Yes, Nigeria’s problem is that we do not import a lot. And that means our solution will not come by restricting imports. For Naira to improve, Nigeria needs to import more – and importantly import the RIGHT things.

As I have noted, in 2022, South Korea’s total imports were $808.09 billion while Nigeria did about $60.35 billion for goods; South Korea is about 25% of Nigeria’s population. But if you check, South Korea imports were largely machinery, equipment, etc for production, while Nigeria’s were for finished goods. Also, in 2022, goods worth around $136.21 billion were imported to South Africa, with many of those industrial equipment. Check – more imports have not destroyed South Africa and South Korea’s currencies!

Imagine if our total imports increase to $200 billion where 90% are for equipment, machinery, etc for productive factories (modern and old), would that not be great? I am yet to see any data which shows that Nigeria is importing a lot, in the actual sense. And that is the challenge for the Central Bank of Nigeria. Yes, the $100, $300, etc young people are sending for virtual wallets, songs, music, etc mean nothing if Nigeria can develop a production-first strategy, over the current finance-first strategy.

We need to import more and if we do, we will likely become a hub to serve West Africa with finished goods, and that means export more. Push the nation through policy to redesign the architecture of our economy, out of the SAP mindset of the late 1980s, where we created finance houses and banks, over building and running factories.

Yes, we need to import more but the RIGHT things, and we need policies to make that happen. I am yet to read what the Science & Tech minister is offering during this FX crisis. His or her insights will be as useful as what the central bank governor is doing.

Yes, Nigeria’s problem is that we do not import a lot. And that means our solution will not come by restricting imports. For Naira to improve, Nigeria needs to import more – and importantly import the RIGHT things.

As I have noted, in 2022, South Korea’s total imports were… pic.twitter.com/EIaXZbiGTc

— Ndubuisi Ekekwe (@ndekekwe) March 1, 2024

Comment on Feed: Nigeria’s imports should increase to $200 billion? A country with less than $500 billion balance sheet size with FX reserves that hardly click $40 billion? This country cannot achieve that with its economic structure and base infrastructure level.

My Response: Import of machinery is not tied to national reserves. That is connected with investments. Nigeria’s economy is bigger than South Africa’s but it imports 2X. If you have a semiconductor factory, a big refinery, 2 deep seaports, etc . 10 great projects, your import could hit $100B even though your reserves remain unchanged.

“The significant devaluation of the naira in 2023 resulted in a materially higher net forex loss of N740.4 billion (2022 restated: N81.8 billion), reflected within net finance costs, which resulted in a reported loss after tax of N137.0 billion compared to a restated PAT of N348.7 billion in 2022.”- Karl Toriola, MTN Nigeria CEO.

As MTN loses billions of Naira, remember that many government tech-focused projects could be affected since most are funded from NITDA Levy (it used to be 1% levy on Profit Before Tax for most telcos). Most of the bureaucracies have modeled that MTN and co will be shipping to them billions of Naira from that levy. But just like that, it is MTN and co which need help now.

Brace for poor networks now that telcos are turning red. As I wrote in July 2023, and  I continue to posit, Mr. President could have made a mistake. Two policies – removal of fuel subsidies and floating of Naira – which I am 100% against, are rattling the economy. And we implemented those two policies even before an economic team was in place for the new government. Largely, there was no model on potential welfare loss for Nigerians because one happened on the inauguration between any team was even ready!

I have noted that Mr. President did not lead on those two policies and could have waited for condition precedent before implementing them. He had no access to government data. He had no model. That he could do those without looking at economic models and impacts on welfare, was poor leadership.

The economic team fighting to fix Naira and Nigeria are doing their best and I commend them. Yes, I have so much respect for Yemi, Wale, and all of them, because they’re working. They were not there when these policies were pushed.

As I noted in July 2023, fuel subsidy is not the problem, the problem is corruption in fuel subsidy. And floating Naira will destroy the economy. We should return to those two policies and reform them urgently.

Can we peg Naira for manufacturers and those importing production equipment and machinery? Can we keep fuel subsidies for industries while commercial and residential customers pay full rates?

Nigeria does not import a lot of things. The problem is that we import the wrong things. In 2022, South Korea’s total imports were $808.09 billion while Nigeria did about $60.35 billion for goods; South Korea is about 25% of Nigeria’s population. But if you check, South Korea imports were largely machinery, equipment, etc for production, while Nigeria was for finished goods.

Yes, imports are not bad; it is what you import that matters. Nigeria has an opportunity to redesign our FX, to bias privileges to those importing productively through FX credits, and not the official favourable upfront-rates. In other words, you do not give cheap US dollars ahead, you give FX rate credits when the equipment is already in Nigeria, as verified by the Customs.

“The significant devaluation of the naira in 2023 resulted in a materially higher net forex loss of N740.4 billion (2022 restated: N81.8 billion), reflected within net finance costs, which resulted in a reported loss after tax of N137.0 billion compared to a restated PAT of… pic.twitter.com/EvbAKmLe3q

— Ndubuisi Ekekwe (@ndekekwe) March 1, 2024