 Welcome back to the breakfast on PlotTV Africa. Now our first major conversation this morning is about inflation. Nigeria's inflation has slowed for a fifth straight month to 17.01% in August. It fell from 17.38% in the previous month and this simply means that the prices of commodities decreased slightly in August compared to July. Inflation was 20.3% in the month on the review while core inflation which excludes prices of food fell to 13.41%. The rise in the food index was caused by an increase in prices of bread, cereals, milk, cheese, eggs, oils and fats and that's according to the National Bureau of Statistics We have two economists joining us this morning. Shagu Shopiton is joining us via Zoom and Gospel O'Billy is on the phone. Good morning gentlemen. Morning. Okay Mr Shopiton I want to begin with Mr Shopiton and then over to Mr O'Billy to tell us what it means for the MBS to say that our annual inflation has dropped to 17.01%. Okay so thanks for having me and good morning again. So the implication of this basically is that to the layman it means that the rate at which prices of goods and services that they pay for increases is slowing down. So sometimes when you think about that you know so you hear that inflation rate has gone down from 17.5 or 17.4 or 17.7 of whatever it is to 17.01. The tendency would be to begin to celebrate as oh prices are coming down but hello no prices are not coming down. What happened is the rate at which prices of goods and services going up has reduced so it's no longer increasing at the rate it was increasing before but it's still increasing you know so I think it's important to just note that and what I'm saying is you know I'm sure it's obvious to the average Nigerian because you know you know you know what you pay for the things that you buy and you know what you paid last month and you know what you paid in December you know so prices are still going up but the rate of increase is slowing down it is good news you know because for the rates to to continue to drop the rate of increase continue to drop on can only hope that that trend is maintained so that the impact on the purchasing power of the average Nigerian will will be mitigated or moderated a bit so as it stands now what this means is that hopefully the Nigerian the average Nigerian has a little just a little bit more to spend on the things that he's buying than he would have last month but the the difference is marginal so it's not something that anybody is going to notice at the moment until we begin to see significant changes in these numbers and and I think the central bank governor also echoed this the expectation and their their their their objective is to bring the inflation rate significantly lower than what it is now at a faster pace so you know for me it's obvious that more still needs to be done by the monetary authorities to achieve that. Mr Aubele do you think this is good news for an Nigeria's economy? Yeah good morning thank you for having me I think it comes with mixed feelings because yes it's slowing down but at a very ridiculously slower rate than expected and that's because when you talk about inflation in Nigeria you're looking at four major dynamics you're looking at the structural dynamics impute we're looking at the behavioral dynamics imputes you're also looking at the social economy as it's where you know and all that and then the institutional bit of things. Now if you look at what all these these four items contribute you know in debunked to medium term you realize that it's sort of recycling the same issues that are reinforcing inflation or the inflationary pressure on the Nigerian economy so until the basics are dealt with you know around the structural things around how our consumer behavioral patterns all right changes over time and generally around how institutions are trying to use policy to deal with structural issues which in this case is a very very very clean alignment all right until those things begins to change we may not see a significant drop in the inflationary numbers let's not forget also that you may have heard that inflation is dropping by one percent or zero point three one percent but technically in real time basis the price of food is skyrocketed on a daily basis and that's also because there are deeper issues around the inflationary basket and the questions around do we need to review the inflationary but uh baskets for us we'll be able to capture close to real-time inflationary because in the real-time inflationary because the inflationary position in Nigeria is very much higher than what you currently have now all right so it's it's these are deeper questions that I don't think we're ready for okay um I'm going to go back to Shagon Chopita and you know ask if you can in any way you know share with us what do you think the CBN has done right to keep it on a steady decline as has been stated um are there certain things that you've noticed that they have continued to you know impute you know to make it continue to decline and is there a way that we can maintain this trajectory yeah um I think the most important measure that the CBN took was to hold the monetary policy rate constant for as long as they have um especially given that we are just coming out of a recession and that's important so um traditionally when you're trying to stimulate growth because you've had a depression or a recession as the case may be um what you do is that you want more supply of money in the system so that banks can give credit um and therefore you know drive drive growth and in order to do that what you typically will do will be to drop your monetary policy rates so that more funds are available in the banking system and then the banks can lend um but what they've done is um resisted the temptation to do that um so that inflation can be can be tamed a bit um the the flip side of that will be if you wanted inflation to really um decline then you actually increase the monetary policy rate so this has been um the main battle and the main debate at every NPC meeting that has held in the last nine months or thereabouts since since we slipped into recession and since we came out um early this year um so I think that's a good measure on that part um but clearly you know money is to be done um I think like um gospel has said some of these things are really uh traditional um economic or monetary management policies and we may need to do more than that if we want to see the kind of impact that you know for instance that the central bank of north has indicated that they would like to see so but so far as far as that goes I think they've done um pretty decent job at least in ensuring that inflation continues to drop all right miss albile do you agree sorry I didn't get the question I'm asking do you agree you know that that has been you know a great move by the cbn and um there are a lot more needs to be done well would you you do you say that cbn has maybe done a little different oh well um to be very honest with you um the current state and the complexity of an engineering economy has made such that um factors contributing to this inflationary convention we are having has gone beyond the poor view of the central bank all right so you have an issue where there is a gross level of fiscal and discipline all right um lack of willingness to build the right infrastructure political um um um in decisiveness sort of you know and then you have high level cost of governance and all these dynamics that have affected economic management from the fiscal end now the cbn is is apparently itself in a position where they have to manage for the excesses of the fiscal side as well as do this job as the monetary policy institution all right there's almost exactly nowhere in the world where you have yeah there's always a form of trade-off between monetary and fiscal all right they're always finding ways to align but you realize that the economies are really advanced now working the fiscal side are currently doing their own bit then the monetary side are currently doing their own bit so they now find a place to align and improve on things but what you find here is a gross opposite the central bank is in the fix because you're trying to overdo all right it's function in a sense and that's because of the fiscal discipline you have so i agree with mr shagwin it comes to the central bank at the moment has tried to keep things constant when it looks at when you look at from an empire perspective and they're trying to do a lot of uh policy support programs in the agricultural space we realize that in as much as those things have been in place the the real time now my emphasis on real time because i have it i have a personal bias for real time inflation what it really is because i don't think our inflationary basket really captures the true story can you share can you share with us miss abelie can you share a little you know more with us on your real-time analysis and what Nigeria's inflation is no particular figure in mind but i know that it's way higher than that than what you currently have now because um if you look at the current inflationary basket it does not catch up for items that are that are high pressure points in the in the science all right in the Nigerian economy such as you know um technological devices phones gadgets you know all of this advanced user advanced consumption habits that consumers have um have come to interact with i also have a few dynamics are changing over time all right in terms of prices of food and all of that and don't forget also that the current inflationary basket is such that there's the the nbs collect data from the same pool of people and the same pool of items every month for the past 10 to 15 years all right if you look at the the US bureau of of statistics you see that that pool of information changes about every five to ten years because technological and and globalization advancements are reorganizing or redistributing that pool all right so if if if we choose to take a sincere look at the situation realize that the real time inflation is way higher than what we are currently reporting because of the structural issue around how we're even reporting to share in the first place but what i'm trying to say in trying to answer your question number one the cb is in the fix and can only do little all right we need to get back to the real structural work of enabling fiscal policy as well as even redefining the inflationary basket to really capture the state of things this is the reason why the average Nigerian cannot see the impact of current cb and policies on the price of food on the price of the purchasing power of the incomes and all of that so in terms of real time inflation it's way higher i can't put it but that you got to be right now because we want to go that route all right it's much more complex modeling and all of that which i have not been able to put together at for now at this stage but i know it's way higher in terms of 21st century development economics okay mr shope at all just on the back of what mr obelis is saying you know that when we look at this annual inflation it seems like we have something to celebrate when we compare the 2021 figures to last year it seems like you know this is declining and it's good news but the month on month inflation doesn't seem to be slowing down anyway and the real time inflation what people see on ground when the market woman goes to the market you know the figures keep going high i spoke to some market people yesterday and they were telling me the cost of chicken a carton of chicken that they buy to make shawarma last month two months ago has just been on a steady you know increase so could you help us break this down for the government's understanding what's the determinant of inflation in the case of nigeria in particular you have to there's no way you can run away from the food the conversation around food so a survey released by the nbs 2019 i think it was also indicated this so nigeria spent about 22 trillion around food alone which represented about 60 percent i just rounded it up with about 57 point something 60 percent of their income on food so as far as the nigerian situation is concerned a lot of what is driving inflation revolves around what's happening with agriculture infrastructure the exchange rates very very critical because as we all know we import almost everything that we use in nigeria apart from basic food staples even things like rice which the government would like us to believe is you know probably predominantly produced locally now in truth still find its way into the country the imported ones still find its way into the country and we know how much we eat rice chicken you know like you just mentioned poultry and all those things are imported so the exchange rates is a major factor in our case in the inflation conversation so there's a lot of things you know playing around each other when i spoke about infrastructure for example for the food that is produced locally we know that most of the food that we eat down south for example comes from the north and even if even if you take the north south transportation logistics issue out of the equation from the farms even in the south down to the markets you have to transport these goods and i tell you what the cost of food that you get at the market that last price that you pay as a consumer consists more about 80 percent of that cost is logistic costs not the actual cost of production of the material that you're buying itself so all of these factors come to play when you talk about inflation in nigeria so you know so there's a need to address those fundamental issues if we're to significantly tame inflation to the point where we're talking in single digit terms really because that's where we need to be we need to be in the lower single digits for us to really have a situation where indeed we can say that we have tamed inflation and our economy people are feeling the impact of growth of the economy until we have single digit inflation whatever you know economic growth you have to always be wiped away by by the wide inflationary trend that we have so so that means we can't exactly take away insecurity from the conversation you know absolutely so basically you're saying that if we're able to solve our security challenge also infrastructure challenge you know that you've mentioned fixing our roads and you know there's there's little or no challenge regarding logistics transportation of food items from one part of the country to another the prices will be driven down and the inflation rates will decline as well absolutely so for example so two things in terms of the security issue large swaps of arable land in places like casino states in places like soto states in places like benoistates plateau state natural states are no longer accessible to farmers for them to to to go to the farm they must have security and the the military simply can't do that they are under they are too straight in then on the transport side for us to see a significant drop in transport logistic costs we must have the rail a functional rail system it's just there's no other way because our roads are bad and even if the roads were good it's not efficient transporting you know the volume of goods that we need to move from across you know the country by road it does simply isn't efficient so then we know how long it will take to develop you know rail infrastructure and all of that we can see what the government is doing but you know clearly clearly it is simply under resort it can't we don't have enough money to do what needs to be done and then that expands the conversation to bigger use of you know government revenues and how to expand that and all of that so it's all intertwined all right gospel ability i'm bringing you back in and i want you to respond to um one of the concerns that i've seen online with regards nigerians inflation um this person here says and i think it you know it's it's most of the thoughts of nigerians that i shared in this message it says dollar exchange rate 562 as of this morning might be higher in nigeria but headline inflation is going down while food inflation and dollar rate are blowing up um and then of course the present questions you know the the cbn and the nbs report of reducing or declining inflation so quickly respond to that um is it possible that we can have the exchange rate blowing up and food inflation also you know increasing while having the headline inflation going down at the same time i i think that but that's the one of the reasons why consumers or the avenue and june will always um come off like that would be the fact that um a lot of times our reports in this part of the world doesn't tell the real story or the true story and which is why i started um i'll try to keep on the conversation earlier or that is a there's an argument also to improve the inflationary basket and that may not seem like an argument everybody's having we're just looking at by one person has it gone or by one person has it gone down and you know just and that that's a bit we need to move away from those arguments you know for things to get better in the sense all right so so there's a wide gap between what the methodology around the inflationary reports and what the average Nigerian is currently facing okay in some part of the country right now the cost of fuel has gone up as i asked 2015 era in some part of the country so what that means is that i will also feed into the cost of logistics and also the prices of food all right so so and even if you look at the inflationary numbers that i said to be going down they are not going down by wide margin or by significant margins it's just maybe zero point something or one point something percent and for me that's not a significant growth and essentially it's to tell you that there is some form of um um basics or real issues that are currently ongoing in the Nigerian economy that needs to be fixed up the country and as Mr. Sheldon had mentioned at the extent which are none of these dynamics are issues that bothers on the structural deficits so what the central bank and the federal government is trying to do is to use policies to solve structural issues but rather we need to use structural solutions for structural problems and one in that number one particular country is a function of the level of that country so you can expect your productivity base to be low or you can expect your consumption base to be higher than your productivity base and then expect your currency all right to be to be to be uh to be appreciated it's not possible it doesn't work anywhere in the world for currency appreciation there must be you know a firstly increase in a first increase in in uh base like productivity of that economy versus all right consumption productivity of that economy so these are the different nuances all right that plays out gospel ability can you hear us see now um exchange rates are going and it's quite it's really a bad situation and how all right um the cost that's currently happening in the market all right seems we're struggling to measure it a little with um the sound hello are you there can you have a please uh yes we can now go ahead yes so we need to close the gap between what's currently happening in the market and how we are currently measuring for all right inflation and all of that exchange dynamics function of productivity production and consumption Nigeria on that scale will be production so the currency will always be at the mercy all right of that dynamics the more we consume the more the weaker the currency because you because we don't have a productive base to grow the the power of that currency and all of that if the exchange rates were a lot more better than it was right now we would have also seen some form of positive effect on the fishery numbers on the fishing trends all right so we can't say we have not seen a significant drop in inflation because the core economics around the inflation says for instance one of the major reasons why uh the fishery is also high is because there is cost push cost simply means that the cost of price goes up before goes up and and and and that permeates through the cost of logistics and all that and we see that prices are increasing the market so we need to deal with this from an end-to-end value chain standpoint as well as we're visiting what we're seeking to measure in the marketplace from an official basket a point of view mr. Chopiton can you put an increase in exchange rates side by side with a decline in inflation yes you can because of the lagging effect in tracking of you know the statistics so remember that what we're seeing now the inflation figures that we're seeing today um are a result of events that happen maybe in terms of policy initiatives and all of that i result of events that happened maybe six months ago um so actually going to bring this point up you know i i made a mental note to ensure that i said this that um yes the authorities you know have every right to say oh inflation is going down and they're happy but you know it's almost certain that this trend is going to be reversed probably before the end of the year because of what's happening with the exchange rates you know because there's a there's a you know has been you know over over repeated and over said there's a direct connection between the exchange rate of our currency and local prices of goods and services simply because we don't produce enough we don't produce what we consume um so uh because we're importing so many things in both in terms of goods and services whatever happens to the exchange with affects the local prices of goods and services and it's just a natural connection so inflation rates would likely go back on the upward trend um as the year progresses you know so i foresee maybe you might drop below the 17 percent um um you know um year on year uh uh region maybe by next month but as you approach the end of the year and cross into the earlier part of next year you'll probably see a reversal in the strength and the key determinant of this would be that exchange rate is counterbalancing whatever else is happening on the security front and infrastructure front and all of that so yeah it's possible and to the comments that you you made earlier you know that somebody read um i think it's important to get people to understand that these numbers are developed based on standard models that are monitored by a wide range of stakeholders so it's very very difficult to cook them up whatever numbers you are seeing are reflecting what's happening in reality but whether it's reflecting them in real time as as Mr Obele has been saying is a completely different conversation so they're not cooked up numbers but they might not necessarily agree with what's happening today because there's a lagging effect also in in the numbers that you that you do see okay um so i've heard Mr Obele speak and he's mentioned the inflationary basket about three four times and when we look at how the international monetary fund talks about measuring inflation it's about tracking that inflation basket so can we talk about this and break this down what is the inflationary basket and how do we you know add more things to that basket consider more things that you know the household buys to see if we can get a better analysis a better measurement of what Nigeria's inflation rate should be Mr Shobito okay can you hear me okay Mr Obele can you hear me yes i can all right while while we try to reconnect with Mr Shobito please please go just a minute Mr Shobito can you hear us okay um Mr Obele over to you now please so um yeah first of all we uh like i mentioned it's yeah the inflationary basket the big issue and the conversion that we are not even ready for because we are focusing so much on the numbers and their insignificant growth in my own opinion than what really makes up for inflation that we are living out of the conversation okay so um yes as Mr Shobito has said a lot of these are standards at school models which I shall say earlier on they are standards at school models that a lot of stakeholders are keeping their track on however if you look at the US Bureau of Analysis you see that the Bureau of Statistics analysis you see that the inflationary basket is always constantly being reviewed and that's one of the major challenges I've had with the Nigerian economics in the sense how we think and do economics in Nigeria it's the same conversation with the state's VAT and central collection of VAT all right that you have a particular model of basket of things in the sense does not necessarily mean that that model or that basket or that situation cannot be reviewed inflationary basket is just simply a collection of items that you track every month all right and the one you aggregate you say okay this is the headline inflation this is the core and it's the food inflation this is food inflation so we need to review that basket and that bothers heavily on the on the culture around how flexible are we are we really ready to go through the intellectual rigor all right and stress stress of you know trying to redefine that basket all right and rework our measurement patterns the same thing to the Nigerian GDP all right if you look at services on the Nigerian GDP block a lot of people will not do what I'm saying it still doesn't capture the real state of services in Nigeria we just see IT and communication what does IT have bro that's big now you have software development you have cloud computing you have Microsoft database you know all this interesting dynamics and how are we capturing for all those things within the GDP structure all right so we need to rework our methodology and it's just for inflation basket for everything else all right GDP poverty and all that look at the Nigerian population for instance we're still dealing and arguing around the 2006 figures why are we doing that because we've not been able to define clearly what our methodology is all right and do not forget also many of these reports are also funded by international organizations like you may say that they are keeping a track but do not forget that in their own home country they are upgrading and updating these inflationary basket these metallurgies and all that all right so why they may not be interested in updating yours to the different commercial in itself but I am saying that in the first century economic thinking inflationary basket must be updated every 10 years because globalization is happening all right technological advancements are happening consumer lifestyles are changing and everything is happening with COVID-19 effects now that's a major milestone to even review the inflationary basket so this is important yes I want us to get practical now now you've now let us know the importance of a you know every 10-year review or decade review of our inflationary basket we know that food really comprises the majority of our inflationary basket and can you tell us what you suggest should be included you know the components of the economy that should be included into what we track to measure inflation over time so when you look at food for instance in the first place all right we need to break down the value chains for that all right there's a growing arm of process food there's a great arm of natural health and living and all of this thing so every food component in those space must be included that's one when you think of technology like I mentioned earlier phones gadgets laptops headsets and all of these interesting dynamics all those things must be included when you think of services cost of training cost of um accessing opportunities that all this is can be can be we can put a metric or proxy metrics to those things and capture them in the inflationary baskets all right a standard way to look at what can be clearly the inflationary basket because of time is to look at the the u.s. brewery of analysis uh inflationary baskets and begin to extract the summation from those things and add to us as well as review but to a large extent it's not as much as but the big question here is not really what we should include it is the culture of flexibility and rigor to upgrade the basket that is where the major issue is just like saying Nigeria needs a structure but you don't have the political way to fix a structure that's a big concern so um on the bigger picture now when we look at this um question of you know this inflationary uh basket when it comes to the Nigerian situation how can we you know put in this culture what do we need to do do we need stakeholders to come together for a meeting is this something we need to look at the npc meeting stakeholders meeting what what what kind of settings do you feel that we need to have these conversations on the national level beyond on the media all right so uh in my own opinion the same reasons why you have education the education sector and many other sectors in fact the so called and culture sector that people are pumping so much money into the sole reason why you have low gross level development in those places is the same reason why you still have the same issues in the inflationary basket scenario and even the gdp methodology scenario and what what is that major issue but we are not really innovative people in a sense and that's because with innovation comes the need for change it questions status quo all right you know and many other things so the political will the institutional will even if you have the institutional will do you have the institutional capacity all right and we really a people who are engaged high level statistical modeling and all of these imputes yeah we have a few people who can do that within the systems but how many of those people do you have at a very large scale all right that cannot take a significant level of these changes i want to see all right and with the political economy but willing to approve of all these changes we didn't understand the design the needs for all these things all right let us say they be different for what's happening in the policy space all right these are the big questions that surround the policy design as well all right our policy design is so ineffective and really poor in this client so we're not a people who are giving look at our educational sector how many students really do their projects themselves and these are the next couple of leaders so are we really an intellectual and cerebral society that is given to questioning the status quo rethinking change enabling change and building institutions that cannot take the capacity for change all right and ensuring that the right legal frameworks and all of these things are in place to effect that change okay so there are the big software issues that I mentioned earlier on that we need to look at not just the change itself okay all right Mr Obele just one question before I turn back to Mr Shopito um when you look at the inflationary basket that we use here in Nigeria and the fact that it doesn't exactly capture every sector of the Nigerian economy would you say that our inflation figures by the MDS is not giving us a complete picture are confidently say so yes it doesn't just the way I would tell you that the GDP doesn't give us the full picture if you look at if you download the GDP Exhaust Sheet or even the inflationary Exhaust Sheet look at those numbers line item by line item the Nigerian economy is way complex than what those reports represent all right and the breakdown of those reports themselves things have really gone decentralized all right and broken down into bits all right down we are trying to really centralize and and report that from a lipstick perspective or we need to go down into the specifics and break them down so it's it's a complex situation and I don't think the reports capture just the same way the population reports not capture that's the same way there is a huge informal economy now how do you capture the an economy that is over 60 percent informal how do you capture that sect into the inflationary numbers these are the big question and that's why I would still say that in as much as an average Nigerian citizen does not really understand its dynamics and they need to be educated they are also right in their own understanding they are also right because you have 60 percent of the economy in the informal space you have 60 percent of economic activities flowing through the informal space 60 percent of foreign exchange dynamics flow to the parallel markets so the argument for exchange rates all right is being powered by the parallel market and the official market your cbn in Iran all that is an argument for the official market what is the argument for the informal or unofficial or parallel market these are the markets that define the the changes that we see and of course the numbers that we see in the real-time space and are in a way to capture that all right and let me also stay here that the frs and some significant bodies have developed models to begin to capture taxation or taxes in the informal space so these things are not impossible some institutions are already doing that already all right and until we begin to rethink all these things we are under reporting that's the word i'm not going to say the reports are wrong we are under reporting the current story of things the same way we poverty it's been under reported or the human capital development is still being under in fact unemployment the general employment numbers and on on that employment numbers are way higher than we are we are reporting all right before we go back to yeah before we go back to Mr. Chopita I want you to stay gus will it really stay on this um um you know this discussion on on the reporting figures um Mr. Chopita earlier mentioned that it it's impossible or it's you know not very likely to falsify um the figures being put out by the nbs um so and he also said you know that it looks like very likely by the end of the year and of course in the first quarter of next year these inflation figures very likely will start to rise again um so Mr. Obele I want you to speak um you know more on falsifying figures as possibility or maybe you know continuation of under reporting um if we get to the first quarter of 2022 and we still do not see um you know inflation figures rising as a result of the exchange rate today um what would you blame for that would you say that you know it's still the cbn doing a great job or maybe the figures don't seem very very correct so yes um when Mr. Chopita said that it's very unlikely they are falsifying he was correct as well because the issue is that it's not an intention to falsify it is the structure or the methodology that makes the thing figure looks as though all right they are wrong these are these the current state of things so they are two different things so just like you want to say there's information there's misinformation and there's disinformation they are all three different things all right so they are not necessarily seeking to falsify those numbers all right but rather the structure of the model through which those numbers are being computed i beat 10 years or a decade backward so the numbers come out as though they're being falsified now i haven't stated that what's going to be said that a lot of inflationary numbers and all these things are not reported on real time when i mean real time i mean that there's a lag so you have what we're talking about right now is your august inflation i think yeah so we have that one month lamb but even at that one month is still not a significant in a sense because if you look at gdp unemployment and potency managers in this and inflation we're recommend it's highly recommended that the average analyst or person doing business should look more into the inflation and the pmi indicators because they are a true reflection of the economy than the gdp because the gdp is being reported like a quarter before all right but inflation is usually a month before so they are closely correct variables than the gdp variables in quotes so it's not necessarily a station of seeking to falsify all right now the reason why the dynamics may change in january is because for every festive season all right the market sort of redistributes and it's it could play out on the numbers as it were but in this case i really don't see the extended dropping and if at all inflation would drop it should still be at this one percent zero point five one percent insignificant drop in my opinion which i think we should stop putting an argument on all right because until those drops are significant then nothing is really happening in the sense because let's not forget that 60 percent of what's happening is not even been captured and it's a name from our space okay all right back to shea we'll chop it on um and let's take a you know break from the inflation direct and talk about the exchange rate it's currently five hundred and you know 60 above you know some say 62 some say might hit 65 by the end of today and even further tell us about your fears with regards the exchange rate what seems to be going on it seems very very chaotic over there um you know i mean the fears are the same fears that i shared with everybody and you know if you if you're great within the Nigerian economy you definitely have to be worried at what's happening two things um one is what's happening in the parallel markets and then the other is what's not happening in the official markets in the official windows so as it stands you know like you reported as of today exchange rates in the parallel market has hit 562 mega to the dollar and you know if you cast your mind back just six months or seven months you know that number would have seen preposterous um because we were still running at about four four seventy five and then we hit four ninety um and now we're talking five five sixty two and there's a very very good chance that before the end of the year we'll hit six hundred um so you know that's that's that's deeply disturbing given that you know has has been repeatedly said we're consuming you know we're we're consuming economy we're net consumers we don't produce right so the only thing and we we we import everything we consume so the only thing that's gonna happen is that price is gonna keep going up um so that there's that and then now there's also now the conversation around the policies that the central bank you know has been following with regards to the foreign exchange um rate management exchange controls and policies um this continued insistence of the central bank to maintain multi a multiplicity of exchange rates is a concern um the fact that the the the the gap between the parallel market rates and the official exchange rate the nafics rate which asset yesterday was still around four hundred and twelve narrow to the dollar yeah you know that is an incredible one hundred and fifty naira you know and why why is that because i remember years ago it was maybe a 10 20 naira difference so how have we gotten to 150 you know you know it's um it's so terrible so we've been talking about convergence trying to converge you know the official and the parallel market rates and every cbn administration for as long as i can remember as always try to grapple with this challenge and at a point we're succeeding um what i think has happened in this case is the the the artificial controls that the central bank has continued to to hold on on exchange rates um the discretionary application of the multiplicity of rates across different sectors so what what that has done is that you know um um forex is available to certain sectors at a particular rate it's it's available to other sectors at another rate and then there are players within the system that can access those rates and use them in the unofficial markets so you are creating an arbitrage opportunity for powerful people people that have connections and there is no way that that arbitrage because we're all capitalized by nature if i have access to those opportunities i will use them nobody's or tourist take nobody's thinking about the global peace and the good of the world everybody's thinking first about themselves self-interest and then about the good of others so if i have access to exchange rates at 350 nair for example to the dollar and i know that if i get those dollars and i can be creative then i can go sell them you know in the parallel markets you know then clearly i will do that and i think that even the ex cbn governor had made that point strenuously that you know these um policies are simply creating terrible imbalances um you know within the system and and it's it's just been a sort of havoc the latest one that the cbn has done is you know this ban you know i won't say ban you know restriction of um access by obdces yes to to the official you know um window and what that has done is further strangulated the supply side in the unofficial window because we all know that the bdc is even though they're only supposed to um provide dollars of foreign exchange to to consumers based on presentation of documentation and at a specific rate but we all know that once the bdc gets this money they put them in the parallel market streets and they're running at parallel market rates so once you're taking them off the table because you want to prevent them from taking advantage of the arbitrage opportunity you created in the first place then you're worsening the supply side question and the only thing that can happen is that exchange rates will get worse all right mr shobito you know the profusion in the in the exchange rates um the policies of the cbn right now and it's as we can all see now its chaos indeed um i want to get final thoughts on this mr obelis first and you mr shobito um so mr obelis can you hear us okay so you've talked about um fiscal policies and the need for synergy between the fiscal and monetary side um to balance up my jersey economy but your final words please on what we can do as a country to lower our inflation rates and achieve a stable economy yes i'll still go back to the four things i mentioned earlier on which is what i started with the number one structure we need the right structures to take the level of growth and significant decline in these scary numbers as well as the impact on livelihoods all right the positive impact on livelihood so once infrastructure is in place and the treasury numbers will drop once security in place those things will drop and then the prices in the marketplace will drop and all of that income can become more significant so the structure and the structure also we also talked about uh growing a productive base for the economy okay mr obelis yes mr obelis um could you wrap up in 30 seconds please all right so structure number one uh behavioral patterns consumer behavioral patterns institutional capacity and effectiveness is also very important then the right policies and alignment between the fiscal and the monetary side these are four major areas that i believe that they can be complementary enough in reducing these numbers if you take out one of those four one of those four uh there'll be a gap somewhere in its execution all right mr chopiter final words from you regarding stabilizing our economy i think that what i think yes sorry sorry about that i think that what authorities need to do right now is to focus more on the fundamentals and i think that's the point that mr bilian has been making right the most critical challenge and job for this government and any other government will have in the next 10 years is to um is to is to is to um address the revenue distribution structure of the economy at the moment from this dependence on foreign exchange until we break that our economy will not develop and will not grow all right thank you very much um shagun chopitan um an economist and of course gospel of billy also for both joining us and sharing your thoughts um very very brilliantly on the discussion today thank you both you're very interested in that as they ahead thank you thank you all right and this is where absolutely this is where we will be wrapping up this morning um has been a very interesting conversation thank you very much for joining us remember to where to catch up with any of the conversations you may have missed it's all on social media at plus tv africa facebook instagram and our youtube channel exactly thanks again for joining us this very beautiful first day of the 16th of september 2021 i am annette philix and i am osaugi agmar