 Welcome once again to the breakfast here on PLOS TV Africa. Our next conversation now is moving to discussing the challenges the Naira currently is dealing with but from a slightly different perspective. We're asking why there is more and more people losing faith in the Nigerian currency and saving their currency or their money rather in the dollar either through Bitcoin or cryptocurrency or whichever you choose and we're speaking this morning with an economist, Gospel or Billy. Good morning sir Billy, thanks for joining us. Good morning. Good morning, thank you for having me. Good to have you here. Let's bring you in first with discussing the loss of faith in the Naira and where you think it's coming from. Why do you think it is at this stage currently? Well, it hasn't been a day thing, it's been happening over the years already, it's been built up around the loss of faith in the Naira and that's because we see how the exchange rates are diverging in the sense and how that has presented itself in form of a report effect on the Nigerian economy, on cost of goods and services and even engagement and as well as how the central bank has openly sought to manage the currency. So we've seen a situation where some items have been banned over the years, we've seen a situation where crypto has been banned, we've seen a situation where think-takes have been banned. So by inactions or actions of the monetary institutions as well as clear-cut forms mismanagement of the Naira and how it permeates into the Nigerian economy, people have such loose faith and are currently seeking for a plan B or even plan C around their financial management, personal financial management. Alright, Mr Obele, regarding this issue, many, many Nigerians are asking this question online. Should I save my money in Naira or dollar? And I know some Nigerians who claim that they do not even have any Naira in the Naira accounts and they actually buy dollars and save their money in dollars. I want you to help us break it down in detail as to, first of all, the advantage and disadvantage of Nigerians during that. Alright, so it's interesting to note that, I mean, we had said this several times, you know, about three years ago I was also on an interview with, I think, Irene on Plus TV, Ben Irene, and I mentioned this that very soon Nigerians will start saving in dollars. And this is the reason why number one is the fact that people have come to realize that on the month of month basis, alright, their income levels are shrinking, sorry, their disposable income levels are shrinking, alright, they're probably getting poorer, alright, in the sense and the purchasing power of what their incomes can buy or what they can stand on is currently shrinking, alright, and the people are also going to become more aware of the worsening state of the Nigerian economy and its finances in the sense and how that impacts on the Naira, alright, so. Mr. Obele, we seem to be losing you there. Okay, can you hear this? Yes, yes, please go ahead. Alright, so there's been an outcry for a plan B for a long time right now and a lot of times people have sought to crypto or real estates as a form of trying to hedge against risk, alright, the Naira risk and all that, let me just simply put, what 5000 Naira could buy in March 2021 can simply not buy now, alright, that starts to how bad things have gone, alright, so people are now looking for more creative ways to save these monies and all that. Now, let me start on the advantages of saving in dollars, alright, first of all we saw it coming, secondly it is a form of strategy to hedge against the worsening state of Naira, so meaning that since the Naira is primarily against the dollar and transactions and all that, it's in good and good, makes sense of people to begin to save in dollar, that way they can preserve in quotes the value of the Naira, alright, it would now mean that if they want to engage transactions in Naira they can withdraw in dollars and sell to the parallel market, but let's not forget that the central park has also had rolled out policies in recent times banning sale of, banning BEC exchange, alright, in the parallel market, so people can now seek to get dollars from the official market, which of course comes with its own bottlenecks and all that, so it's in the case of trying to be ahead of these ecosystem of poor currency management that will find a solution where there's been a hike in dollar sales and people are trying to save Naira, alright, save the value of their Naira in dollars as well as to position themselves in such a way that they can do more in terms of engagement, buying and selling across and within borders. Now on the disadvantage of that is that we get to find a solution where the Nigerian economy becomes dollarized over time, meaning that the level of dollar transactions even within the Nigerian economy would grow, alright, so meaning that people can now save and people can now withdraw in dollars and what would happen is that you may start seeing some mom and pop shops that start charging in dollars, consultants start charging in dollars and start making a case for it and that would continually suppress the value of the Naira or wasn't the value of the Naira because now you brought the dollar home as a means of exchange and as an unofficial means of exchange, so that's what we doing and it's going to be a very difficult situation for the central bank going forward. I want you to explain further on you know how this affects the Nigerian economy, you know the more and more people continue to all you know lose faith in the current in the Naira and of course save in the dollar in different platforms, does this in any way show that there might be hope for improvement on the Nigerian economy and the exchange rate and how can you convince people otherwise? Alright it doesn't primarily show that there's hope it just means that the system is in a state of chaos in a sense. Now the only way that can turn to a positive hope in court is if the central bank chooses to moderate that dollarization in the sense alright as a second currency in the Nigerian economy. If it seeks to officially say that okay dollar is now an official currency within the Nigerian economy that's the only way they can begin to draw some trade balance alright and minimize the level of leakage or the spillover effect alright of the current state of the dollarization alright but I don't see that happening anytime in the short time so that's why I say it's likely and doesn't bring some form of hope to the Nigerian economy alright and the adverse effects will be high over time. Now what does this mean for the Naira? It means that the value of Naira in the parallel market will start worsening at a relatively faster pace and that's because more people now have dollars to sell and are seeking to engage dollars exchange and they would even do that alright on a one-on-one level. So now you don't have to go to a BDC or go to a bank. I can walk into the bank now we draw $2,000 and seek to sell to probably an exchange rate we both can agree on alright so there's going to be a decentralization before that decentralization of the parallel market and now don't forget that there are both key effects on the likes of taking the rates down so there are going to be different rates in the parallel markets and people would want to take the laws into their hands and at that level it's really going to be bad for the Naira in terms of the value of the Naira in terms of the perceived value of the Naira in the global space and in terms of monetary system or policy development these are visuals currently happening in the global space. The central bank will be seen as an institution that cannot control its currency or manage its economy effectively and as well increase the chances of leakages within the Nigerian economy so those are the fears except the central bank chooses to alright say alright we now say that we now accept dollar and a second currency and all of that which I don't see happening in the short term. Alright you actually just first thought the next question I was going to ask you which you know is concerns this a bookie effects the fact that he has suspended publication of rates on their website now we know how the CBN said you know a bookie effects and all that I'm gauging an illegal for illegal trading and all of that and now that we have suspended that yes there are other websites as well that go ahead and publish these and even the rates on the streets on the black markets are different so regarding this how do you think this might affect what the market is saying saying that there might be different price and different rates on different websites and on the streets as well. So what may happen is there may be a base price in terms of you cannot sell dollar below this price but off that day price base price will be so much rates at which people will be selling so that's going to lead to some level of poor market coordination or alignment in the sense and to permit him to the to the formal market at some point alright so and people will begin to channel those increases into the cost of doing cost of operating cost of operating and then cost of operations rather and then the cost of business goods and services in the mid to long term so what we now say is that inflation and the cost of goods and services would begin to pick up on some particular industries faster than some particular industries meaning for instance when you look at the FMCJ space the demand for foreign exchange is very much higher there relatively than other sectors alright so that would mean that people start sourcing for these currencies over time and once they start sourcing from well-dismantled individuals who are willing to sell and all that it will now mean that there will be different price structures in the Nigerian economy as when it comes to buying goods and services and consumers would have no option that we have to deal with the ripple effect in terms and to be very unfair on the other Nigerian in return. Okay there's also conversations about the E Naira and you know other incentives that the government is trying to you know bring in to hopefully strengthen the confidence in the Naira and of course you know doing business with the Naira how effective do you think these things will be? So currently we need to understand first of all that the gain over the central bank is dealing with is structural alright so whether you introduce the E Naira or you do not introduce the E Naira it simply means that until you deal with the structural problems around productivity systems and business productivity alright and open up how I deal with access to market related challenges we love the position in the place where the Naira will become of value alright to have it in Nigerian or even visa these transactions across a million borders. Now that is to say that even in the central bank launches the E Naira today which you know decision plans to do it doesn't still reduce the fact that the value of that currency is over time alright rustling in the sense alright so the fact that the Vibes to be not just on them of trying to digitize the monetary system and all that but also dealing with the structural problem. Now I was speaking in the Zoom meeting yesterday and I mentioned that if Nigeria fixes power by 50% the Naira will appreciate alright if we can fix power by 50% the Naira will appreciate and what that simply means that fixing power with over you know with a cross-border increased productivity number one it will reduce cost of operations for businesses number two it will increase household cost of living you'll be shocked you'll be shocked the percentage of income household spend on the weekly basis unfilled and generator servicing alright so it will reduce all those things drastically and as well as create more income bandwidth for the average Nigerian to spend alright to take care of their kids to pay house rent and to improve the quality of their lives alright equally as well for businesses productivity will increase because the cost of operations has decreased alright and all that will form the supply sorry the demand structure alright to reduce the demand structure for dollar exchange and all of that and Naira will begin to find its levels so the argument for and against market demand and supply of a Naira would be balanced because productivity has come into the picture and that's the pain for which the Naira will grow in value alright so the Naira does not necessarily increase or improve the productivity of the currency alright it's still the same currency as in Western state it just means that you are engaging with those currency dynamics on different platforms and having different experiences trying to interact and all that but it doesn't necessarily mean things will be cheaper doesn't necessarily mean cost of living will drop and doesn't necessarily mean that cost of transactions on the e-space right now would be cheaper because it's a Naira no it's still going to be expensive because the value of that currency is mostly you've told us the advantages and disadvantages of saving in dollars but from your own perspective as an economic analyst would you advise Nigerians for their own personal advantage you know to save their money in dollars so let me just I would answer this question with another scenario take for instance there's a green argument that investments should begin so people Nigerians for instance should begin to seek dollar-based investments why that's because they are much more relatively stable and you're dealing with a currency that is much more of value alright and we drop any time soon and all that it's just it just a matter of choosing the right investment for yourself so there are increasing conversations on how can you do more with the Naira alright in a relatively failing economy and one of those options is begin to we think savings in currencies that appreciate over time which is dollar sorry investment in currency that appreciate over time which is dollar in this case or investment that appreciate over time which is really stable and some other in a sector of little investment over time so that's to say that if you have the capacity to save in dollars honestly peace to you because you will be intelligently seeking to get against risk because if you leave your money's in Naira one million Naira today as at 22nd September 2021 will not be of the same value in 2022 and into Boston in 2023 because when an election year comes with an election year comes uncertainties around spending uncertainties around all of these dynamics in a sense alright and and the Naira will get you thousands again and I'd be happy to take this interview again to refer you back to this okay well quickly final question for me what are your predictions between now and Christmas and of course January 2022 how do you see the Naira fairing well I'm not trying to be a prophet of June but it's gonna wasn't it's going to Western or if it even has a chance to get better for one particular reason before things get better there must be structures and systems in place for us to see those results the way economic indicators work alright but walk on the basis of actions or premeditated actions that have happened over time prior to the real time alright so meaning that if the dollar is going to improve by December January with the CBN is to start taking some actions now we need to start seeing those actions but unfortunately the actions we are seen at the moment are seeking to patch or either worsen the situation in one way or the other so it technically means that if you protect that forward we will see now the Naira will worsen in the coming months I cannot tell exactly but it's likely going to surpass 600 by January 2022 most likely going to surpass 600 by January 2022 and that's because the actions and the premeditated actions or inactions alright is reinforcing or redistributing the market which is also worsening the value of the Naira until productivity is a view alright either by facing critical infrastructure infrastructures or dealing with structural issues the Naira cannot appreciate in any way interesting one there Mr. Gospela Bailey economic analyst we really have had a better understanding regarding the Naira the dollar and how really it has been and regarding this forecast you know the only one who shares such sentiments lots of other economic analysts feel that you know it's going to get up to 1,000 Naira you know very soon and that really is is very sad for economy really hoping and looking towards all those structural adjustments and that you've mentioned the Naira can hold its way thank you again Mr. O'Billy thank you for having me it's always a pleasure good morning good morning all right it's been a pretty wet Wednesday morning across Lagos and of course we've been here to guide you all through to start of your day but this is where we will be wrapping up if you missed out on any of our very interesting conversations remember where to catch up it's simply at plus TV Africa on Facebook Instagram and our YouTube channel same at our new YouTube channel at plus TV Africa Lifestyle I am Hossal Gi and I am Annette Felix