 Thank you for staying with us. You're still watching The Breakfast on Plus, CV Africa. And right now, we're having our second hot topic. We're talking about the clampdown on biddy sea operators will worsen the forex situation that was being said by the presidential candidate for the Labour Party, Peter Obi. Joining me to discuss this is Mukta Mohamed. He's an international finance and economics analyst. He's joining us from Lagos State. Good morning, sir. Thank you for joining us. Thank you. Okay. So I'm sure you've already heard the news when Peter Obi made this statement that this will worsen the forex situation in the country. You are an economic analyst. What do you think about this? What do you think about the statement? And do you think it is true that this might just worsen where we are currently as a nation? Well, it depends on which angle he's coming from. If you talk about regulation, if it's a bad regulation, then it will not worsen it. But what we are now is a security apparatus going after a security change operator. And that's not a solution to the problem. The problem is not going after a security change operator. The solution to the problem is supply. So if you are going through the period change operator because you want to improve supply, then you definitely have it. But if you are going for them because you feel they are speculators, they are hoarding, then you worsen the situation like Peter Obi said. Because what he means is that there are a segment of the economy that these BDC normally service. And so when you go after them, they will go on that. And when they go on that, those sector that they service will still look for them. But nothing will be, it will be scarce. It will be more expensive because scarcity of a product makes demand of that product. When the scarcity of the product and the demand for that product is high, then the cost of that product will go up and the rate of that will go up. So if it's by that, it is, if that's the reason why the AFCC or the security apparatus are going for after them, I think it's going to worsen the situation. But if you are going after them as regards that, okay, they are not abiding to some regulation, they have to abide by the regulation. Like what the CBN said now, no more street hoarding, no more street trading. And you're not saying, okay, you don't want to see anybody in the street, but you can maintain your operation on the cover of your office, you've got your license, then that could sanitize the sector. So it's all based on what they are really after. And for me, if a sector that could not be regulated when they could be spun on the street and in their office, decide to go under, how will you regulate them? The same security apparatus that are going after them, they didn't go after them when they were all about the street, when it was, it was more like a street hooking. Now, even when you ban hooking in places like Lagos, the ban street hooking, nobody banned it really changed from hooking in dollars. You see them all over and closer to the banks, in the bank branches, nobody banned them. So definitely we must be serious. We don't want to deal with issues that have to do with economies. We shouldn't just think that we're just with the beastly. Economic issues are only resolved by economics policies, not by security threats. Okay, so what are some potential effects that you think this can have on the stability of our Nigerian economy? Because you're already talking about economic reforms and solutions. But the fact that there's this clampdown on all of the BDCs, is there a potential effect that it would just have that would impact us negatively our financial situation at the moment? Yes, it is. There's a big negative, like Petro Abiso. If you come down on them and they go under and scarcity comes in and you are not able to meet supply, then definitely you create a distortion in the economy. And then the rate we keep going up, because the private market is part of the financial market. The speculators are always part of the market. So no matter how much the government has been seeing who speculators are, the ones about transfer, very speculators are always part of the financial market. Besides, the government realize that they are part of the financial markets. Any market in the world, whether the equity market, you have speculators, they come in there to speculate, to make money. So they're all out there to make money. So what do you do is that you come out with a better policy that gets them a cost panic. And once it comes in speculators' terms to get their finger bone and they will have to react just then you will be the winner. So going outside speculators with security threat or going after them using security apparatus will not solve the problem. You need to come out of policy. And the policy that needs to stabilize the economy now is boost supply of liquidity in the FX market, boost it. And how are you going to do it? Number one, you have to do it with clear cut policies that are not detrimental to the economy. Policy when you come in and tell me that I cannot repatriate some of my fund out of the show of this country after 19 days is not going to help the economy because I mean foreign direct investors or foreign portfolio investors will not be so excited to come to your market because you are going to restrict them, restrict them in the movement of their funds. And when they are coming, you didn't restrict them. And when they are going, you are not restricting them. So what you need to do is bring in policy that will create a friendly investment environment. What is a friendly investment environment? Foreign direct investors, portfolio investors will come and boost liquidity. Increase oil sales. That's what we are beginning to see. Let there be more revenue, more efforts into the economy through oil. Then get a product, a coin and join the dashboard to make more remittance back into the economy. That also we have the non oil sector try to give them the infrastructure so that they can go. This will also be part of the ending effects in the economy because as he stands today, according to the 19 and below statistic, 93% of the, I mean 97% of the growth we saw in the GDP was driven by the non oil sector. But when you look at their contribution in terms of effects into the economy, it's not even up to, not even up to 30%. So we need to do more to boost investment influence to the country. So what are some alternative reforms or policies that you think the government can introduce to, because I mean, you've just said it, going over this BDCs might not just be the best thing right now depends on how you look at it. But what are the alternative, you've mentioned some, but what are some other alternative reforms or policies that you think the government can introduce that will start to see the effects even from here on the other side, the masses, because it's okay for you to put it on paper and say, you know, but this is what we're going to do, this is what we're going to do. But what are the things that we would actually see the masses will see and say yes, at least now the Naira is being stabilized. The dollar is not as high as it used to be and everybody's happy. Yeah, I think the first thing we have to do, we have to look at the import duties. Nobody seems to be talking about that. Everybody's so concerned about the net because Nigeria is an economy that we import virtually everything we eat. So even what we wear, even what we drive, we gradually import them into this country. And that sector is an informal sector, as a key driver of the Nigeria economy, either in terms of effects in flow, and also in terms of employment. So what I didn't mention before is to stabilize it and we see the Naira is, you must begin to think about how you can put a fix through it. If you say your Naira is under value, then let's see the true value of the Naira in your import duty charges. You say, look, this is the true value of my Naira and this is what we're going to be charging for in import duty. That will first of all drive down inflation. Most inflation driven down, then they could then begin to talk about currency stability. That is one. Secondly, you must come up with a product that could attract Nigeria in the diaspora. I keep saying Nigeria in the diaspora. They were the key driver of the Nigeria economy at a point in time. So you must come up with a policy that would need to improve the Nigeria in the diaspora. And I'm very, very confident that either policy comes into play, then we could ask stability, maybe come in partner with the diaspora commission. At the end of 2018, the influence on the Nigeria in the diaspora was more than what we had in terms of oil revenue. How can we begin to attract them? The COVID-19 pandemic is over. They are now working and sending an influence to the country. Then again, the government also must turn down on illegal, what we call illegal transfer agents, either through the app system or whatever. They need to climb down on them because there also seems to be some of the problems that are busy putting up, which are already speculating. And most Nigerians now see them as the people that have the true value of this change. They decide on the CBN. I think that is another thing that we need to do in the short term. And then again, in the short term, the CBN must begin to think of how to meet up their debt obligation. They say they have about 2.1 billion left. They need to also engage the international airlines company that have not been able to repatriate their funds back to their country. And also, indeed, that you might not just give them the funds, you may also give them the condition. If you have to have your return, then you need to make those portals that mean Nigerians to get available to cheap air tickets to come back. You can just be giving them money and also you're not giving them conditions because assistance, they are still not charging Nigerians in Naira. When you talk in Naira, you compare the price in dollars. If you have to pay in dollars, cheaper than when you pay in Naira. And also, if you have to go to the next, our next door neighbor is cheaper because if you lose it too, it can stay away. It may come with such policy that we douse down the effect of the spread on the Naira. Then you see stability. And again, Gomin also most began to look right and support the most talk about NNPC, but the Potacor refinery to start delivering of the product that they said they turn around maintenance almost completing December. But after this move, we're not seeing a single liter of that. Then we begin to see it in the market. Then until refinery also maybe when they come to the market that also reduce the pressure because most of the pressure that is on the Naira is due to the importation of the five-patreon product. Okay. So last week, there was a story making headlines and it was talking about how the federal government was considering banning all these crypto exchanges to stabilize the Naira. Do you think that's another way where we can sort out this whole foreign situation, foreign situation? I think yes. In some ways, 50 is part of the financial market. I mean, in the US, in the US, when you want to play crypto is highly regulated. In the larger economy, script is regulated. And so Naira should not be an exception. However, you just think that they could just operate in Nigerian based on their own category. No. In the UK, crypto is not even allowed in the UK. China does not even allow crypto in the economy. So if we are going to allow crypto to begin to, then they must be regulated, especially when it comes to deal with the esteem. Because what we were able to know, I mean, through investigation, was that there are better rates that was also put on this crypto platform. And so they do the change, traders and others normally go to the crypto scrap fund to say, okay, what's the selling today? What's in it? And then they look at that and begin to tell the way they want to sell it to Nigeria. And most of the people that will come to patronize the beauty change and do that also play in the space of crypto, because that is the exchange rate. So they come in by for the beauty change and they have to put it in their crypto wallets for them to start trading. So we must regulate that sector. And unfortunately, the crypto sector is a sector that is played by the younger generation. So they believe so much in it because of the high return, the lack of regulation of it. And so that is one area that government really need to really, if they have to climb down, they have to climb down. If they have to call them for a meeting to make them that look, if you refuse to be regulated, then we ban you out of our space, then I don't think they should all be banned outrightly till the government should engage there. And then from there, they must abide by the regulation that have been set up by security and exchange commission. And they must be registered if they have to play in Nigerian space. They must be dealt with like every other financial instrument, you have to go to security and exchange commission. We have to know what your board of trustees, we have to know where your office are located, we have to know how your funds are coming in, we have to know how, so they need to be regulated. And if they now say, no, we don't want to be regulated, then they can be banned out of our space. And that also our communication space. And that could also drive down the crisis that we have been. Because I started last week, the exchange rate was almost hitting 2000. But when government came out with this policy, I heard that last week the exchange rate was about 1,770, even if it's still high, the official rate has gone from a higher 1,600 to a higher 1,488. That shows that they could be something in that space that we need to deal with. Well, on one of our newspapers this morning that we reviewed, it's on the business engine, it said that the federal government had come out to say that the Naira was being stabilized. But you as an economic analyst, I want you to speak to me right now. Do you think there's a light at the end of the tunnel right now? Do you think we're coming out of this? Because we're seeing the free fall of the Naira, we're seeing the prices of goods and services being at an all time high. People can barely feed, people can barely make ends meet, people can barely afford anything. Do you think from your own trajectory or the trends that you've seen, do you think very soon we might just be coming out of this and things will, things are looking better for Nigerians? Very soon I don't know. It's not happening very soon. You know, the government has already been positive and I have said that there is a government that we're beginning to see the more you see the less you understand, the more you talk, the more you get confused. When you say the Naira has been stabilized, I don't know how their stability is. Is it because the Naira have moved from almost 2,000 to 1,770, that's stabilization. Is it because you have dropped down the import exchange duty from 1,600 to 1,400 and 1,480, that doesn't mean that's stability. Stability means because the stability is relative to the Naira. Stability for the poor man is that I have food on my table and I have it at a very good cost. For the government, stability doesn't mean that we stabilize the currency. That's majorly one of the major problems, but that's not the whole of the problem. So the government needs to be clear about the clear policy on stability because when you're talking about stability, have you gone to the market this week and you see that goods have come down? No. Right now, over the weekend, we had our people went to queue for custom right and some people lost their life because of stampede. And here we are this morning, the government is saying that, oh, we created stability. Did we create stability on Sunday in the afternoon and so that we go to the on Monday and we'll begin? Stability in the economic space is not something that happened overnight. It's not something that happened in 24 hours. It's not something that happened in one month, two months, three months. Sometimes it's not something that happened in a year. Sometimes it could even take a decade. Sometimes it could take five years because the way the Naira has fallen is that the government was helpless because it's a government that came to power in May and the exchange rate was about 510 Naira when it came to power. Then they floated the currency and it moved and it moved and it moved and it got to almost 2,000 before you begin to know what to do, how to do, how to call about to begin to calm down on this, calm down on that. It shows that you didn't even know the grip of the decisions you were taking before. I think if you have a grip of it showing you were taking before then you have put policy on ground to stabilize it. If you come out of the government and remember that the presidential adviser, the chairman, the president, advanced out of touch told us sometime in last year in September that by December the exchange rate should be selling between 650 to 700 and that December it went to 1,200. We didn't hear anything from them. The CBN government came out and said that Naira's stand is undervalued and it should be 3,000, 3,700 and 800. And in a year it was then the CBN they said moving the rate to meet up with the parallel market rate from about 900 at that time to 1,500. So you see a government that said something in 100 and does this for that as well. I don't think stability is anything that will be achieved in the shortest possible time. I think stability will be achieved as we begin to get the supply in, as we begin to come up with policy. One exciting news about the weekend is this presidential advisory committee that has been set up. And when you look at this committee, you look at men and women of Calibur that do business in this country. So hopefully the committee who advised will be heard by Mr. President. It will not be a political committee. Remember the former President of Boston, you'll see your own needs to advise, your own needs to take back, take you out there. Hopefully, we'll listen to some of these advice that are coming from people that are key players of the economy and will help stabilize the economy. Well, I mean, we can only be hopeful that this is the worst we've ever been, the worst we've ever been as a country. But we can only be hopeful that, you know, things will get better. And I think we need prayers at this point. Someone said all we do is pray in this country. But at this point we have no other, no other way to turn to. Yes, I agree with you. But again, we must understand. When you come to spiritual matters, you can pray. I will forgive. When you come to economic matters, you will pay for the sin that you have committed. Well, the principles, principles that you have to adhere to. Anyways, I want to say thank you for coming and just, you know, coming to shed more light in this conversation. Thank you so much. My pleasure always. Thank you. All right. Okay. We've been speaking to Muhtar Mohammed. He's an international finance and economic analyst. And we're talking about the fact that former, well, the presidential candidate for the Labour Party, Peter Obey had come out to say that a clampdown on BDC operators will only worsen the foreign situation. Well, this is what we have to wrap it up on the show today. Thank you for having the breakfast with me. My name is Rometh Paul Singh and I'll see you tomorrow. Have a good day.