By
Sampson Iroabuchi Onwuka
Ernest Simeon Odior
Sampson Iroabuchi Onwuka
Ernest Simeon Odior
Lagos Based Industry
Journal of Emerging Issues in Economics, Finance and Banking
(JEIEFB) an Online International Monthly Journal (ISSN: 2306 367X) Volume: 1
No.5 May 2013
Citation from Ernest Simeon Odior – Dept. of Economics;
University of Lagos, Akoka, Lagos NIGERIA ‘Macro-economic variable and the
productivity of the manufacturing sector in Nigeria; A static analysis
approach’
A broad stroke of the content of his analysis of Nigerian
manufacturing sector from 1975-2011 reveal expectations in his writings, which
in spite of the econometrics used and the dummy variables, emphasizes the
professor’s lithe academic particularly his use of manufacturing numbers from
eras (9yrs) comparable to other nations and from the list of interesting
examples exposed by others who made similar strophe’ argument about Nigeria and
its failed industrial transition over the years. The above statement can be
called an executive summary of his essay which according him, “….the central
opinion of this study is that manufacturing sector in Nigeria has been
declining over the years and this is now reflecting in the poor rate of growth
and development of the nation. The conclusion however, is that the interest
rate policy of Nigeria has not been successful as expected, thus there is a
need for a review of the Structural Adjusted Programme and all its policies.
From the previous arguments in this study and from the empirical results, it is
clear that some of the macroeconomic factors interest policy have large
positive and large negative impact on the productivity of manufacturing sub
sector in Nigeria.”
The compulsion towards Dickey Fuller reveal why he is adept
to regression, but the author even from a face level argument removed the
transition from production to labor without breaks clearly dovetails on
manufacturing as more important element in hemming the lack of development in
Nigeria as opposed to production which is based on Jobs, whereas production is
important manufacturing is relative to prices or prices on top of final
products hence a question of market and market conditions than development with
respect to credit. If we can use some of the assumptions of
psycho-mathematically econometric models like those of Carlos Michelacci who
raked the assumption that changes in the economy is not entirely based on
credit to manufacturing (?), that the composition between the technological
innovation and effective credit lines and investment procedures are necessary
for changes to take place in any economy. Particularly in a case study of
Nigerian economy from the 1975-2011, which has little industries to boost,
which had other impediment such as the lack of electricity and its short
supply.
The demoted argument on the lax of interest rate
correlations between the disequilibrium and personal consumptive behavior CPI –
which he did not separate – to macro-economic consequences of Exchange Rates
and Foreign Direct Investment, which he did not separate as pliable to both
short term and long term indexing, further widens on the gaps in his argument
that the premise of lending and the extension of credit to manufacturing and
industries neglects the roles of ‘origination of loans’ which can only happen as
we move from unemployment numbers to money supply, whereas the return rate may
be tied to manufacturing and segmented in specific areas of the industries and
specific eras, there are other events in the life of every business and any
economy that should be accounted for in determining manufacturing success in
any given period.
For instance the return rate on investment to an area
struggling against older and mature cooperation creates the necessity to invest
in key and specific areas of innovation, which for Nigeria 1930 – 1960, and 1960
– 1975, and 1975 through 2011, unlike many parts of the global business did not
have enough home based innovation saving in rail roads. Besides, Nigeria had
political problems of instability and poverty of warrant any form of index
based accounting and measure of investment through manufacturing. The whole
basis on his essays seems to serve one examples, that indexing from an era can
make the essay. As such the critical tipping point in the survey over a period
with perhaps one important measures is how the credit reflects on the growth of
business in Nigeria. There are points he raised about external shocks to a
system but the point considered exogenous.
One such cases where actions from a different industry could
have impact on actions on a wholly different situation is the example of
Nigerian Industry, for instance the impact of NEPA in Nigerian productive
industries. Although the number of industries may be expected to perform X, Y,
Z of export depended economic vintage. The country through this period was
experiencing new attitude from its convenient leisure class psychology. Crude oil production as a major source of
income and alternate source of energy heralded a new era and encouraged foreign
investment in Nigeria, but at the same time. Odior’s focus on Nigerian
Industrial weight from 1975 through 2011 did not point to Crude oil as
incentive, not that it mattered, did not indicate the number of industries in
Nigeria from 1975 through to very recent times. Put it clearly at no point did
Odior make any useful arguments about the role of Crude oil in attracting
companies in Nigeria, as such the question of decades running to the issue of
crude oil? It may be common sense that crude oil as an entity that could be
argued to have ended the role of Brent Wood given the rise of IMF instead and
given the role of OPEC is diversifying the currency basket of the most legit
economic community let off.
The industries stayed
the same, abbreviating separate production numbers and meaning, but were not
totally relied upon for Nigerian Cultural and economic development. Credit as
we have argued is not a manufacturing factor, credit is production, that
Nigeria was running at 1.00 dollar to 0.84 Naira, is suggestive that industries
at the level in Nigeria were not primary to the total development of the
economy. It was tying the economy to Nigeria to crude oil and the revenue it
generated that made the difference. Another important dispatch from this period
that Odior did not mention is the price of building industries in a Third World
economy such as Nigeria. We look at the building of Refineries in Nigeria by
Shell and Oil Companies, that with the fall of Shah in Iran in 1979, oil prices
took on a noticed spank in world markets. There was higher and higher demands
of crude oil and countries such as Nigeria, Venezuela, Mexico, Indonesia,
Philippines and some Asia Tigers such as Azerbaijan, UAE, Dubai, are wanted new
facilities and new operation capacity. These new refineries required money and
when built from credit awarded to them by Nigeria, a lot of these companies
entered into questionable deals with the Government and when these Governments
such as Nigeria did not perform their wish, they sponsored their persons of
interest in the military took over the country.
With Nigeria for instance, the military entered into office
in 1983 under very spurious and questionable circumstances, but their stay in
office and consequent switch from Buhari to Babangida created the beginning of
the end of Nigeria economic correlation to its chief source of export – Crude
oil – which reverted to debt servicing over their own crude oil compromised by
the shortfalls in crude oil. The current minister for finance and economy, Ngozi
Okonjo – Iweala (2012), mentioned that “In 1985-1985, when oil prices plunged
to US $8-10 per barrel and Nigeria could no longer pay its bills, there was a
brief attempt to reform the economy and change its direction.” It is not an
isolated case despite the claims of refinery producing companies such as SHELL
masturbating of new rigs in Nigeria in spite of the debt the host owed them, the
refineries and their coming to Nigeria, the debt Nigerian owed the world,
measures the rate of returns on the credit given to these operational groups in
Nigeria, the debt given to the operational capacity of these oil rich countries
which relied on the sale of crude oil to repay these loans, and the shortfalls
driven by crude oil prices falling below estimate. Other industries in Nigeria
were also falling behind because of this, and Nigerian failure to capitalize on
the new and sensitive cash crop through training and maintaining an elite
engineering group, forced to shrink in attracting investment from oversea,
obviously, these Nigerians were defaulting on their debt; the price of a barrel
of crude oil dropped – almost unexpectedly as we notice in this 2014 end year.
“NEPA, the Nigerian Electric Power Authority – also said in
Nigeria to stand for Never EXPECT Power Always – was a giant public utility
responsible for generating, transmitting, and distributing electricity. It
consistently delivered one of the lowest levels of average per capita
electricity production in the world.” This could not mean implementing IMF
programs in Nigeria was the right course of procedure, or entertains its
plausibility that IMF encourages development of personal industries and so on, and
it will be inappropriate to shifting from the immediate concerns of
administration of industries to something else less specific. A measure of a company’s
specific development in Nigeria or a measure of a company’s specific
development in Nigeria or in any industry was not treated in Nigeria, including
in part, the Marshall partial and total recalls which we discovered in Europe
and elsewhere.
“In 1999, when President Obasanjo took office, a review of
the sector showed that no new plants had been built and no major overhauls of
existing plants had taken place for a decade, that only 19 of 79 generating
units were in operation, and that that no transmission lines had been built
since in 1987. One fourth of the average start-up cost for a business was for
private power generation and virtually all Nigerian manufacturing firms and small and medium size enterprises had
back-up generator.”
Transferred to co-investment, public offer, and concession
10-25 years of investment, Asset Sales and liquidity commercialization are
usually rounded to the last 9 years of era existence, I may seem that the real
question of period in the other of the investment in Nigeria, should begin from
1975 through 1981, beginning perhaps 1982 through 1988, and from 1988 through
to 1994, from 1994 through 2000, from 2000 through 2006, from 2006 through 2011
or 2012, etc. The reasons why we place 1975 is a period of embarkation in
studying Industrial development in Nigeria is because of the discovery of Crude
oil in very large quantities in the former Eastern Nigeria, which places it at
the end of repatriation from Eastern Nigeria following the end of the civil
war, at the end of Gowon’s administration as the Head of States and commander
in Chief of Armed forces, and the first installment of would be oil backed
military juntas in Nigeria beginning with Muritala Muhammad, to his
assassination sometimes later, till a new round of deals with refinery builders
under Obasanjo which was viewed as a continuation of Murtala Muhammad, as such
speak for the same era till the handover to civilians in 1979. These
conspicuous political and military departures may not have influenced monetary
policy saving those credit from international baskets and Paris club which is
perhaps earned from rates.
The failure of Nigeria to service its debt may have started
from resulted sudden short falls in crude oil prices, may be an example of the
reasons why foreign investment tanked in the area of manufacturing in Nigeria,
the locals couldn’t keep up with the debt and the rate of returns so tied to
fixed income did not keep up with these defaults leading to a spike in forex
exchange and the balkanization of Nigerian Naira.
Friedman-Phelps analysis maintains that the stage of Philip
Curve is at the level of unemployment that can be described as natural and
non-accelerating unemployment, which Johan Van Overtveldt (2007) elegantly
showed that “This natural rate is not an eternally constant number, but instead
it refers to that rate of employment.” He refused to toe the line of thinking
available from Friedman-Phelps analysis by citing Milton Friedman (1976a, 228),
“…is constant with existing real conditions in the labor market. It can lowered
by removing obstacles in the labor market by reducing friction. It can be
raised by introducing additional obstacles. The purpose of the concept is to
separate monetary from nonmonetary aspects of the employed situation.”
The man who mostly reckon with Samuelson is Robert Solow and
in so far as the recent run of interest from employment through investment
which are claimed to be less sufficient without innovation as these men argued,
we can add that short falls in the essays of Odior includes the mathematics
that credit and monetary policies were instrumental to manufacturing, whereas
the citation in …. Samuelson who made the chief arguments about the endogenous
responses of the dynamic system to external shocks and the regression relating
to augmented ability of the system to auto-repair per piece is important here,
largely for names such as George Akerlof, and Robert Solow who should be given
the credit for suggesting that investment and credit alone could not
fundamentally any economy in the world.
As such Credit from the beginning would never serve as the
best informed process of determining the performances of the industries and
manufacturing. It leaves us with the hook on exchange rate, and in this case,
exchange rate allows the best of us to try our hands with turnkey investments.
A turnkey investment is investment in industries that begins elsewhere but
finds its way in an entirely different environment. For instance the issue of
factories and their production capacities can be moved from a dilapidated
economic environment with lesser return rate to a lucrative labor driven
environment like crossing over to Mexico from United States. The chief
motivation is the cost of final products, largely due to labor but ultimately
based on price either on the final products or the final destination of these
products. Here, the total success that can be achieved in any environment base
on price does not transfer to technological advances including the instances of
assembly plant saving a question of time or the duration of these loans.
The only reason why company or any financial institute or
system dynamic such as the Central Banks would be willing to release money is
there are more than adequate reasons to respond to the Government original call
for money. If that call for money is considered expansion, it is only expansion
without jobs when it travels through credit, then some of Odior’s use of
Samuelson’s adjustment theorem and applications may hold water when transferred
to Dudley Fuller. At least we have a recent example in the US recovery process
which is considered job-less recovery, largely based on the intent on credit
but may intentionally mean that the system after a period of depression can
automatically repair with annualized injection of money which gives some weight
to credit facilities but does not always transfer to manufacturing. This does
not mean that the credit awarded to captains of industries such as GM and GE,
were requisite for overall growth of the economy, or could it said that the
success of these of the large conglomerate narrowed the gaps in trade deficit.
In fact, considerations of labor away from production is
simply faulty, consideration of supply of money without mention of the event
horizon is equally wrong, that the Government from debt through investment may
decide to reach for money or ask the seating officials and delegates to
authorize a borrowing – usually from Banks or central Banks, means that these
bodies of interest who do not run the Government or the economy are given the
wherewithal to buy all the Government securities which are redeemed facially
through notes. This call for money is seen through the nostrils of Fed Reserve
as Money Supply (Milton Friedman), but in terms of the relationship of debt to
investment, debt to earn as torching final prices on products is a form of debt
by the federal government under the names of tearing price ceiling or
tax-payers such as the tax-payers cartel; the treasury (Hicks). In my view,
final products resulting from deficit is an incremental shift to right of
manufactured products, hence its definition.
Debt and Investing
We may also point to the issue of Time Series, that from the
point of view of the changes that can take in any market and any time, there
are business cycles and seasons which nearly all economist agree is evident, to
the point that others who successfully removed house investment numbers from
VAR, site that shocks in the market or any market, can either be endogenous or
exogenous.
The general theory of the older principles of economies at
least preceding Keynes, or what a certain Robert Gordon called pre-Keynes
economics emphasized the agglomeration of numbers from an economy, embracing
mainly the Internal working dynamics. It is the common argument that these so
called internal dynamics of any economic was based of ……but there was another
of Economist who say it differently, that the problems of any economy, is a
problem associated with mainly external influences, that is the influences were
from the Keynes school of money a problem that due to aggregate demand and all
ultimately human problems. This school in our time is called ‘Irrational’
economists and like the many theories associated with Keynes, they cite the
importance of the Government in resource allocation.
For that attention has been placed on the shocks in the
systems that are the problem acting outside the normal bias of self-regulating
linear systems of Paul Samuelson, which as mentioned that J.R Hicks and Gordon
argued independently to be relying mainly on ‘capacity ceilings’ or ‘capital
replacement’ to estimate amplitude. It is not impossible to narrate that the
rational school of economics when from the propagation of income or the ratio
of government reaction to changes in any industry to diminishes, as also represented
in Samuelson’s multiplier/accelerator model which tend involves equations that
will tend to absorb bumps, fluctuation and shocks as they arise, and would be
required to self-generate the exogenous shocks needed.
The changes he mentioned resulted from series bearing the
results from early stages which compared with other models, which can be
compared to latter stages or applicable to ‘later periods’. The interesting connection between the
limited resources of man as Bawerk mentioned and the problems of infinite
propagation, proved a problem for
Samuelson’s linear dynamics and the multiplier effects, and following the
arguments of Hicks about capacity ceiling, the connection between the time
frame and Time series or duration as Bawerk argued for and the series involving
a test of D1 D2 as Frank Knight indicated, proves that this group of economics
many of whom are regarded as econometrics of rational economist, are probably
no different from their ancestors and other classical theories, many of whom of
Austria descent argued from their perspective and from the vistas of Adam
Smith, that the market was self-regulated.
Reading a book by Johan Van Overtveldt (2007) The Chicago
School, was much impressed by his layout argument and the quality of scholarship
and lithe academic that shines through. I was mainly interested in the
evolutionary thinking and influence of Greg Becker, especially his largely
conciliar 1993 executive piece, which recognized Jacob Mincer and a certain
Wenthraup, considered others before him including Frank Knight but meteoric on
George Stigler who is also one of my favorite economist. The shift from
Chamberlin’s support of monopoly to the challenges he met with Ronald Coase,
leaves you careful on how monopoly from varied and opposing views and
anti-monopoly both achieve control from central formative government and yet
for free market, leads to control of price and market direction, but dangerous
in terms of human factor which in Becker needed to be measured from its
economic cost. But all of these theorist discovered that there is an efficiency
of market possibility that are somewhat possible when there is monopoly akin to
conditions of large scale indexing. The impact of a monopoly in narrating
manufacturing is slightly obtuse to one crop economies like Nigeria that
estimates from Crude oil.
Here, if as Overtveldt mentions that Stagflation occurs when
there is stagnation plus inflation, it leaves us to look the fact of accounting
when manufactured products fluctuate between the prices and between private
(individual) and public choices. Although from trading perspective, Stagflation
occurs when there is stagnation either from inflation or from deflation, to a
more cogent point which I invoke against Odior, most a difference between the
two types of stagflation I have mentioned and learnt from Bernanke but not
totally he didn’t specify this difference, is that stagflation from inflation
is short term bias, leads at best to recession (as I observed after reading a
Alan Blinder 2013) but equally capable of altering the financial landscape and
it a demand cave and a supply; both of money and final products solutions, and
when there is stagflation from deflation or lack of price movement or very slow
price appreciation, or shortfalls in demand due to multiple, similar, or
alternate products types, there is a long term bias associated with it.
This stagflation or stagnation from decline in prices or
prepositional deflationary pressure, leads to depression and it is a supply
burst where aggregate demand practice is usually the solution. Both in money
types as Friedman tip toed but probable did not pay enough attention and ‘wow’
missed, and aggregate demands purely from the ‘propensity of marginal growth’ which
was John Keynes favored argument. Keynes proved a solution in the stagnation of
price mainly depreciating over time on what we call the great depression, for
if we put Frank Knight and Bawerk in the contest of viable solutions, these two
of largely European weight, looks at Credit and monetary reforms, all of which
are correct if we put in that a shift from Rational economies faulted from
disequilibrium can be demonstrated as a shift to Irrationality, it is mainly a
question of human behavior and momentum in of itself.
Between Friedman money supply (demand cave-in) and Keynes
aggregate demand solution (supply chain or burst), there is a question of investment
and growth, which is both from a manufacturing perspective and production
perspective. In respect to supply side economics which is not exactly the
theory of Surplus, we may see that investment from surplus as a sign of growth
only triggers or converges to CPI behavior which champions the family and
household economies or Margaret Reid and balances the recession from shortfalls
in houses and near to long term results in the economy. Unlike for instance the
2008, the housing numbers were outside the balancing comfort of CPI, and the
short views were so catastrophic that it created a panic requiring the Feds to
deal both the long term market structure and short term. We may indicate that
Friedman’s idea of investment from debt – which I think it’s the actual future
money from negative barriers, trumps on Hyman Minsky’s shadow boxing on this
idea of investment from debt by pointing to surplus from stage of the unknown
does not warrant a system which in his it’s not guaranteed, but in terms of
surpluses, there is always a new investment as a way to guarantee its future
returns even if meant expediting the risk factors through assorted investment
basket.
But from money we don’t already have, the tendency to alter
a bull market is only through trading inside or within the institutions which
requires a large percentage borrowing. New comers are likely to be poached if
their investing with their new earned resources or new dividend as we shift
from mutual funds and house indexes to saving loans for flows already achieved,
Here, attention on exchange rate is missing from the corner
stone of the author’s argument, although it is listed as a deviation or a
measured redeemed of deviation of less 0.5 capable of hurting the consumer,
that is, it has impact on the disequilibrium or individual and house hold
management largely on the poverty of the transition strategy involved in
industrial businesses which long term assures the success of policies given how
many new economic groups and individuals are entering the market and how well
that stand against established corporation. Exchange rate considered from
manufactured is obviously a giveaway that some markets are better placed to
mitigate on each over the issue of comparative advantage, that in so far as
Nigeria is concerned, Nigerian up to 2011, this comparative advantage
especially the primary citizens consumptive behavior is largely responsible for
any useful advancement that has been scored through manufacturing, some of
which are assembly plants with indexing based elsewhere and therefore outside
the accounting in a country like Nigeria from 1975 through 2011.
Here’s are some examples, a Toyota Japanese automobile plant
is found all over North American, especially the United States, and a Samsung
assembly plant is found allover United States and North America but the
receipts of transaction, quotes, and profit margins, are not quoted in Nasdaq
for Samsung, Toshiba, and variety of Sony products, but are quoted elsewhere.
Although some pairing is done through NASDAQ via the Vanguard but the primary
quotes are done through Tokyo. In US, the Spider Index 500 or S&P 500 is
primary established for companies and business based in United States. But we
compare the US manufacturing since NAFTA and CAFTA, some of the Assembly plants
and mills in Mexico are now present in United States.
There are still relied on the transfer of notes through
exchange commission to score in their respective registry of origins. Here the
loans may also result from these registry of origins and not necessarily
Nigeria, that the final destinations of the products may become equal to
exchange rate plus the price as final retail offer for instance products
entering into Nigeria or turn investment which cannot take into account the
credit that reaches from the Government. Hence the case of credit in spite of
the shocks to the system – that is if prepared from national budget and
planning.
Put it clearly, when Odior mentions that “The coefficient of
determination (R2) show that only 99% of variations in manufacturing
productivity (MAP) are accounted for by the changes in Exchange Rate (EXR),
Consumer Price Index (CPI), Interest Rate (INT), Credit to the Manufacturing
Sector (CMS), Broad Money Supply...” he is referencing price which are final
products of a functional markets or simply the function of any market and would
be reasons where CPI tapers off on Interest Rate. In essence, the rate at which products are
finalized are driven….
p.375
“(M2) and Foreign
Direct Investment (FDI), while the F-Stat is 995.02 with a probability
distribution of 0.000% of the F-Stat, it passed the significant test at the 5%
as the observed F- Statistic of 995.02estimated was greater than 4.458
(critical) at that level of significance.
It implies that or the result tends to suggest that the regression
equation and the overall fitness are not too good.” Nigerian do not have enough
credit line and resources to access levels of penetration of Foreign Direct
Investment, saving perhaps through Central Banks.
It is the manufacture of any product largely for reasons of
profit that the exchange rate assumes a different form, and for exchange rate
assuming from the title is derived from debt, which are forms of investment and
not necessarily credit. Here the damage to exchange rate is determined from
debt and are injuries from repayment of loans or rate of repay of loans like
Nigeria owning the Paris club, and Nigerian owning Shell and Crude oil
companies tied to Dutch System and foreign littoral of Bank currency. We state
that the damage from the debt with or without respect to investment can either
transform the buying power of a local currency hence widen on its ability to
create money without the Government – that is allowing the general public to be
part of the system - or exchange rate can degrade the local production or by
market definition manufacturing, by creating or becoming financial nuisance in
the names of long term investment whereas the system however exogenous suffers
in quality of currency rotation.
Here, exchange at the receding ends of a culture or a nation
without exchange banter for instance a crude oil banter such as Nigeria whose
interest rate is not scalable due to other West Africa countries, or equal to
those who mismanage this cash crop or one cash crop given events horizons
within the endogenous events in the system dynamic may be considered shocks,
may seek the presence of the government to further create money through call
for cash (M2) or through breaking new price ceiling (final effects) that the
existing market and financial institutions such as the Banks would have to
release more money in forms of expansion – as if in depression or recession –
and would in the end, create a balance sheet problem for disequilibrium
individuals who may be struggling against the convulsion of a new velocity
rendered through private corporations and industries.
In essence, the release of credit in this case as unopposed
to the author’s intent, is an after effect, not a prolegomena to manufacturing
indexing, or based on the concept of receipt of interesting information
provided through macroeconomics that the laudable practice of structural
reforms as elsewhere argued by Paul Krugman can be achieved through national
budget as part of a general stimulus. This does not call for additional credit
through Banks or special concession saving for profit or advertised interest or
gains, in so far that the expansion of the Government and its willingness to
structural reform is concerned, or in so far as the transformation any economy
can be measured – not necessarily achieved – estimates through industries and
their manufacturing indexes are largely dissociable from numbers. For other
reasons other money policy, there are reasons why the budget from the beginning
and these may be achieved through budget planning and fiscal policy.
“The co- integration term for a single model is known as the
“error correction term” since the deviation from long-run equilibrium is
corrected gradually through a series of partial short-run adjustments. Since the variables are non-stationary at
levels but cointegrated, then their dynamic relationships must be specified by
an error correction model (ECM) in order to capture both the short-run and
long-run relationships. VEC includes both the long run and ECM. The Error
Correction for the long run MAP equation is explained below: D(LOGMAP) = - 0.039( LOGMAP(-1) - 0.0085EXR(-1) +
0.399CPI(-1) + 0.650INT(-1) + 6.705LOGCMS(-1) - 7.222LOGM2(-1) -
2.758LOGFDI(-1) + 13.099 “ (3)
In limelight, we might consider that speaking about
manufacturing with the kurtosis of 0.5 or 0.05, is reasonably ambitious, that
the manufacturing is not the same as production is not small misplacement of
Economics, that the initially position of the manufacturer or manufacturer
index could indicate its origins by the levels of free trade between separate
Nations of interest and perhaps nothing else. The professor looks to show that
CPI and interest rate may adequately help disequilibrium of private interest, but
we are certain that this point is either too general to the land of reasonable
point of view with bearing that the total view from the main point assayed by
the author but missing from his piece is that all financial products, all
behavioral activity of the consumer are final products duct-tape to demand and
hence price from disequilibrium, and not supply which is industries which is
advantage from supply /pricing towards equilibrium. It is common sense that CPI
cannot easily beset interest rate in spite of frisson effect, that the ends of
rates is to perform the buying functions of demand equations, ends if not the
whole essence of rates is therefore averse for offload unwanted momentum
(propensity) from a stock real interest and not through the classic variable on
aggregate demands.
“This implies that, the adjustment coefficient (ECM) or the
speed of adjustment of MAP if deviated from its long run equilibrium is 0.04,
while the intercept term still is positively related in the long run (13.10).
Also the error correction estimate equation shows that the long run behavior of
Exchange Rate (EXR), road Money Supply (M2) and Foreign Direct Investment (FDI)
appear to have negative relationship in adjusting to long-run disequilibrium
given the ECM value and that the long run behavior of Consumer Price Index
(CPI), Interest Rate (INT), Credit to the Manufacturing Sector (CMS) appear to
have positively relationship to the adjust to long-run disequilibrium given the
ECM value. Since the magnitudes of some coefficients are large, these…..”
Robert E. Lucas, Jr. Prize Lecture, December 7, 1995,
MONETARY NEUTRALITY, University of Chicago, USA, “The central predictions of
the quantity theory are that, in the long run, money growth should be neutral
in its effects on the growth rate of production and should affect the inflation
rate on a one-for-one basis. The modifier “long run” is not free of ambiguity,
but by any definition the use of data that are heavily averaged over time
should isolate only long run effects. Figure 1, taken from McCandless and Weber
(1995), plots 30 year (19601990) average annual inflation rates against average
annual growth rates of M2 over the same 30 year period, for a total of 110
countries. One can see that the points lie roughly on the 45-degree line, as
predicted by the quantity theory. The simple correlation between inflation and
money growth is .95. The monetary aggregate used in constructing Figure 1 is
M2, but nothing important depends on this choice. McCandless and Weber report a
simple correlation of .96 if Ml is used, and .92 with M0 (the monetary base).
They also report correlations for subsets of their 110 country data set: .96
(with M2) with only OECD countries; .99 with 14 Latin American country”
This fact is excessive and the figures only highlights the
seemingly obvious, that excessive presence of foreign denominator easily
mitigates on any local market, and it looks to arrive its final impact on the
buying power of any private (individual) or in disequilibrium, since it can
only be the case from a negative balance sheet, that the final impact of social
decision is depended on budget, perhaps meeting a rational economics which
makes and breaks exogenous mode lines and endogenous exposition or shocks. For
debt is generated endogenous from a system, but returns on investment is an
exogenous shock. Between the essential variable of shocks.
The debt as investment becomes a different matter when it
travels through a fiscal policy. The main is the execution of the process which
is the cog in wheels of progress for many economic communities and Nigeria as
well. A transformation of the infrastructure can be achieved through a yearly
budget especially when the demand on cash crops in the International Market do
not create…. Part of Krugman’s Great Unraveling is how the interruption of
classic expansion through budget was mitigated by the exceptional aggregate
propensity best informed from the arguments of Keynes concerning the very knack
of US struggles for New Deal away from Walter Bagehot of the 1870’s. By premise
if not by total recall, we are looking to advertise that the whole measure of
regression used by the Odoir as from the original intent at marginal utility (‘Macro-economic variable and the productivity
of the manufacturing sector in Nigeria; A static analysis approach’)
measured or metered from any standard deviation of any industrial market(?), in
this case Nigerian Industrial 1975 – 2011, looks to impose that a tipping point
is visible through this period, where the behavior dynamics of consumption or
consumptive behavior differs sharply enough ….Therefore speaking of credit to
industries or credit to industries as a way to enhance manufacturing (?) we are
not so general and comprehensible that individual interest in transform is
easily incorporated into a general interest to national and overall interest by way of
Banks.
“Credit to the manufacturing sector has the potential to
increase the level of manufacturing output as long as the demand is targeted
towards Nigerian manufactured goods as more money is made available to the
industries to produce more. The policy implications is that there are basic
structures that must be put in place for Nigerian manufacturing sector to
obtain higher productivity, loans and advances has the capacity to sharply
increase the level of production if only credit lines.”
Electric Car California example….Retro
EV incremental operating cost
evt = mt (elec/eveff + gvrm* evrmfac) + battery t
gvt + mt (gas/gveff + gvrm)
where
(1) elec = cost of electricity in $/kwh
(2) eveff = Ev efficiency (wall to wheels)
in mi/kwh
(3) evrmfac = Ev repair and maintenance
costs as a fraction of ICEV repair and maintenance costs
(4) gas = gasoline cost in miles per
gallon
(5) (5) gverm = ICEV efficiency in miles
per gallon
(6) Gvrm = ICEV repair and maintenance
costs ($0.029 per mile)
So,
Mt = miles traveled in year t
B = discount factor (1/CI + .04)
Battery t = battery purchase cost in year t.
The calculations done with due respect to cost of production
including ICEV repairs as minority to other automobile is meant to create the
analysis of ‘Present value’ of ICEV repair and to cost derived from the Rand
and from CARB. The composite usually carry the graph model showing dollar term
differentials models from some cycle or a new model with respect to an old
model. The emphasis on GAS for instance, is set to compare with the total
amount of work put into a vehicle and the difference to the dollar per each
vehicle. This model may have started with Ford before RAND, but the cost
analysis of ‘Present Value’ is set to meet Periodic lending is closer to
parameter Toyota Models, which does not include the EV versus Gas gosling
Automobile comparative, but newer model associated with ICEV which are produced
by non-popular companies and the EV by the more popular 7 leading EV plus
battery companies.
The years covered were 1998 – 2002, it measures the ratio of
new Electric Vehicles including production time and distribution network not
counting taxes and the ratio of the automobiles manufactured with the constant
or set time of production, distribution, and sale, or market triangle involving
the production of gasoline dependent vehicles and EV. These processes involved
are factored into the equation and in many ways than one, represent, the total
expectation or demands for the product with a given time and once more, and the
percentile value was not based on the productive chain on the biggest 7
conglomerates rather on the new EV companies with new margins.
Their statement mentions that “For uniform and triangular
distributions, one can approximate percentile values farther out in the tails
by linearly interpolating between the function values at the 5th (95TH
) percentile and the value of the function when all parameters are set at
the lower end (upper end) of their ranges.” That is a failure rate at 5%
or 95% perfection not unlike Tesla for good and bad ratings, but general high
standard with due respect to the emission of gas, narrow cost complementing a
5% percent initial write down with a view of perhaps a further write down given
the success rate over a presumed lifetime emission…..
There is also the issue of repeat performance which expected
to meet target with increment of resources (supply of money) for 2010, 2020,
showing the plunge from 5% gap to less than one with the 10 period. The short
duration is best fitting for a region that has expansion on one hand and has
the issue of liquidity which new companies face – especially in umpteenth competitive
environment. In reality, production possibilities of any industries is subject
to rigorous process but for the wealth of expected turn overs from a period of
expansion, there is always the issue of innovation. My argument that in spite
of ‘creative destruction’ of any one city with some degree of capacitance or
any one environment facing the stress of new plant and production house; blast
furnace and assemble plant, the phase of expansion is important since
innovation leads to new ground, for the size of that expansion and the staying
power of the expansion is subordinate to innovations during this period. I take
the argument from Schumpeter whose long theory is not exactly wrong but not is
expected to be untrue given the various changes in a given time frame and that
resources including human beings are not unlimited resources.
Graph….
But in respect to the estimate of the production ability and
the meeting the target, the California Group and the Rand Corporation compared
the operating cost of EVs to ICEVs and from the comparison there was the
speculation that THE Big 7 companies dealing on EVs would to lower the price of
their cars, in other to retain their competitive advantage, especially when
there are not under a lot of Credit pressure to deliver on the cars. This means
that the Present Value of new innovations from new cars in old economy is not
compelling as measured from price, that therefore expectations going forward
would most little be derived from total performance over a period of time.
To reverse this trend, the suggestion is that the cost for these cars by
companies other than conglomerates is further reduced and this will entail, the
attempt to match or beat estimates of EV by large companies, and during face
off, these new companies will be expected to significantly reduce the price of
a vehicle.
If we borrow from the sample, we discover that the
challenges that several American Manufacturing Sectors face is not dissimilar
from what new companies in old markets face in California. There is an
understanding that the herding which is a competitive advantage we face in a
business environment permeates the initial phase of innovations. For instance,
the appearing on new businesses are usually poached by big corporations with
long standing traditions, in fact one of the two reasons why several giant
companies remain in business for so long, is because of this kidnapping of new
frontiers. This is not always the case but when we compare the rise of a new
industry in context of existing once, for instance the Automobile Industry in
Detroit emerging from the rust of carriages and the rail road carts,
experienced difficulties at the beginning and where in fact attacked by these
companies until it was more than obvious that the fabricated parts from steels
and brass industries, may cut the cost of production and revise the emphasis on
trains and horse carriage, it gradually but eventually won the day. The Ford
Corporation introducing its new brass and copper allow car with steam engine
attachment, suffered losses at the beginning, but when he nearly gave he
received a boost from nowhere and the invitation of car companies operating
elsewhere such as Europe, made the day for smaller vehicles which was quite
expensive but less of hassle to what it eventually became at the turn of the 20th
century.
Manufacturing is really stock and price domain, and when
there is a separation between Investment (price) and Commercial papers (Bonds,
mortgages), Banks can’t perform credit lines for industries on behalf of the
Government, in essence, it must look at the performance of its local industries
and interest, its investment is generally a question of equity and equity is
marginally 8-10% of receipt and customer deposits. But as part of a general
budget, the terms of expansion could have been failed by budgetary requirement
saving for new facilities of sudden interest rate changes forced by sharp
declines of forex exchange or sharp delineation of foreign exchange banter.
P.375
“The establishment of Microfinance Banks (former Community
Banks), Small and Medium Industries Equity Investment Scheme (SMIEIS), Small
and Medium Enterprises Development Agencies of Nigeria (SMEDAN), Bank of
Industry (BOI) should be overhauled for development and improvement in the
local production. Also, efforts should be made to achieve a more realistic and
stable trade balance through liberalization (through FDI) that will guarantee
output growth in the both short and long run.”
This confirms beyond reasonable doubts that the author place
faith in Banks as the money engines for liquidity and for credit or even too
much faith. He contradicts on his élan that “trade
balance through liberalization (through FDI) that will guarantee output
growth”, where the same FDI in author’s previous incarnation is argued as
detrimental to disequilibrium or individual propensity, therefore dislocates
the roles of stock market and the investment which both the Banks and any
institution could make on a product for the future profit. He speaks of
monetary policies as a better instrument in managing the threshold of
investment, but it would done better through fiscal policies which is the major
platform for all government based reforms. Banks do not create credit - the
Government does, Banks do not create money - the Government does, and in
respect to credit lines or grant of credit, it is based on outstanding equities
of the Banks and partial repository with the Central Banks.
p.378
“In the long run as predicted and forecasted, the credit to
the manufacturing sector remained the highest determinant of manufacturing
productivity in the long run in Nigeria, while the monetary factors; the broad
money supply and exchange rate would have a negative impact on the sector’s
output in the long run.”
“The implication of excess money supply is inflation, which
can be attributed to an excess of the supply of money relative to the demand.
Excess money supply causes the value of money to drop, which manifests itself
as higher prices, causing each unit of money to buy less.” Spurious. Excess
money is generally expansionary and the main product of price which is
inflation is inflationary pressure which job creation do not necessarily help.
For that, excess money happens when there are spreads between the money markets
which Commercial Banks have little or no defenses on
As a consequence of the flaw of his argument, Banks are
private owned corporation with license to operate publicly may lead us to the
part that changes that occur in any society are product of its market and
prices which is not directly interest rate than inflation, is primary reasons
why debts are serviced and why there are trade deficits and gaps, and why there
are poor exchange rate which Banks unless so determined for interest rate, do
not have much to offer. Manufacturing is within the definitions of the banks
stocks, which is equal to investment where investment in this case is equal to
gains from previous underlying securities. Credit quality of Nigerian
government and their Banks as too tar for consumption, it withered on the heavy
brows on international standards with the country moving from Aa to crisis,
there was hardly any guarantee of profit saving Government which in Nigeria did
not exactly happen, which is the whole reasons for the labeling on
Corruption.
“Higher price levels, however, will eventually increase the
demand for money, as money is needed to finance more costly transactions.
Inflation reduces the demand for money at first, but when the inflation ceases,
the demand for money will level out at higher level than existed before the inflation
started.” Spurious
Bohm Bawerk (1911) ‘Handworterbuch der Staatwissen Schaffer’
(3rd Edition) “The level of the interest rate prevailing in a country does not
in the long run depend on whether that country has a large volume of coins or
other types of money, taking this term literally, does exert a certain
influence on the movements of the interest rate – an influence which, although
not profound, is very conspicuous and therefore often over-estimated,
especially by the layman.” That “…then the excess quantity of money, to the
extent that it pours into the channels of the commodity markets, will in a
well-known fashion reduce the purchasing power of money.”
“This however needs to be reverse because as the rate of
inflation rises, the value of the Naira reduces and this affects the quantity
of inputs (raw materials) that can be purchased, wage rate, cost of machinery
and also increases the price of the final product, which if it is too high,
could push demand from locally produced goods to chapter foreign goods which is
not the best for the growth of the manufacturing sector in particular and the
whole economy at large.” This statement
is spurious.
The estimate for lines of Credit which the Government do not
covet on its score is based in part of the underlying securities, facilities of
the individuals or reliable expectations of the business thrust, and to some
extent new changes that could take place in any economy. “The study has
therefore brought out in clear terms the reason for the poor performances of
manufacturing sub sector in Nigeria. For
example, monetary policy can account for moderate change price levels, which
can cause the reduction. Monetary policy positively impact is maximal and
partially significant when compared to fiscal policy. This shows that
expansionary policies are vital for the growth of the manufacturing sector in
Nigeria which in turn would lead to economic growth. References Adebiyi, M. A.
(2001), “Can High Real Interest Promote Economic Growth without Fuelling
Inflation in Nigeria. Journal of Economic and Social Studies”
It’s correct only if we compare it to increasing interest
rate when the economy is doing badly or less than a 4% growth----.“Our interpretation of the result is that
improvements in some of these factors would account much for higher
productivity in the manufacturing sector.” In essence it is an employment
argument explaining the production side of it. It is not manufacturing
argument, a shift from unemployment to product shows what side of NAIRU graphs or
Philips curve you are proceeding from. For all intent, manufacturing does not
encourage credit, production does, whereas manufacturing is ridden to price and
estimate, it is not bound by any levels of Banks activity or State activity
saving for special cases of ‘unemployment’?
II
Ernest Simeon Odior and the dollarization of Nigerian naira
look forward to role of foreign denominator in a local economy and how it
promulgates inflationary pressure. Some of his outstanding examples can be said
to have defined the premise that facts from examples as the examples between
arguments made about the use of dollars or foreign currency such as the British
pounds makes the formidable case that their presence in any and under any
exercises of trade exchange, only led the buyer from the centrality of its unit
of exchange to other market forces dictated by price and currency, enhancing
the departures from currency or
encouraging lack of confidence in major domains often create additional gaps in
the money market spreads hence incur real inflation rate on the buyer and the
economic disequilibrium.
We follow his argument from the last page into this second
departure in Odior treating of Digital Currency, that his position on the
merits of a digital currency in country such as Nigeria, which is he assumed by
many Nigerians and by others as a solution that will check the floatation of
capital and inflationary pressure. The point that quantity of currency or
quantity of money in expansionary market policy seems to show that there is a
deficiency gap in considering a digital money, slightly different from Credits
cards and Debit cards, to psychologically discourage the tendency to spend or
expenditures with respect to Robert Mundel and Harry Johnson, who see the
relationship between purchase and balance sheet economic unraveling as similar
to expenditure or study of expenditures, which are necessary for improving
aggregate demands but do not have to toe the lines John Keynes even though he
should be absorbed of the comparison and shadowing in of his monetary policies
by Harry Johnson who see Keynes as fatal example of old forms of economic
theories. But in the context of quantity of money given the mindset of Fisher
and his MV = (money velocity, compared to Friedman’s money supply, may show
that the two angles on both equation should emphasis quantity of money where
price theory is reversion to what we have.
The trick of this process is that a poor execution procedure in narrating Harry Johnson’s account from the new reality of Mundell regional currencies, give and take on one critical aspect of all these schools and perhaps why the systematic argument of the quantity theorist may not fully apply unless as I mentioned from Western Union and Currency wars, that the a single in all its measure of economic value is also a market quantity. For if this is true, we can see the difference between Friedman and Fisher, since Velocity argued from its impact on interest rate can be considered money, where interest rate which as Bernanke mentioned is price, therefore interest rate and funds rate is rate of money and its velocity is concomitant to the argument about the supply of money – my demand cave – and probably attributable to the early levels or stage of the rates and flows of money in action, the M1, that at end of flow, there is a new level of quantity of money theory that straddle between M1 and M2, which is the path created by the expansion or contraction as the underlining securities and how well it stays with the return of money; the derivative, that the end of flow of rate of money, there is a diminishing of the correlation between the rate of money and velocity to the money in circulation which is not exactly knowable.
Therefore one function which rate of money performs it’s in the price at the receiving end of the flow and velocity, for if consider that the scalar and vector quantity is added to the first rate and in the upside of inflation, there is a tendency to mitigate inflation through a fund’s rate that can be achieved from interest rate preceding a future money actions by Federal Reserves or Central Bank, that the conditions of money to expire its flow is flow measured from the price of product or manufacturing than the quantity of money redeemed by inflation or inflationary pressure, although by price theory, these paths cross each other only if we explain it through M2 as equal to the supply of money, and by nominal interpretation will create a bad receipt for expansionary path of a final product increasing a central bank, and the propensity to leverage a system ; that a such propensity increases derivatives and options as opposed to the path suffered from M2 in explicating velocity where sharp difference exist, which will argue that sensitive inflationary conditions nominally decreases a propensity to leverage an underlying security or cave a derivative. What we may argue also is that the conception is only good on paper, since in real life, people tend to take more risk when there is little chance of profit and not the other way round. The only explanation to this is what I tend to offer, that as much fixed rates are in US linked to US Government bonds perhaps the case in Europe and housing numbers and mortgage linked to fixed income without necessarily torching permanent money.
The trick of this process is that a poor execution procedure in narrating Harry Johnson’s account from the new reality of Mundell regional currencies, give and take on one critical aspect of all these schools and perhaps why the systematic argument of the quantity theorist may not fully apply unless as I mentioned from Western Union and Currency wars, that the a single in all its measure of economic value is also a market quantity. For if this is true, we can see the difference between Friedman and Fisher, since Velocity argued from its impact on interest rate can be considered money, where interest rate which as Bernanke mentioned is price, therefore interest rate and funds rate is rate of money and its velocity is concomitant to the argument about the supply of money – my demand cave – and probably attributable to the early levels or stage of the rates and flows of money in action, the M1, that at end of flow, there is a new level of quantity of money theory that straddle between M1 and M2, which is the path created by the expansion or contraction as the underlining securities and how well it stays with the return of money; the derivative, that the end of flow of rate of money, there is a diminishing of the correlation between the rate of money and velocity to the money in circulation which is not exactly knowable.
Therefore one function which rate of money performs it’s in the price at the receiving end of the flow and velocity, for if consider that the scalar and vector quantity is added to the first rate and in the upside of inflation, there is a tendency to mitigate inflation through a fund’s rate that can be achieved from interest rate preceding a future money actions by Federal Reserves or Central Bank, that the conditions of money to expire its flow is flow measured from the price of product or manufacturing than the quantity of money redeemed by inflation or inflationary pressure, although by price theory, these paths cross each other only if we explain it through M2 as equal to the supply of money, and by nominal interpretation will create a bad receipt for expansionary path of a final product increasing a central bank, and the propensity to leverage a system ; that a such propensity increases derivatives and options as opposed to the path suffered from M2 in explicating velocity where sharp difference exist, which will argue that sensitive inflationary conditions nominally decreases a propensity to leverage an underlying security or cave a derivative. What we may argue also is that the conception is only good on paper, since in real life, people tend to take more risk when there is little chance of profit and not the other way round. The only explanation to this is what I tend to offer, that as much fixed rates are in US linked to US Government bonds perhaps the case in Europe and housing numbers and mortgage linked to fixed income without necessarily torching permanent money.
A permanent money, is best explicated through the social
security and savings theories of pension, championed by Martin Feldstein and
Franco Modigliani, and James Tobin, which not only argues for continues
injection of money into the system dynamic such a permanent income of
distributive income; Social Security and Pension, gives on a bright side some
incentive into the rate of renting, purchase and housing numbers. The only way
we can understand that the market rate of houses is through permanent income
which I relocate to distributive income from social and government pause. This
rate is the rate of actual money since the new income bracket do not flight in
the face of new real estate which is half the life of presenting a new building
or real estate, whose measure is started in the discount of the future money
through underlying credit of a first acquired, which is based on current return
rate with APR abiding from any lender even the ‘last resort’ of it, that a rate
of rate betted on FICO estimate as from fixed income showing current jobs, does
not incorporate the opportunity cost of losing the job in nearest future, does
not include the price of the future market in 30 year bell weather and mortgage
rate, that at 30th year for instance, a house acquired and lived through
incorporate new measures which the original owners may no longer afford.
As such the estimate from a permanent money which exist mostly from Europe example, is how much any real estate could cost when there is payout from a government cost measured in market rate of real estate. All of these process is the thirty year sickness or mortgage that cannot fit into economic systems but borrowed without physical cash but on the understanding that the owner must to live, then until the money exhausted, the issue of digital money is therefore future money and has no meaning or participation in the current shocks in the system saving for serious cases of final flow or end of flow, a bad argument that can only be understood from quantity away from M2.
As such the estimate from a permanent money which exist mostly from Europe example, is how much any real estate could cost when there is payout from a government cost measured in market rate of real estate. All of these process is the thirty year sickness or mortgage that cannot fit into economic systems but borrowed without physical cash but on the understanding that the owner must to live, then until the money exhausted, the issue of digital money is therefore future money and has no meaning or participation in the current shocks in the system saving for serious cases of final flow or end of flow, a bad argument that can only be understood from quantity away from M2.
the tendency to percolate the currency of the life of
mortgage is no only the exponential growth rate of the APR over the same house,
which leaves you paying more than required, that there is a reserve of the
original price which is sold at discount from the beginning and was therefore
intended not to serve a profit in short term for the house owner. This is going
by the interpretation that is equally possible when we but when there is
flipping of houses, selling and buying new houses, multiple acquisition of
houses by a single entity, the expenditure issue becomes a problem, money will
not be called a single entity but a credit of entities, as such the physical
quantity of money, even for a digital process has little to offer when there
are activities in an industry that is outside the propensities of available
money. Saving is an investment when there is digital currency, savings like we
find in China, is an advantage there return of rates that has nothing to offer
to activity of the economy….
If Mundel theory is granted additional meaning and drastic
economic measures, it is only in the aspect of digital currency since the money
velocity (Fisher), supply (Friedman) and propensity (Keynes) may no longer
apply, what we therefore experience and consider is the final measure is a
reversion to savings, savings by private with or without hints of further
rewards in any demand and supply.
The estimate of risk involved in lending can be carried over
to the propensity to spend when there is quantity of money.
The main reasons why
the ‘Project Cure’ was slated for Nigeria is to demote the fast pace of the
balkanization of Nigerian Naira, a currency I for one is arguing needs to be re-evaluated
to salvage the currency from the current precipice on which it stands.
Ijeoma Nwogwugwu, The
Battered Nigerian Naira and Project Cure, “If the naira is stable and can
serve as a store value, there will be no need for people to convert the naira
to the greenback. It is irrelevant if the CBN prints the N5, 000, N10, 000 or
N20, 000 banknote; insofar as a banknote cannot guarantee value, people will
always convert it to currencies that do so. The primary reason individuals or
institutions resort to dollarization is because, as the reserve currency of the
world, it offers the greatest store of value, not for ease of carriage or
portability.” Sept 12, 2012. We derive from her argument that bank notes cannot guarantee value which
is not necessarily hers, but used appropriately here and for that some issue
regarding the quantity of money is best observed. The propensity argument is
slightly aged but necessary makes and break on the need to have less money or
digital cash-less money transaction, although the physical quantity argument
will no longer be in effect.
“Lastly, from a cost perspective, it remains to be seen if
the CBN will be reducing the cost of cash by restructuring the currency. The
central bank, last week, in paid advertorials, showed that the cost of printing
and minting currency notes and coins had fallen between 2009 and 2011 from
N47.141 billion to N32.627 billion.”
In a Brief overview on the Central Bank of Nigeria’s
proposed currency restructuring exercise Speech by Governor of the Central Bank
of Nigeria, at the press “Project Cure”, Lagos, 23 August 2012, Mr Sanusi
Lamido Sanusi ; “I am delighted to brief you today on the CBN’s proposed
currency restructuring exercise, which we have code-named “PROJECT CURE”. As
you all know, one of the core mandates of the CBN, like monetary authorities
across the world, is the issuance and management of the legal tender currency.
This implies that the CBN is responsible for the entire process of currency
production and it includes the following elements: design, production, storage,
distribution and the disposal of unfit banknotes.” His citations makes it into
the essay going at the root of his reasons for the action that he took,
although Nigerians inveighed against it especially the instigation bearing
quantity of money clause, there are some academic reasons to hint that Nigeria
needs an administration institution for Bank and Banking and inaugurate a
similar Bureau for Economic Research like US NBER. When these operative
associations are available, it becomes much easier to test the waters with
interest and other fund rates before proceeding.
Where a lot more argument on there is need for Nigerian
market to expose its diorama weights, it looks permanent to measure out that
the lows perceived by many others of a South Africa removed from the top by
Nigeria, would or perhaps may not last, that in so far as the markets are
concerned the majority of the advances in Nigeria through the internet
resources and through the sequestered banking resources like those available in
Nigeria arrived there easily through South Africa. In pivotal inferences of the
range of possibilities that is meeting for a connection from Europe to South
Africa as opposed to Europe via Portugal which is the preferred logistics route
instead of South Africa, that domain market in a West Africa may in fact hasten
the Atlantic Crossing and their bids for and against the only whole internet
company Tata, the latter is believed to be in league with Nigerian cell phone
industries hence more position to look
at the Cogent and South African companies including the SEAMAN which needed to
expansive co-operation of South Africans to line East of Africa, whereas
Nigeria and West Africa was ahead of the curve and was by 2001, already the
main event in the Industry.
According to Sanusi (2012) “An important component of our
responsibility is ensuring an optimal currency structure in terms of
efficiency, cost effectiveness and balanced mix of various denominations. It
entails the CBN being responsive to the changing needs of the economy and
keeping pace with evolving trends in contemporary currency technology-world. In
addition, in line with international best practices, monetary authorities are
required to review their nations’ currencies at intervals of between five (5) and
eight (8) years: S/N Denomination Date Restructured No. of years 1. N10
December 1999 1 2. N20 November 2000 1 3. N50 April 2001 1 4. N1, 00 October
2005 7”, WE
I tallied this event to what happened to the investment of a
Nigerian Bank byname First Bank, which expanded at the same as other Bank, enjoyed
profits with a share of losses like others, but for reasons of their own, First
bank suffered the most. Apparently, the width of expansion of FIRST Bank in
Nigeria was wider than the rest, the age of their investment was older than the
rest and their penetration was more legendary in terms of Market Nigeria that
with events horizons of 2008 and already incurred inflation, the total losses
were a result not so much from expansion of the credit due to crude oil prices
but a deeper mezzanine debt tranches that were either out of money in the
course of life (duration) or buried in the circumstances of the financial
kamikaze in spite of the automatic self-repair.
A re-domination of that currency may avail these Nigerians
the highly prized inception of foreign interest with immediate and direct
acceding to West Africa and Bay of Fish where the Naira would more than likely
play its ultimate cards.
Technologically, Nigeria may meet the requirement of digital money and surpass
South Africa as much of the world would accept, but the demand for co-operation
between South Africa and the rest of the world, open and closes on this same
issue that when Nigeria wakes up from its current slumber, the East and West
Atlantic Crossing and Internet bubs and ports will forever operate outside the
reach of these Nigeria.
Looking to feature of Project Cure from the rear-view of the
businesses that attributed this rounds of dollarization which is bad – even for
the Americans – for American dollars is only useful and can be said to be
useful when it is used as banter for currency exchange, for only the can it
mitigate against a local market exposing its weakness on one hand, promoting
the American dollar Status quo. I coined a new splitting of the process
‘Currency Wars’, a coinage that some have mentioned existed separated, but when
meshed with the price corruption
which was self-defined from the weight of analysis into the Europe and its Bank
savings, and how European savings and investment were all wasted in less than a
decade sure common applause of inflation which were naturally occurring.
This is what I described in kindly light as price
corruption, which is the square root for currency wars, that the presence of
future currency (currency progressing with its markets such as the Euro and the
dollars) should not be allowed to enter the Nigerian welter weight market bare
and naked or simply unaccompanied with the sale of crude oil or denominated and
originated foreign direct investment (FDI), that sending for instance Us
dollars or Chinese Renmibi to Africa without the land of exchange and exchange
rate, that is sending dollars from new York to Africa to be picked in dollar
term, was a mitigation against the currency and a polar tug for its local
market. For every US dollar redeemed
through Western Union or any Bank of interest in Nigeria, or in Africa, or in
Mexico or similar such countries of the world, to be picked in dollars, the
currency being a commodity no different than food or manufacturing products,
suffers a trade deficit which widens without their knowing it, leading to
Balkanization of the currency and inflation edging away from the axis of the
exchange rated piece such as Naira.
Here as the deal, if 20 billion dollars move from Nigerians
and Africans anywhere in the world to Nigeria or Ghana, it is considered a form
of investment by these receiving ends of the business. But this is a trade
which the inability of Nigeria and Ghana or any other West Africa or South
Africa to send their own currency to United States to be picked up in Naira
(Nigeria) or Cedis (Ghana), or any nation that that have their nationality
physically and fiscally active in the United States, send or engages in
transactions with US dollars to their countries of origin, stands to widen the
wealth and power of the dollars, but when the dollar acts like it does in
Nigeria, it becomes a predicate for that economy, forcing a first world market
and standards to apply in a Third or International markets such as Lagos, what
we experience is an undesirable damage to the local unit of exchange and a depreciation of the local return rate of
products manufactured in these countries.
US as a Super power in the world, not unlike English or
Britain and with Chinese relaxing their business and immigration policy, these
currencies like the French and the Swiss, will always have a future market in
its currency niche and may future return rate – hence a positive economy or
investment. It’s Nigerian capable to granting a stasis for the economic
bandwidth of West Africa and Africa which they champion? The answer is yes,
that in spite of the absence of the Canary Wharf in Nigeria, in spite of the
absence of New York and Chicago International mercantile currency basket, in
spite of the fewer number of foreign currencies other than the dollars trading
in Nigeria and freely, that its perform based expectation of future market
through Forex or other exchange bias, can be usefully realized from a
re-denominated local currency.
Secondly, by emphasizing local currency ticked to the Naira
in spite of all argument these Banks are making, that all currencies are by
exchange careening equal to a final products, and like canned beans, rice and
tomatoes, a specific foreign denominated currency is simply and ultimately a
product similar than the once mentioned but marketed separately.
There is no doubt that a liberal attitude towards foreign
denominators may undermine the weight of currency price index. From Forex
perspective, Nigeria as an International market, rank through the third tier,
characterized by local frontier and by the conversion rate which does not the
need the Bank. But the wealth of resources which are possible through this
range of businesses may confine some of the more endearing composition on the
subject by way of the Forex in relation to other parts of the local West
African Market.
The re-evaluation as part of the attempt at dollarization
would by condition of its existence consign the new attempt at digital monetary
rotation of Nigerian currency into oblivion, for if the re-denomination of the
Naira is achieved, quickly and on time, the new and nearly responsible attempt
at buying back the Naira with stated crude oil and cash row currency such as
the dollars and the Europe may not be necessary. It is natural that Nigerians
object to the physical presence of dollars or any other currency saving where
they belong – the Banks. It is common sense to mention that the use or abuse of
dollars in Nigeria by Nigerians from USA or from elsewhere, or by Americans
visiting Nigeria or others can be better met with a greater appeal if the
currency rate – at least for now is offloaded from military problems and
credits panache – to a less than 00 re-denomination.
Of course the papers for the prospects and oppositions to
the status quo are not yet fertile or the government shown a kindly filtration
to such research as dollarization and Project Cure, or sample opinions on the
merits of a re-denominator in West Africa and in Nigeria removing as Charles
Soludo suggested, the 00s from the current mark to paper Nigerian Naira. As
opposed to Ngozi Okonjo-Iweala and her refutation of the Nigerian Naira re-denomination or her ameliorating examples of ‘Reforming The Unreformable’
(2012)’ lessons from Nigeria mainly administrative, management based history of
the transformations going on Nigeria.
