 Now, we're back with the breakfast and plus TV Africa. We had to, you know, the issues of the economy. The central bank of Niger, the Cebien, has raised the monetary policy rate. The MPR has stated to 15.5 percent from 14 percent in an aggressive move to fight inflation in the country. The governor of the central bank of Niger, Mr. Godwin Mepheli, disclosed this while briefing the press at the end of the fifth monetary policy committee meeting in 2022, of course, in Abuja. He also announced an increase in the cash reserve ratio, which is a minimum of 32.5 percent from July, CRR of 22.5 percent, while the retaining liquidity ratio at 30 percent. The governor said that members deliberated on the impacts of the widening margin between the current policy rate of 14 percent and inflation rate of 20.52 percent. We have Ubon Naya, who joins us. He's an investment and economic development, but he joins us all the way from the United States of America. Ubon Naya, it's good to have you join us this morning. Yeah, thank you for having me. All right then. Let's quickly talk about the rate. What does that mean? I mean, the 15 percent from 14 percent to 15.5 percent. What does that really mean? Because these are very technical terminologies. Yeah, it's as simple as interest rate. Interest rate is basically how much monies will be worth, the worth of money when you want to borrow money. So if you want to borrow money from the bank now, it has to be above 15 percent because if the rate is 15.5 percent given to the banks, that's commercial banks from the central bank. So that means by the time they add their commercial, their cost of funds, management fee and all of that. So the funds will be above 20 percent at the end of the day. So for any business that wants to borrow money, it means that you have to borrow it at a higher interest rate. That also on the flip side. It also means that people that have monies in the bank would also want to keep their monies in the bank for a higher interest. So that is, you know, that's the easiest way to explain what just happened. Well, but what would you say the implication would be for the Nigerian economy now? Now, I always try to define the role of the central bank and the physical money when it's a fiscal policy managers as a in a football team, the strikers and the defenders. Now, the central bank are the defenders, while the physical policy managers are the strikers. Now, the success of a team is highly premised on what the strikers do than what the defenders do. Now, it is when the strikers are not doing well that the game pushes back to the defender. So the defender is now trying struggling to see how they can't, you know, stop goals from entering into their into their own goalposts. Now, I try to break this down so that everybody will understand that the central bank, where they are right now, all they're trying to do is try whatever means to see how they can, you know, shield the economy from going down. But nevertheless, whatever it is that they do will not be able to help the economy bounce back. I say that because, like I said, if the physical policy managers are not turning out policies, programs that will keep the economy liquid, it will become immediately difficult for any central bank to support the economy. If we've been shouting ever since, whether you like it or not, the implications are one, you're going to make cost of production go higher, too, because if you're trying to mop up liquidity within the system, it also means that those who are taking money from the local banks who are producing and you see, local industries have had issues. They've been struggling since post COVID. So if interest rate becomes higher for them to borrow, it becomes cost of cost of living becomes higher. Goods and services become a bit more expensive. So it's just that they're in a dilemma that it's really nothing they can do at this point. See, that's why we're shouting all the programs that the central bank kept on doing, all the interventions. See, they spent over nine trillion around intervention. If these things were pioneered by the fiscal fiscal fiscal fiscal fiscal policy managers, it would have been a lot easier. It has a way of jumpstarting the economy. So if these things are sustainable, it would have been able to bring in a whole lot into the economy. But as it is now, it's a very tough one. Well, so you stated that, I mean, in the course of all of this, you have mentioned that the CBN is trying to manage the economy and not ensuring that the economy goes down. But it feels like we're going down already. And so what would you say that the CBN is doing that the economy is going down? That's from saying it is beyond the central bank of Nigeria. It is what the policy makers, the National Assembly, the those who are in the executive is what they do that would actually help the economy better. So what are the policies that we have concerning agriculture? What are the programs that we have concerning education, research and development, the oil and gas? What are we doing to see that there is a robust economy? What do we do for the service industry? Are we doing anything to support the service industry? So these are key things that support the will of development in any economy. So if we are all, this country is import dependent. OK, let's say we are import dependent. Countries exist that depend on importation. We're having revenue issue and a country as huge as Nigeria that depends so much on importation. We don't even have a shipping line. So we depend on people to even get the goods into our country. And we are crying over not having enough liquidity. We don't have money in our economy. We're having revenue issues. We're borrowing to support the economy to pay salaries and all of that. So there's so much to be done. See, infrastructure, we have issues with infrastructure. Input in agriculture, limit when it comes to power. So we don't even know where to hold. So my point is, the CPN is trying to defend as again, it is not their role to to to to get the economy moist. No, it's not their job. Their job is to to to defend the economy, you know, with monetary policies. Now, the physical policy managers are the ones who are supposed to, you know, bring up programs, policies that will help the economy to stay afloat. No, but OK, so now I mean, it's very clear what you're saying that it is not the CBN's responsibility. They are only acting. So if you have all of the policies, the CBN is putting out, they're only acting in accordance to what they are expected to do. They are doing what they are expected to do at the end of the day. And that's what they are doing, right? But however, the president, especially if you look at it in terms of agriculture, the president said that his policy on agriculture has actually saved the country from a collapse what you like to say. And really, he's talked about we must grow what we eat and we have to eat what we grow. We have always been very conscious of need to achieve food security in Nigeria and to encourage local farmers and the real economy. This country was one dependent on foreign rise. And so rice has been a major, you know, concern for this administration. And so this administration has been big on saying we have been on the plus in terms of production of rice and what have you. I'd like to show you thoughts on that. Closing the border, not forgetting that we have closed the border to foreign rise to ensure that local production tops the charts and that we're able to, you know, consume what we're producing. I'd like you to share your thoughts on this one. Now, this is this is what it is. I believe that I want to use the rice issue as a, you know, as a test case when it comes to taking strong decisions to see how you can become productive. Now, a lot was done. The anchor boroughs program was initiated, piloted, you know, fully supported by the Central Bank of Nigeria because it brought the necessary investment that was required to drive that process. Now, farmers were engaged, you understand, you know, big people started in milling rice and all. Now, don't also forget, as soon as that began to happen, there were all that external influence that hit our food belt. I use food belt because, I mean, if insurgents, insurgency and all of that began to hit work, this production or this because rice production is basically, you know, farm and then meal. So if the farmers can go to farm, of course, that particular program was already sabotaged from day one. Now, the other issue here is if our raw material supply strategy is not as good and then if you're talking about raw material, basically over 60 percent of most raw material comes from agriculture. So if we're looking at wheat, we're looking at sorghum, we're looking at sugar. So if the productives, if we did not become productive within those fair, it becomes difficult for you to see results in the economy generally. Now, there was an intention for us to begin to grow what we eat. There was an intention for that to happen. Now, the process began. Did we achieve milestone? Did we achieve some of the milestones? Of course, we did. Obona, the president stated that Nigerians are now eating because we actually, you know, ban an importation of foreign rice. The president stated categorically that Nigerians are eating local rice. That's what it is. And so why are we still grappling with it? Are we really eating local rice? I mean, we're eating the rice that we produce. They are Bakliki rice. Yes, I don't remember the last time I had it because I haven't been eating it. We are. No, no, no. No, we've gone beyond a Bakliki rice. So what are we can now do? No, we are doing proper right. We're doing proper milling. So there are so so much that you eat in the market that you don't know that they are made locally. But that does not negate the fact that they have become more expensive because all the factors are now in, you know, you have to include cost of production, cost of transportation, which is still high. So yes, we have produced locally. It has become more expensive. It's easier to move goods from China to Macmillan bus stop in a battle than to move goods from a state to a power off. These are these are these are issues that affect, you know, productivity in the economy. So yes, we try to do that. But don't also forget that we still were still dependent on importation when it comes to wheat because these are things that you use for things like, you know, staple foods like rice, rice was not sorry, like bread. So you see, we solve the problem, but we still have more problems. Even the problem we try to solve, we didn't solve completely because we had security issues. We still had infrastructure issues. So the cost of products, the cost of logistics was still very high or still remains high. So it's economy is like you will until you're able to solve the entire, you know, the entire compartment of the wheel. And there's a conflict and agreement of, you know, bringing out the full result is never complete. You always find yourself shooting yourself, you know, in the foot at every point in time. So there has to be a comprehensive program on education. There has to be a comprehensive program on a financial engineering strategy. There has to be, you know, market identification and supply supply supply chain, you know, a full supply chain structure. There has to be what I call raw material supply strategy for it to work. So if we are still dependent, most industries still depend on import, you have not solved the problem. But for me, what happened with the uncle uncle Boros program was to show, yes, it is possible. I expected the government that immediately we notice that there was a serious problem of insurgency in the north would have faced the south where we face crops like cassava, where we can also, you know, get things like glucose syrup. OK, let me give you a very simple example. Nigeria is the largest producer of cassava in the world. Thailand is the second largest producer of cassava in the world. Thailand earns about two billion dollars from cassava every year. Nigeria makes less than a hundred million dollars from cassava every year. So that's to show you what it means when you produce something and you don't add value to it. Well, so I mean, if you look at all of this, we set up with agriculture because we know that the Buhari administration has been great on agriculture and what have you bought. You have analysis and reports saying that it's been the weakest if you look at it, because we're growing the sectors green at about 15.5 percent. Drugs opposing that with, you know, other government or other administration, for instance, the one before the Buhari administration, which is the Jonathan, which was at 13.5 percent, if I'm not mistaken. And so would it be very rational to say that we have been very great on what we're eating, what we're producing? That's the question. You said that the products will be very expensive, but I can categorically tell you that the rice that I consume every day is not local rice is not made in Nigeria. What's still important, even with the fact that the government has said we have banned importation of foreign rice. So what exactly are we even doing with ourselves? Really, because it's not foreign rice is not made in Nigeria. So even even if we have said that we are making this rice, but I can tell you that the rice that I have been eaten, which is very expensive, it's not made in Nigeria. It's still an important rice. So first, what was the essence of even saying we're, you know, banning. Foreign. No, I'm not trying to be an advocate for the government. All I'm just trying to do here is to make you understand that you cannot. These are things, yes, you can promise heaven, you can promise heaven on earth. But the reality is, is a process. It takes time, like I always use the the the the GSM thing. When it started, GSM was so expensive. The SIM card was so expensive, but now the SIM card is almost free. Now, it's a pro is a is a is a is an outcome from it comes from either scale. When you scale, when your production, when there's a product, what is when you do scale in your production? So that means more people have to go into farming. I want people have to go into agriculture. If you see, it's all about perception. Now, the perception in investing in agriculture became, you know, something that a lot of young people were all becoming very interested in. Now, everybody now would would have been putting so much money in agriculture, if not for insecurity, because if you see good results, if you see good numbers in agriculture, do you definitely see people, you know, gravitating towards moving towards OK, this is the safest place to put money. Which is another disadvantage to, you know, what we're talking about earlier. When you raise interest rates, people now see a company seem more comfortable to just, you know, put their monies in the bank and expect returns without doing anything. So if whether you will see rice that is imported rice on the shelves, yes, of course, you will see now from the CBM books, you have to ask how many from M have we done on importation of rice? They will tell you they've not done, you know, so much. There has been some high drastic reduction of money spent on importation of rice. So every rise that you're seeing probably just came illegally. But I mean, all governments try to augment because we keep saying we keep on directing our population. And rice is one of the most consumed food or commodity in Nigeria. So if government needed to import or support, you know, give license to some few people to bring in rice to augment the one that we are producing due to the fact that plans in work because of insurgents. I keep. No, no, that wasn't that wasn't the case. I mean, very explicit. It was said that there was any does a ban on foreign production. And that was, I mean, foreign rise or whatever it is, you know, we didn't allow all of that. The essence of the ban was to encourage local production. The president had categorically stated that we're already eating what we're producing, really, in terms of I'm not even going to all the parts. I remember very well. Let's see. Sorry. If I can remember very well, that was earlier when the borders were shot. They shot the borders, you know, because, you know, they still, you know, used to move rice from some of those borders in, you know, to Nigeria. So the borders were shot to support this industry. Because man, a lot of all these right farmers, you know, association said, no, we can't start producing unless, you know, some of these things, these measures were taken and the measures were taken. And some of these companies have jumpstarted. They started working. They are people. They are big, big milling. You can't even, you can't even begin to imagine. Try and do small research on how much production that we do now in Nigeria from almost zero to almost every state in Nigeria. Have you can imagine Lagos state having a partnership with Kibistit at one point where Kibistit was producing in tons of, you know, tons of millions of tons of rice to supply to Lagos state. So these things have moved from where they were to where they would not gotten to where we want to be. But I said, they were, they were, they were destructions. There were things that happened that were not part of the plan. If not, we would have, we will have exceeded this particular level. I understand where you're coming from. It's clearly, you see, like I said earlier, it's something you have to, you have to have a robust plan on security. So these things will continue to happen until you're able to get it right. Good. But let's, let's move away to another part of this conversation, which, which talks about the announcement that was made on an increase in the cash reserve ratio to a minimum of 32.5%. Prior to that, it was 22.5%. Right. First, my question would be, what does this mean? While they are retaining the ratio of 30%, what does this really mean? Because this is, you know, technical terms that's very specific to these particular sector. So I'd like you to explain the fact that we're moving from 22.5%. So 32.5%. OK, so what it means is that, let's say Bank A, you have 100,000 there. So what you have to leave within central bank, what you have to leave within central bank will be less, less 22.5% or the actual 32.5%. So you can only work with the, you can only work with them. That's, I can't do my math is very well right now. You can only, you know, work with the remaining. You can only learn from the remaining. So that's what it simply means. So you can't work beyond that circumference. So that is as simple as that. Let's talk about inflation. Inflation has also been part of it. And when we talk about inflation, usually it might not just be easy for an ordinary Nigerian to understand what it is. So when we say that inflation is on the high, we're looking at the figures now, what does that mean? It simply means that there you have lots of money pursuing less goods. So the cost of goods will continue to search high because you have too much money trying to buy a particular commodity. So it makes so there's there's scarcity of goods. You know, there's a scarcity of goods. So it makes goods more expensive. So what the central bank is not trying to do is to reduce the amount of money. You know, trying to chase chasing after a particular those goods so that it will now, you know, that sometimes most most cases, you know, drive the cost of cost of goods, you know, you know, downwards. So that's actually basically what inflation is. You know, trying to break it down as, you know, as as elementary as I can. Because whether you like it or not, if you are having issues with most of your most of the most of the consumer goods that you have are all important, you're having FX issues. So it makes cost of goods more expensive. And then if you have a lot of liquidity, it will also increase the amount of people chasing after that particular goods. So it becomes the case of the highest bidder. So the what of your, you know, what of your of your monies will continue to, you know, go down? Well, but generally now we're looking at the fact that the inflation rate is at nineteen point six four percent. And of course, two point two seven percent point higher compared to the rate recorded in July, that's in twenty twenty one, which is seventeen point three eight percent. My question is, what does this mean now? What does this mean to an average man? Because when we have all of the statistics and all of this fear, it might just almost be difficult and possible to understand the dynamics and what it means in terms of spending on the buying and selling. What does this mean to us? No, for every consumer, everybody should have at the back of their mind that if if you used to buy, we used to buy a plate of rice for 100 Naira. So you're going to be buying it for, you know, maybe one hundred and twenty Naira or one hundred and fifty Naira, because I mean, it has a multiplier effect. So if the inflation rate by records, you know, by statistics gives you that it's about is that the increase from the two point seven five percent increase. So in reality, in real terms, when you get to the market, it's going to be a lot higher than that. So everybody should know that cost of goods are going to get higher. And not only that, it's still good. I believe it's going to get higher than this, because that's if you were entering an election year, so there's going to be a lot of spending on electionary. You know, there's going to be a lot of, you know, there will be a lot of what profit taking from, you know, from investments, a lot of investors will pull out their resources. It's just a natural occurrence. It's not like there's anything wrong. It's a natural thing. If you had money and then there's going to be a scrabble. If you have money in a pot and there's going to be a scrabble in that room, the first thing you do is to take your money out, because where a man's treasure is, that's where his heart is. So no investor will leave his money in an economy where there's going to be, you know, a struggle, a struggle, political struggle. So they will do like they will stand on defense to watch and see what direction. But of course there are risk takers, you know, the huge risk takers who will still say, OK, either way, I know I'm going to be comfortable. And then there are also those who cannot take out their investment because the kind of investment they have are not the ones that you take out on. You know, but this will actually affect the portfolio investors more. Those are people who play in the capital market. There's going to be a lot of profit taking. People will stand on defense to watch to see what will happen. So pretty much what I like, you know, there's going to be the infliction is going to get higher, you know, in real terms. No, so quickly now, I would just throw this. Niger would become 62 in a few days. What would be your thoughts on the economy and what should we do? More like the issues and maybe the solutions. Now, I said that, you know, one of the reasons why I'm here in the US is because, you know, we had some huge investment summits here as one of the side events at the United Nations General Assembly. Now, when I was interviewed, I said very I said, you know, clearly anytime you call, investors will come. Why are they coming? Because the truth be told, yes, we have issues. Yes, when it is not the most favorite place to put money. But the thing is, Nigeria is one of the most untapped nation when it comes to economy, economically, is an untapped economy. Solid mineral on tax infrastructure, investment in infrastructure to, you know, to when it comes to public private partnership on tax, services on tax, a country with over 200 million people untapped. So this is to show you that when it comes to our economy, Nigeria is still a virgin land. The only place that we have even the oil and gas untapped. I say untapped because we have not even been able to add value to the oil and gas. So this is a nation where if we have leadership, if we have people who understand that every second means something. Monies are invested. Monies are not thrown around. People who understand prudence, pay attention, pay attention to people that pay attention to distills, processes. It will, you see, you will be shocked at what you will be marveled at what this country will become. I say this, I always say, I always use that a very simple example. What we play over, what we play politics with, which is I've ever heard them talking about Ruga, whether cattle, all those kind of stories in Botswana. What manufacturing contributes to Nigerian GDP is exactly what cow contributes to the GDP of Botswana. So even the cattle that we are raring, they're supposed to help us because Botswana is one of the highest, they are one of the highest exporters of beef to Europe. So cow leg, cow leg in Botswana is sold for 25, for 25 pulla. 25 pulla is approximately 700 nera. So if you buy the four cow legs, they will give you the head of the cow, free of charge. Well, that's a lot. OK, we need to go now. I remember in Pranjati. Yeah, it's OK. OK, we have to go now. I mean, I think that that's even fair. 700 nera and having a cow head, we probably would be having many cow heads in Nigeria. Thank you so much, Obuna Ikoko, for being part of the show this morning. I mean, we look forward to showing more of your thoughts as we proceed to 2023. All right, thank you for helping me. Well, we're out of time. We've been speaking with a developmental economist right there and he's in the United States of America. Thank you so much, Kuku, for being part of the show. We take a break and when we return, we'll be looking at the second conversation. The president, Mohamad Buhari, has inaugurated a Council on Climate Change. And we'll talk about that. Stay with us.