. This is especially the case given that, in the near term, inflation on our estimates is likely to rise further on the back of lagged currency depreciation and given that real interest rates are still comparatively low relative to elsewhere (most notably Egypt, which is likely to be a beneficiary of large inflows on the back of recent policy adjustments).

“We think the Naira looks cheap on a REER basis in a historical context. Added to this, the current account surplus was +3.5% of GDP in 2023Q3, and we expect it to increase above +5.0% on the recent FX moves and associated import compression. We thus see reason for the Naira to be undervalued, and we see it appreciating to 1200 within the next 12 months.”

Reaction to this prediction has been skeptical, owing to several factors, including what analysts have described as ‘inadequate moves’ by the Nigerian government to boost the naira’s performance in the FX market.

Also, in June 2023, JP Morgan projected that the naira, which was at N755/$1 then, would appreciate in the coming months, trading around N600 to a dollar. A statement by the institution said: “While it will take a few days for USD/NGN spot to settle, we fully expect an initial overshoot towards the parallel market rate of -750 or higher, after which, we expect USD/NGN to settle in the high 600s over [the] coming months.”

Despite JP Morgan’s optimism for a significant naira appreciation, the currency plummeted to its lowest levels since then, exacerbating record-high inflation rates and fostering disillusionment among Nigerians.

Financial analysts believe that while Goldman Sachs’ prognosis offers a ray of hope for Nigeria’s currency outlook, its realization hinges on the meticulous execution of monetary policies and the ability of Nigerian authorities to navigate the intricate terrain of economic stabilization.

Tekedia Capital is honoured to have supported Egoras on its mission. This humble company began by repairing and assembling generators, refrigerators, electric irons, etc. Over time, it acquired and built technical capabilities for something higher. On April 28, 2024, Egoras will unveil its first electric vehicle brand:  Egoras APEX 28.

We salute innovators who understand that great missions could begin small. Like Aliko Dangote, who began as a trader, only to become the owner of Africa’s biggest industrialized conglomerate,  Ugoji Harry has demonstrated the power of vision.

To learn how Tekedia Capital is funding the next Africa, go here .

Tekedia Capital is honoured to have supported Egoras on its mission. This humble company began by repairing and assembling generators, refrigerators, electric irons, etc. Over time, it acquired and built technical capabilities for something higher. On April 28, 2024, Egoras will… pic.twitter.com/9mSn5qk38n

— Ndubuisi Ekekwe (@ndekekwe) March 9, 2024

I read a post on Twitter from a user who posted a picture from the recent call-to-bar ceremony where thousands of lawyers were inducted into the Nigerian bar. She asked, “Where do all these numerous new lawyers will see work?”. 

Well, statistically speaking, the Nigerian Bar Association (NBA) welcomes at least five thousand (5000) new members on a yearly basis and records available show that there are over two hundred thousand (200000) active lawyers presently in Nigeria. So the poster is not wrong to have curiosity asked where these enormous numbers of new lawyers recently inducted will see work as it appears that the market is already saturated. 

To be fair, it is not just the Nigerian legal labour market that is saturated, every field of endeavour is saturated, and both white-collar, brown collar and even red-collar markets are all saturated. There is an enormous amount of workforce birthed into the Nigerian system annually for them to scramble for the meagre jobs available. 

I recently sent out a public post that we have a vacancy for two new lawyers to join our firm and I got over a hundred applications from both young lawyers and older lawyers for that advert. That’s how saturated the market is. 

This is why I found it ridiculous when I read that the Nigerian government is working with the British government so that UK-trained lawyers can practice in Nigeria. If it worked out, it would have been suicidal for every Nigerian lawyer practising in Nigeria, including the bigwigs. (More on this later). 

But without the risk of sounding harsh, it is embarrassing for you as a lawyer to be applying for jobs or submitting your CV up and down. As a lawyer, you have been trained to literally do anything legal to feed yourself and survive. You can excel in any human endeavour you find yourself. If there are no jobs for you, as a lawyer, you have been trained to create jobs for yourself and by extension create jobs for other persons. 

The good news is that the legal market will never be saturated and lawyers will never go out of jobs despite any technological invention or any AI, no matter how sophisticated it gets, there will always be a need for human lawyers. The two hundred active lawyers currently in Nigeria are not even enough to cater for the Nigerian legal market of over two hundred million customers/ clients. So the sky is big enough for all the two hundred thousand lawyers to fly and to excel individually. The better news is that we are not just servicing the two hundred million persons market, we are servicing an international market of over 7 billion clients. 

Foreign investors have been penetrating Nigeria aggressively and Nigerian lawyers are the ones advising and sealing the deals. Recently Udo Udoma and Bello Osagie law firm (a Nigerian law firm) was the one that advised Universal Music group on their recent acquisition of Don Jazzy’s Marvin record label that made the news some days ago and they were paid handsomely for it. I too have numerous foreign clients scattered in different nations of the earth. When investors of foreign clients come into Nigeria for some deals, they must engage a Nigerian lawyer or a lawyer who has been licensed to practice in Nigeria. So we are not in the market for just Nigerian clients, we are in the market where our clients are in every part of the world. 

More so, for those dealing with international legal issues, such as the complexities of Interpol notices, seeking the expertise of an Interpol Red Notice lawyer can be crucial. These specialists can help navigate the legal intricacies and work towards the removal of such notices.

Interestingly, some big law firms in Nigeria are even already branching out and dominating other countries. Templars recently branched out to the Ghana, Olaniwun Ajayi LP already branched out to the UK, my former boss, Dr Kayode Ajulo, has a branch in Gambia and Ghana and numerous other law firms have presence in other countries including non-English speaking countries like Cameron, France and even China.

So as a young lawyer, don’t ever feel agitated that the market is already saturated and you will be bereft of jobs, believe me, even if there are ten million lawyers in Nigeria, it won’t still be enough because (for the umpteenth time) we do not just service a market of two hundred million persons, we are servicing a global market of over 7 billion persons.

There is even more money in the Nigerian legal market now than it used to be. Now Nigerian lawyers bill in millions of dollars. Nigerian lawyers charge billions of naira as legal fees. It couldn’t be heard of that any lawyer from the early 2000s downwards would be paid a billion naira or a million dollars as legal fees. 

The sky is big enough for all of us, Just carve your niche for yourself and excel in your area, that’s all it takes.