 Welcome back to the Breakfast with Plus TV Africa. Our first major conversation this morning is on Nigeria's economy and the controversy concerned in the central bank of Nigeria, Governor Gabriel Nemefele, and Abu Ki Fx. And of course, looking back at all the policies of the central bank of Nigeria that may have also led us where we are today. We're speaking with a writer of a tech cabal, Mr. Ulu Muiwa Ulu Ubuyega. Good morning and thanks for joining us. Good morning. Hi, good morning. Thank you very much. Great to be here. Great to have you on the platform. So let's first of all start with your views on the last 72 hours or more, the last couple of days. The central bank governor, of course, calling for a fight with Abu Ki Fx owner and some of all that drama. And of course, the website also declaring that they are going to stop posting parallel market routes on their site. Quickly share your reaction to that, first of all, before we move forward. I do think that it's been, like you said, a dramatic 72 hours. I think some of what has happened has been a little overboard. But if you look at it in the context of the fact that we have a central bank whose primary responsibility is to maintain a stable exchange rate and they've increasingly had difficulty doing that since around March. Then you understand where some of the, I don't want to say desperation or you understand where some of the drama has come from. I've said, I think in the last couple of weeks, that I do think that some of the CBS policies, while they may be idealistic, they're little misguided. Our team is guided, pretty tough choice of words. But our team is guided because on paper, they expect the market to behave the setting way and they expect individuals to behave the setting way. But we all know that theories do not always just play out very neatly in reality. So yeah, that's my view of the last 72 hours. I think some of it has been some desperate action and the part of CBN has been them trying to clutch us straws. But yeah, that's pretty much it. So the CBN governor has basically accused the owner of the platform, Mr Adid Dottun, of illegal forex trading, that they buy dollars with Naira. They hold sway and then they try to manipulate the markets. Let's talk about the possibility of a bookie effects as a website, being able to manipulate the economy regarding our foreign exchange nationwide. What's the possibility of that being able to happen? I have the possibility of a website like a bookie effects, manipulating effects rates long term is very, very small. Think about it like this. This is a website that mostly just does an aggregation of effects rates. For instance, if you pick up the Guardian this morning, you see that the leading story is that there's a backlog for FX demand of up to $2 billion, yeah, $2 billion. And you see that the Guardian, interestingly, quotes a market price rate of $1 to 570 Naira. Now a bookie effects is down, so where did they get those rates? So at the end of the day, everybody who lives in Lagos knows that if you walk to a co-hotel, you'd find a couple of people who are willing to trade. Beyond walking to a co-hotel, if you go pretty much, if you walk down your house, if you go anywhere, you'd be able to find people who are quoting rates for you. So the thing is that the parallel market, unlike the CBN's Dinafix rate, unlike the I&E exchange window, the parallel market is not one person. It's a bunch of people, right? And the prices on the parallel market respond to the macroeconomic conditions in Nigeria. So you're not going to have a situation where all these people can come together and collude, right? So a bookie effects offers a pretty simple service. They simply aggregate the prices. So yeah, so that's pretty much it. So I do not think that a bookie effects manipulates the prices. I think in giving that narrative, we just give them too much power and that's not what it is. All right, one other thing besides a bookie effects now, the general discussion concerning Nigeria's exchange rate and why we've continued to struggle. People will always mention the laws of demand and supply, foreign direct investment and some of all of that. But something else that I think hasn't also been spoken about is the fear that people have in investing and bringing more influx of dollar into the Nigerian economy. Can you share with us what you think the CBN has gotten wrong in being able to drive more foreign investment into the country? Are there certain policies that have scared investors? Are there certain positions that the CBN has taken and maybe the current administration has taken that has made that difficult? Absolutely, if you looked at, so Bloomberg published an interesting news report a few weeks ago, citing that Unilever, the multi-national couldn't get dollars that it needed. MTN Nigeria, when it wanted to pay dividends to MTN group, couldn't get dollars available for over a year at the official rates. So what we have is a central bank governor who believes that controlling liquidity is the solution to the problem. But the flip side is that where you control access also cannot be money in because the reality is that they cannot take it out once they bring the money in. So I do think that we should have a clearer moment in full FX regime. Right now, I did say that the FX market in Nigeria is broken. So we need a situation where we sort of just can sit down and redo that all over again. Okay, we have now been joined by another analyst, his Mr. Nick Agouli. Thank you very much for joining us this morning. And thank you very much, good morning. Okay, so it seems a bone of contention, you know, in Nigeria's economy in the past few hours really has been our foreign exchange rate. And the CBN is accusing a bookie FX of manipulating the market to the way it is now, trading at over 500 narrates with dollar. From your own standpoint, what would you say are a combination of factors that actually determine the rates? And thank you very much for that question. You see, we have a unique situation in Nigeria where something that is very straightforward, we complicate it, we make life very difficult. It's as if as a country, until we make things hard, we don't like it. I live in the UK, nobody talks about foreign exchange in the UK because we spend pounds. But if you want dollars, you get the dollars. If you want any currency, you get the currency. It's not a big deal. It's not something that occupies national discourse. In Nigeria, it has become a big thing, you know, that is what we're discussing now. And the simple fact is this, the dollar is the commodity just like yams you buy in the market. And the price of the dollar is determined by the factors or by the forces of demand and supply. So long as the Naira is chasing after the dollar, the price of the dollar in relation to the Naira, we continue to be high. There is nothing the CBN governor can do about it. If he lies, he can empty the entire foreign reserves of Nigeria into the FX market and the dollar will still continue to be high. Why? Because the Naira is chasing after the dollar. And there's a few instances I will give you. A few weeks ago, we discussed the issue of Nigeria setting fire on the gas we produce and then going to import gas. So when you go to the gas market to buy a cylinder of gas, you pay Naira to the dealer. But the dealer needs dollars to not go to the US and import the gas. The same thing with petrol. We say crude oil, but we say petrol at the station in Naira. And then we now need dollars to go and import petrol. We need dollars to go and import food, import pharmaceuticals, import the vehicles that we drive. So long as we're needing dollars to go and buy these things, there is nothing that we make the Naira to be strong against the dollar. There's nothing. Not even NGS, when they come from heaven, that can make the Naira to be strong against the dollar. So fundamentally, instead of the CBN governor fighting to strengthen the Naira using our foreign exchange, our foreign reserves, the thing that Nigeria needs is to go back to the fundamentals. We don't have electricity. And because of that, our factories have closed. So when you see a Nigerian, the clothes he's wearing, the shoes, the food he's eating, the car he's driving, the medicine he's taking, the petrol in his car, the gas in his kitchen are all imported. And for you to import these things, you need to go and buy the dollar. So so long as you're chasing the dollar to buy it, it will never be weak against the Naira. So these are the things that we need to do. Go back to the fundamentals. Let us become that productive economy that we were in the 60s and the 70s. And you'll see Nigeria's currency begin to strengthen. By the way, if we were, yeah. I mean, so some of the points that you've made now, clearly show that it's not just the CBN governor's responsibility now. It goes way beyond him. There's a lot of other policies of the current administration that may help the CBN governor to achieve his aim. So he may not necessarily be trying to get it to one Naira to one dollar, but at least stabilize it. And I think that's what he has been struggling with. Make it a particular figure and keep it there. I'm going to go back to Mr. Aloboega. There is some narratives that have also come out over the last couple of days. And I'm going to ask you to respond to them. The Nigerian factor in some of all of this, people have pointed out that Nigerians also have not helped the situation by being a little fraudulent. Applying for PTA and BTA and then using those funds or something else, they've also pointed out the other fraudulent requests for foreign exchange that have been used to do total different things. Are these requests and are these points big enough to be challenges with Nigeria's exchange rates? Or are they really just very, very little and not enough to have the effect that the Naira is currently having? Thank you for that question. I'm going to make a quick clarification before I answer that question. Because when you introduced me, you said I was with the publication tech of all. I'm not with the publication tech of all. I write a newsletter publication, it's called Not a Dib Dive. And so to your question, I would say that it's a little, it's a little tricky to have a policy that allows for arbitrage, that allows people to take advantage and then call on the goodwill of individuals. It's not possible. It is doubly naive because the CBN has been here before we did this exactly in 2016. When you have an official market rates and you have a BDC rates and the difference in the spread between both markets is 83 Naira. Anybody who wants to make money knows that the sensible thing to do is to go and somehow get the bank rates and sell it at the BDCs. It's not legal, but what you have done is to incentivize people. We've had different economic conversations in Nigeria several times and it feels like the big blessing we should always learn in Nigeria is that banks do not work. You have to quite understand how to incentivize people to do the right thing. One, disincentivize people from doing the wrong thing. Number two, unless those two things happen, you will not put policy down on paper and tell people to ignore the opportunity to make easy money because of patriotism. When they know that other people are doing it and get away with it. So when you understand it like that, we need to go away from this narrative of I have a problem with the idea of a strong Naira, a strong currency or whatever. What we should have is a currency that is determined by the free markets. We should not continue this narrative about exports and how we're spending X and Y billion Naira on exports because every time I hear those narratives, it is almost always the beginning of a policy that will lead to more poverty. Case in point, the border closure. Case in point, the decision in 2014 to increase the custom duty on cars. So what we should do instead is have a Naira that we don't need to maintain an artificial price for the Naira, it doesn't do anything for anybody. If you insist that the Naira is 412 Naira to the dollar and nobody can buy it, it defeats the purpose. So what we should have instead is that price discovery should be able to happen. People, buyers and sellers should be able to decide on their own, how much do we want to buy this currency? So I would say that the CBN on its own for its own path has led to this crisis, right? Because if you look at up to March of 2021, if you track the CBA rates and you track the BBC rates and you even track the parallel market rates, they're pretty much almost going in the same direction. The difference is very, very small. At certain points from 2014 to around 2019, the difference is maybe four Naira, 85 Kubo, right? So when you have that situation and you decide I still want to peg the Naira to an artificial price that which nobody can buy it. It's one of the two things. So either you're deceiving yourself or you're deceiving the market and if you're deceiving the market, the players in the market are also looking to make money and then you put yourself in a quandary. So yeah, that's how I see it. Okay, I want to bring in Mr. Agouli and then I also want you to answer the question. Mr. Agouli, in July, July 27th this year, the Central Bank of Nigeria ordered that the sale of forex to BDCs in Nigeria had been suspended and also the procession of their licenses also had been suspended. And we know that just a few hours after that, we saw the precision of the Naira and it continued on to where we are now. So the CBN in the person of God in the NFL had said that the reason why they had suspended the sale of forex to BDCs was because they had used themselves as a conduit for illegal transactions and that if anyone wants to buy forex, they can go and go to the banks who have now been mandated to do that. So Mr. Agouli, what role would you say that played, the suspension of BDCs? What role would you say that played in deciding what the market is saying now? Mr. Agouli, first and then Mr. Ologwega. Before answering your question directly, let me just say that, even Nigeria, we carry out our governance in very minor peaks and will I even say timid ways. There is no need for a CBN governor to be wedding into the foreign exchange market. Like I was telling you, in the UK, I can take my debit card, my pound debit card, put it into an ATM and select which currency I want. Is it pound, dollar, or euro I want? If I select euro, the ATM will dispense euro into my pounds. That is as simple foreign exchanges. You know, like my co-panelist said, the exchange rates that will eventually be used to convert that euro that I got to debit my pounds account is as determined by the market. Through the loss of demand and supply. In Nigeria, we have big time foreign exchange earners. I can tell you some of them. Number one, the oil companies. All the upstream oil companies in Nigeria and I work for some of them here in Nigeria, they have revenue almost entirely in US dollars. That's what they save food for. But they need Naira to pay staff salaries to pay some of their local cost in Naira. So they can put their dollars in the market, looking for Naira. You have the embassies. You know, you have the international organizations that are being funded from their headquarters in Nigeria with dollars. All these people have dollars. If only the government were allow an interplay of those with dollars looking for Naira and those with Naira looking for dollars to interact in the market. In the same way, I go to buy yams in the market. If I go today now to buy a cow in the market, the government is not there fixing the price. I am buying that cow based on the loss of demand and supply. And because there are more cows in Katsina, I will pay less price for a cow than I will pay for a cow in Lagos. Because there are less cows in Lagos. The government is not bothered about that. But in Nigeria, the government now came and created an unusual situation of having two markets. There is the so-called official market and then the parlor market. This has not created the avenue for people to simply go to the official market, take dollars at 411 and come into the parlor market and upload it at 550. How can government create such an avenue for people to be rent seeking? So these are the things we're talking about. For me, if you ask me, my personal opinion is that the central bank should stop wedding into the Naira. Let us have a single foreign exchange market. If the dollar now has to exchange at 1000 Naira to a dollar, stop it. What is going to happen? At 1000 Naira to a dollar, people will suddenly discover that a corolla car that you are importing is more expensive than the Innosons motors that are being produced in Nigeria. And then they will start buying Innoson motors. And as they are buying Innoson motors, Innoson is very happy. He's expanding his factory, producing more cars. Other people are seeing Innoson making money and they start coming into the car assembly sector. That is how you grow an economy. We can artificially be determining the value of a commodity, no matter what it is. And we are having this problem in Petro. We are having this problem in foreign exchange. And the Nigerian government has to take the first steps. All right, Mr. Agulay. Mr. Ologwayga, yes, I do like that. Mr. Agulay is looking at the bigger picture regarding how it's not just within the sphere of the foreign exchange, it's also within the wider economy. So, Mr. Ologwayga, talking about the BDCs. Can you hear me? Yes, I can. Yes, so talking about the BDCs, what role would you say the suspension of the BDCs have to play in all of this? Again, we've been here before. We did this exact same policy in 2016. It led to the exact same results we're seeing. So what we are just seeing is you're just transferring the problem from one end to the other, right? You see the BDCs, you see the banks. It's the same problem. And if you look at what the actual problem is, is that the supply of forex to the irony window has not even risen to pre-COVID levels, to 2019 levels. And so as long as that supply is not there, if you like, if you insist on the price and people cannot find it, they are going to go somewhere else where they can find it. And you have to remember as well that there are at least 42 banned items on the FX list. Those people also need to have access for X1 way or the other. They're still going to go to the parallel market. So I think that, again, just banning the sale to BDCs, again, it's just attacking the symptom of the problem. It's not attacking the problem itself when simply not attracting enough foreign exchange inflows where discouraging FDIs with the rigorous ways is to take money out of this economy. So the analogy that when we float it, it becomes a thousand, it makes coral as expensive and then people would buy it in the sense, it's almost laughable. That's not, and you say that that's how to build an economy. That's not how to build an economy, but I will not dwell on that. I'd simply say that price discovery needs to happen. I'm going to agree with Mr. Agulay up to the point that price discovery needs to happen. The CBN needs to let the prices be determined, but that's about it. Yes. So yeah, that's where they ended for me, yeah. Okay, well, I'm also going to let you go ahead and speak with regards to other persons that don't seem to be a part of this conversation and that one person is a Minister of Finance, Zainab Ahmed. She hasn't been mentioned in all of these discussions concerning Nigeria's economy and the strength of the Naira. As a fiscal and monetary policies, there's so many different angles that could come into play here, but go ahead and share your thoughts on the role that she has played and where she may not have also stepped up her game in this discussion. Well, this is directly the CBN Governor's remit. It's his direct remit. He gets to determine he is responsible for FX exchange stability. So this has, this is all his business. This is not on the Minister of Finance at all. So yeah, and in theory, the CBN Governor is supposed to be independent up to some levels. So again, this is purely a conversation about the CBN Governor. It has nothing to do with the Minister of Finance. Absolutely. All right. Thank you very much for your time and for your views on this discussion this morning. Truly interesting. All right. Thank you very much. Thank you very much for your time and for sharing your views with us. Have a good night. Have a great day. Okay, so we'll go on a break here. And when we come back, we'll be taking a look at another one in strike that Jehesu has issued to the federal government if it does not accede to their demands.