 Looking at the second issue on the front burner this morning is the issue of the Central Bank of Nigeria saying it has established policies to address persistent depreciation of denier. And of course, we're going to have Muhammad join us this morning to make sense of all of the conversation. Now, moving forward, it might also interest you to know that the Central Bank of Nigeria and her director had mentioned some issues that say the local currency was currently exchanging at $414 an hour to a dollar at the official market rate, but $751 an hour to a dollar at the parallel market, so when you have different markets, a statement comes a few days after the association of Burundi Shunj operators of Nigeria criticized foreign exchange policy of the Central Bank of Nigeria for adversely imparting denier stability across the market. Well, I'm now being joined by Muhammad to make sense of all of this. Thank you so much. Here's a developmental economist. Thank you. Let's get straight to the conversation. Within the period of seven years, denier depreciated by 52.52% against the US dollar. How visible are these policies established by the Apex Bank and the fact that they said, hey, this is what we're doing. Thank you so much. Compliments of the seasons. I think the only policy in the past seven years that the CBN has done that have a positive impact in the exchange has been the import-export window that was created when the market went as high as five hundred and one that was in 2016. So after that, we've not had any policy that have had a positive impact. Well, that policy came in and dragged the exchange back to about three hundred and sixty. We enjoyed that three hundred and sixty until we got to the COVID crisis, the lockdown and all that. Then the Russian-Ukrain crisis also. Since then, I think the CBN has been on a loss on what to do as we regard the exchange rate because monetary policy seems not to be working. So they were trying to use administrative policies, five Naira for every one dollar to attract investment, but the core policy that can drive your exchange rate to stability has to do with attracting foreign investors, both portfolio and direct foreign investors. At the moment, they are not achieving that at all, rather we've seen that shrink to about ninety-something percent. So definitely we've not been attracting effects into our economy and despite the high price of goods, which have been to advantage to to boost up our reserve and attract more effects into our country because of the oil thief to one and also because of the subsidy regime. We're not able to enjoy that also. So definitely the policy of the CBN has not worked since the other first one worked. Every other policy has just been like a trial and error. Let's further look at some of the issues and I'm sure that you're very much aware that the local currency was weakened by about fifty-three percent and then external debt rose also by two hundred and eighty-eight percent. And the question is what exactly is the implication of this? What does this mean for the economy? Well, we have already seen the implication of that on the economy, inflation has gone high. CBN have high interest rates and that means that small businesses or even big businesses are not able to borrow at a good exchange rate. So cost of living has gone up and it will keep going up as we get those policies. So definitely what we have seen in that, especially in the area of borrowing, especially when the ways and the means that the CBN policy whereby fellow government can borrow from the CBN and it has gone high with about twenty-one point something trillion. And again, those that means that CBN have to bring in more currency into circulation that also has affected interest rates that also have got up to inflation, cost inflation to be high. And especially when some of these borrowing are not meant for productive venture, they are meant to pay salaries, to pay allowances for both civil service, civil servant and political appointees. So definitely those are why the economy is not responding to every policy. And again, you must also forget that Nigerian depends about 80 to 70 percent of our goods are being imported into this country. And so when you depend on that also, you realize that you are not any more effects and then you need to source for it. The primary market, which is mostly from CBN, they are not able to meet legitimate demands. The most times CBN only able to meet like 50 to 60 percent and when they meet that is about school fees and traveling allowances, they are not able to meet up demand for the manufacturing sector. So all these have been why you've seen those increase in the exchange rate and also the high inflation and figures we have seen in the economy thus far. So it's also responsible for why, you know, our debt's increased? When you look at our debt, our debt increase has to do with more with projects. According to the federal government, they borrow to fund a lot of our projects. And so that's why people like us have said that this project, project that have economic impact on the nation. So what you needed to do was to use that as a collateral to attract PPP, public private partnership whereby the private sector come and drive this sector and then they will build and operate for the for a number of years. So that will reduce what you have to borrow to be part of it. So you will be using the project as your counterpull funding, giving them like 25 to 30 years to recoup their money, just like what we are doing in the in the airport, the new airport that we were constructing all over the country. But unfortunately, I think the government have no yield to that. So they've seen borrowing as an easy way of solving some of their promises, especially those that they made during the electoral campaign. And so that's why we've seen Nigerian debt come this high, like never before. But also, I mean, in the beat to manage the value of the Naira, the CBN had introduced a couple of policies, a number of them. Such was the stopping of 41 items from assessing forks, you know, at the official market. They also offered five Naira for every one dollar of funds remitted in Nigeria through internal money transfer organization. They also banned the supply of forks to borrow the change among orders. Now, none of this seemed to have a short Naira stability. How do you respond to this? All these administrative procedures, they're not monetary policies. Monetary policies are what drive investment into your economy, not administrative policies. So now, monetary policies are what will bring foreign investors into your economy and they will come in with the dollars and then they will beef up your reserve. Now, when you look at most of these policies, the administrative policies towards creating stability internally, but they are not going to attract investors into your market. Now, let's look at the 41 ban item. Those items were banned, but those items were not banned from being imported into Nigeria. So what you see, and then you look at this 41 ban item, you begin to look at these are items that Nigeria generally use. So Nigeria still wants this item and the people that are importing this item into the country will go to the parallel market and they will get this exchange and then they will import this item because demand and supply now plays. That's why you see the exchange rate in the parallel market went up because a lot of the 41 ban items, which most Nigerians are going to use, where they're still being patronized. So the demand for these efforts to bring in this good into this country was high and so then you saw the exchange rate volatility comes in there to play. When you look at the other, I mean, it's suppose of five Naira, $5, you see that and then you also see the other policy of paying if you come to money transfer, Western Union, they have to pay you in dollars and then you went with the exchange rate of just getting five Naira per dollar by and by receiving your money in dollar and taking it to the parallel market. For the Nigerian in the diaspora, they now see that sending the money in dollar, receiving it to the Western Union in dollar and then going to the parallel market is more profitable for them than going to the bank and getting the five Naira, especially when you have to go to Amritsa, to get this five Naira. Remember, this five Naira is going to be paid by CBN. So that policy also doesn't help. The other policy that should help with the one with the brooder change, which I think it would have helped if we have done this earlier. But like I said, it's never too late to do a good policy. The brooder change have been the one that have drive the exchange rate to where it is now because of infringement that remember before now, every week $200 million were released to this brooder change to drive stability in the exchange rates. And they never did it rather, instead of exchanging for between three, I think at that time was supposed to exchange for like 360 or 365. The brooder change started exchanging from government collecting from government at 360 and selling for 450. And that is why CBN said, we cannot continue to do this and then stop that. And that cost a lot of supply challenge into the market. And then we saw the theory. Now, the problem is when CBN stopped that policy of giving it to the brooder change, they did not create a window for people that usually assess the brooder change to be able to assess the effects market. So those same people need to patronize the brooder change no matter what, because of the slimmest nature in assessing effects to the brooder change. And that also comes up. The issue of demand and supply comes up and demand was high, supply was low. So the exchange rate went up. Just as we course this conversation down, one of the policies that the central bank had said that, hey, this is what we're doing to ensure that the Naira does not depreciate more than it is now. They said they highlighted the RT 200 FX program as such policy that has been put, because there's also been speculation or probability or postulation that we probably might be having 1,000 Naira to the dollar. And they say, hey, that's not going to be the case because we have such policies as the RT 200 FX program. So how do you respond to the RT 200 FX program? I'm going to need to correctly say about the people that are saying the exchange rate will get to 1,000. That is artificial. It's not about any economic data or any economic policy. It's being driven by speculators. Speculators have driven the Naira to where these Naira are trying to drive the Naira to where they want it to be for their own selfish gain. It up to this moment you realize that the World Bank have not come out to see the Naira is overpriced or underpriced, that tells you that definitely the Naira is overpriced as it stands now. So for me, I am not among those school of thought that thinks the exchange rate will go to 1,000 Naira on what are all those business that makes you feel that the exchange rate will go up to 1,000 Naira. Now coming back to the RX 200, I think that's a policy that is working, but for any policy to work, it will take time because it took time for us to get to where we are now. So it's going to take time for us to begin to see the settling down of those policies. Remember, this RX 200 policy was just introduced by the CBN for 200 SMEs, whereby they will provide the framework, and especially those that are going to be importing goods outside the show of this country. And I think it's working based on the data that has been given to us by CBN. That's why it's based on the data that has been given to us by CBN. So it seems to be working, but it will take time for us to begin to see those impact in this policy. And why it's going to take time is because if your monetary policies are doing things that they ought to do, and the physical side are not doing anything, you will not see the synergy, so you will not see the result. Now in the first place, it is not in the place of CBN to get themselves involved in issuing of soft loan or loan to SMEs. It's not in the place of CBN. So CBN is beginning to double into areas that they are not supposed to double into because the physical side is not creating the policy that will attract SMEs into the economy or drag SMEs to do more export outside the show of this country to attract efforts into the economy. So they are going into where it's not theirs own prices. So for me, I think that's where the challenge is. That's why we are not seeing the results from all these policies. But with time, especially when the physical side begin to come out with policies that will complement what the monetary policy from it is doing, that will begin to see the result. Let me give you an example. An example is in the UK. Now, there's going to be a hike in electricity to arrive during winter. And what happened? The physical side said, you know what? Every household we are going to provide them 2,500 pounds every month to drive down the cost of electricity. And that also we take down to the manufacturing sector. That is the physical side. The monetary side, what we're doing, they take a hike, they have to go. And so the cost of borrowing goes up. So definitely, once the physical is doing, then the monetary has to have a synergy with them. That's a good thing that you have said that the policy has good intentions. But if it does have good intentions, one will begin to ask that why would the World Bank be concerned about asking the CBN to review the policy, really, especially when it's causing more problems for the foreign exchange for the country. But Muhtar Mohammed, we have to go because we need to join the newsroom at nine o'clock for the news brief. Thank you so much for being part of the show this morning. Muhtar Mohammed is a developmental economist. He joined us this morning as we look at, you know, the Naira and its appreciation and depreciation as well. That's the size of it. If you missed that on any part of the conversation, it will be great to follow us on Facebook, Twitter and Instagram, subscribe to our YouTube channel at Plus TV Africa, Plus TV Africa Lifestyle. You can also view us on YouTube as well as at Plus TV Africa and Plus TV Africa Lifestyle. My name is Messi Boko, have a fantastic morning and join us at nine o'clock for the news brief.