Who will tell the president?

Last week I bought a kindle from Amazon, I was charged 270 naira per dollar.

This week I noticed people paying for Nigerian hotel reservations from abroad through hotels.ng (The start-up I work for) were charged 200 Naira per dollar.

This morning I saw this on twitter.

Banks are round tripping?

Who will tell the president..

• That Nigeria has at least three different exchange rates, and the gap between them is growing daily.
• That banks have become the biggest round trippers.
• That round tripping now gives a ROI of about 35%, few other ventures can give you that in such a short period of time.
• That the price of oil is not going up anytime soon, so the downwards pressure on the Naira is unlikely to ease up.
• That demand(for dollars, or anything else) is an economic force that can not be controlled, you can only react by adjusting the price or supply.
• That banning importation of items, dollar spending limits, controlling the use of naira cards abroad and other demand control methods are temporary measures that are ultimately unsustainable and do more harm than good.
• That there are only two ways close the parallel market gap.

1. Increase Nigeria’s exports which is a long term approach, and the most favourable
2. Devalue the currency

• That the currency is already effectively devalued as most Nigerians buy dollars for 270 naira.
• That devaluing the naira does not hurt manufacturing as manufacturers are already finding it hard to access dollars to buy raw materials, and devaluing makes imports expensive which makes local goods more attractive.
• That adjusting to constantly changing CBN and bank exchange rate regulations makes it difficult for any Nigerian company(especially start-ups and SMEs) that does business internationally.
• That foreign investors are wary of investing in Nigeria with this climate of uncertainty about rates and they do not care if the exchange rate is high or low, as long as it is stable.
• That the gap between official and parallel rates encourages round tripping which stretches the gap further, this is a vicious cycle that can only be stopped by devaluing.
• That fighting market forces and trying to keep the naira at 200 to the dollar cost the government billions in foreign reserves and the cost has now been shifted to everyday Nigerians that buy dollars at 270 naira and sell at 200 naira.
• That all we need is for Mr. President to make us a market.
• That Nigerians have spent so much time and energy thinking about exchange rates recently, I think we all deserve economics degrees.

Friends, family, advisers to the president, economists, twitter people, everyday Nigerians, Nigerians in the diaspora…...

The president may be aware of all this, but his actions(and inaction) so far tell a different story, so just in case he does not know all this..

Who will tell the president?

This article originally apeared on my blog The Naira Guy