 Nigerians have complained that despite the Naira's gains in the past week, the costs of goods and services remain high. The Naira miraculously recovered 0.618 Naira to the dollar after reaching an all-time low of 900 Naira to the dollar. Black market traders attributed the sudden improvement to eased demand and increased inflows of FX in the market. On the show today, we will be looking at why Nigeria's foreign reserves remain on the pressure. Welcome to Business Insight in plus TV Africa. I am Justin Al-Qadouni. Now first off, the need to address the lingering challenges in project management has again been re-errored. This was the major focus at the 2022 conference of the Project Management Institute Nigeria themed Resolving Project Failure Issues in Public and Private Sectors. Details in this report. Research into Nigeria's project landscape indicates that delivery remained a huge concern pruted over 70%. According to the Nigerian Institute of Quantity Surveyors, there exists a large quantum of uncompleted projects in the country, estimated at 12 trillion Naira in the last 20 years. This expo is meant to bridge gaps between private and public sectors, share learning and find solutions to problems associated with project failure. For me, one of the reasons why I think Project Failure is that we don't have enough satisfied project managers. What I've realized that we have a lot of assistant project managers have been to a conference where you have a lot of engineers, over 150 people. While I was speaking, I asked them how many of them are PMPs and only four people. But most of them had their position, half of the crowd had project managers as their title. So how do you have run projects by people who are not PMPs? So it's up to the government. One thing with PMI, PMI, we are not regulator. We advocate for best practices. What it means is that we don't say you must do this. We give it the blueprint and say this is how it's supposed to be done. So it's up to the government to say, okay, let's take this blueprint and let's make it work. Collaboration is very important, okay. There's a limit to what you don't know you don't know. There's no two way about it. So we want to ensure that we empower people who work within the project space. There's something we call project economy. Our project economy is all about is ensuring that values and benefit are delivered. So we want to ensure that when governments spend money in this regard, value is being delivered, okay, and also benefit is derived at our front. The success of large-scale capital project is dependent on how a project manager brings diverse and multi-locational teams together. In the public sector, this is more pronounced as project managers must also deal with multiple stakeholders whose opinions can strongly influence the outcome. The failure is coming largely from lack of continuity, lack of project management practices. So we have projects, even the project objectives for several of these projects, not enough buying. So where you have a project where the concept behind it has altruistic objectives, you have people not wanting to key into it. From government policy, then funding, then the concept of the investment itself, what is the objective? When you start a project and there is no continuity, of course, the next government don't show interest. It means there will be project failure. The International Monetary Funds Report of 2020 suggests that countries waste a lot of said of the infrastructure spending due to inefficiencies. It said governments need robust frameworks to plan, allocate, and implement quality public infrastructure. Welcome back. When the mayor reached its all-time low, market participants reacted by rapidly raising their prices. However, another exchange rate has appreciated prices are not falling as quickly, resulting in a price-rigidity situation otherwise than as price-tickiness. Joining me right now is the CEO of Street Nomics, Gaspol O'Billy. Many thanks for joining us, Gaspol, on Business Insights. Thank you for having me, Jay. Great to be here today. Yeah, it is our pleasure. Let's just get your candid overview concerning the situation with the forex in Nigeria as in the vis-à-vis the narrative US dollar. Over time, it's actually peaked so high and now it's as though the narr is actually gaining some sort of momentum. Can you just give us a quick overview, please? Well, I'm not really, really very clear about how the narr is gaining momentum because I can't see any clear mechanism that's influencing that momentum. But it's already very obvious that there are fears around the worsening state of the currency and how that worsening state of the currency has also impacted on investors' confidence on our credit ratings more recently, on our monetary economics in terms of how we are leading institutionally to navigate growth and development with monetary economics and also on fiscal side. So there are valid concerns across board that the narr is worsening and it's gone past just speculations. It's actually happening. Nigerians are bringing the brunt and the upper class, the elite society, the elite community are already feeling the impact as well. So I understand that at that level of impact would also lead to some form of conversations or some form of regulator influencing of the market dynamics to further shape the exchange rate. However, I do not particularly agree that the narr is really gaining strength because the real economic principle around currency productivity is number one, you have a productive base and which we do not have right now in Nigeria. So until you have a productive base, first off, and then secondly, there are clear cuts institutionally, institutionally driven process through which your currency remains. When you have those two, then you can see clearly that yes, the narr is gaining value on the ground of mechanisms. We can see, we can feel, we can touch and there are metrics to show for that effect. But not that overnight increase and Nigerians are still poorer within the context. So it's a false increase because if it's an actual increase, Nigerians are better for it, businesses are better for it. All right. Let's still talk about, you mentioned it in passing, you talked about the feature rating, which has actually downgraded Nigeria to a B, but let's talk about feature saying that Nigeria must resolve or solve its forex shortages to improve rating. What specifically do we begin to do at this particular time? So we're talking to a B, which is six notches above the four, but anyway, what are the specifics in real terms? What should we be looking at? You said Nigerians are not actually happy as it were. They are still battling with the issues of inflation and the cost of living in increasing by the day. So what do we need to do specifically, point by point, thusful? Yes. A couple of things that needs to be done. First off is to look up at low-hanging fruits and begin to maximize them for supply side improvement on the x-ray right now. And on that conversation, we're talking about the non-all sector, we're talking about repositioning SMEs and ensuring that they have the right enablers to scale their products and services within and across products. We're also talking about organizing and formalizing the services market, which contributes almost 57% to 60% of the Nigerian economy. So how do you take that critical chunk and begin to further formalize and organize the market? And what we say these things, it's because at the current moment, Nigeria is not even have a national services economy or service policy. So there are clear-cut institutional issues that are leakage that need to be closed. And when those things are done across the real drivers of growth and development, we begin to see that it will double up quickly in terms of foreign exchange earnings. And of course, we need to balance out on the supply demand side and we begin to work as well on the local production, bit of things and scale and from there. It's not as easy as I've made it sound, but it's a lot of complexities, a lot of work, but already we're seeing that there are low-hanging fruits that we can make the most of to further unlock value for the Nigerian economy. So supply side unlocking value for supply side is very critical. And until we do that effectively, they may not be some form of balancing on the FX block. All right, fine. As Kunlop thought, believes that for this present time changes that we have seen in the forests recently in Nigeria, it's not actually as a result of maybe anything being done specifically by the government. Some believe that it's the end of the year and manufacturers are not exactly importing and a lot of Nigerians would actually creep into the country and would have a lot of forex to get even in the parallel market or elsewhere that the Naira might actually appreciate more. Do you agree with that? Those are just flimsy analytical arguments that sort of want us to take our face away from the real conversation. The big question I would like to ask as well, Jay, is how many economies really thrive on those kind of window or even we can make these in driven argument? Because the economy is unproductive, the Naira, the growth or the value of the currency is a function of the productivity dynamics of that economy. When we talk about productivity, we're talking about education, we're talking about human capital, we're talking about doing business, we're talking about quality of life, we're talking about infrastructure, both the hard and soft critical enablers that helps the average business or the average person find fulfillment, contributing productively and then scaling growth prospects and becoming prosperous doing that, not necessarily GDP growth only. So the conversation of people who come back to the country that will bring hard currency is a flimsy argument by folks who are either seeking to be politically correct or are not being honest enough with the state of the Nigerian economy. Let's not forget that the same piece of maths you're talking about in terms of how that would lead to an increase in effects of flight and market. Don't forget that there's another side of the climate change economics that has impacted heavily on the forereck on inflation and cost of living crisis and that may further shape and exchange it down the line, which is the recent flow crisis and how the major food production centers of the country have been destroyed or hampered or affected by the flood. There are many things that are evolving and showing to us on a daily basis that the Nigerian economy needs to be sorted or to be fixed structurally on an emergency level, not thinking of making arguments around Nigerians in diaspora who are coming down with foreign exchange. I don't think that really makes sense in terms of an argument going forward yet. The National Bureau of Statistics, NB, says the country's headline inflation rate rose to 21.09% year on year in October. That was just last month. But what do you really see happening? Because what would have thought that with this appreciation of the Naira per se, maybe there would have been some levels of price reduction to some extent, but over time as though prices of commodities are still skyrocketing despite this recent development. Thank you so much, Jay. I mean, when I started the conversation, I made mention of the fact that those who are arguing that the Naira has gained value are presenting a weak argument because we have not seen clearly what the mechanisms of that value increase or that appreciation has been. We've not seen that very clearly. Let's not forget that if truly the Naira gains value on the grounds of productivity, it will reflect in market prices. It's just very simple economics, very simple economics. But guess what? Because whatever value we increased, whatever value we've seen recently was not viewed on productivity. The impact of the cost of living crisis or increased, the impact of increased cost of living is still being fed by the average Nigerian. So if you notice inflation, yes, on a month or month we have dropped, but it has been increasing consistently. I mean, inflation only tells us about the fact that there is probably too much money supply or the conversion of increasing cost. But that number has been worsening on a month or month. So the big question here is because Nigerians are having to go through a lot to get down the daily basis, simply shows to us that the cost centers are building and they are worsening. So anything outside this argument of productivity is a weak point. It is a weaker side of the argument. Don't forget that we're in political periods where propaganda statements and propaganda analysis are on the table to further distract people from making critical electoral decisions that they should make. I don't think the Nigerian economy is getting better in the context. I just think that institutions at a very high level have felt the impact of the exchange rate. And they're probably doing something that we don't know, but those things are not mechanical enough to drive economic productivity, but they're doing something to influence market prices. Okay, but Gospel, it is still actually very alarming the recent inflation rate. What do you see happening in the next maybe month or weeks? Because as it is right now, it is shocking when you go to the markets today, a commodity that you actually bought maybe for just about 5,000 has actually doubled to about 10,000. And it is really, really, really not something that Nigerians can actually afford. Knowing that salaries have not been increased at the end of the day, they still get to put in more hours for work at work rather. And disposable income is still the same level. What do we see happening in the next couple of months? Are we actually hitting some sort of a hard rock in the near future? Or what exactly do we look forward to, if there are any hopes maybe? Well, there are hopes, but to be honest, the situation is likely going to get worse a bit more. And that's because you have strong cut issues that have evolved in recent times. Now you have the conversation of the flow crisis. A lot of suppliers will increase the price of their inventory stock and will also increase the price of goods and services going forward into the near future. And that's because the supply chain has been badly hit by this inability to pay attention to climate change and its effect on food supply. And of course, our lack of ability to really plan for future crisis as well. So now that the key production centres of the economy have been arrested with flood, what's going to happen is that producers or suppliers will increase the cost of inventory stock. So prices are going to further increase in the Nigerian economy. Let's not forget also it's a Christmas period and that already has a lot of demand pressure on goods and services, especially food. Taking note that you may not have enough food to supply the economy as we move on. We're likely going to be a food crisis into the early part of 2023. So producers know these things. So they're going to hold more food items so that they can release those food items at higher prices later in the future when it's really, really clear that everybody now understands that there's a supply issue because of the flood that happened. Secondly, there's an election coming on the 1st on Q1 in Q1 2023. And that's going to be a major impact. The uncertainties around the elections, the tensions around the elections are major things that are going to be shipping economic indicators as well. However, it's also very key for the average Nigerian to begin to think of financial literacy or to engage in financial literacy in terms of ways they can further earn more income or do more business or engage in investment that would secure assets in hard currencies, preferably. Because the way it's going right now, it's just a free fall of the nair. All right, fine. But as we end the year, you've even talked about the elections, which is just about in February, just barely, two or three months. How do we, if you were going to advise the nation's economic managers per se, Nigerians need to leave at least an above average life. They need to be able to go to the market and what the little they have at least get as much as they could or can to feed their family. What should the nation's economic managers be looking at in the shortest possible term? Because I know elections are in February and most of them would not even want to face the main problem because it's politics every day. What do we need to do right now? I know, is it possible that in three months that we could actually get these little results that we expect to see so that at least we can get as little as food to eat on our tables every day? Thank you, Jay. It's really, really a very painful situation that we're in right now as a country. Yes, the foreign exchange challenge and the inflationary impact can be turned around. At least significantly to a very measurable extent within three months. But that's not going to happen within the next three months because everybody right now, especially the institutional drivers of economic management right now are focused on the elections or they are either focused on the elections or they are focused on being politically correct. The concept of political correctness is to engage economic priority within the lens of what is key for you to win elections, to retain power and to retain control in the political landscape. And that's what is important right now for those stakeholders. It's just quite unfortunate, but it's just the sad truth. However, in the near future, it would make sense for institutional stakeholders to begin to think more from a structural reform standpoint. There are a lot of low-hanging foods and one of them would be to show up, you know, FX supply at least to just enable some balancing out of the economy, show up FX supply and block leakages, you know, in the exchange market. Block leakages in the exchange market and see them to be a bit more realistic about the exchange rates and how to walk around parallel markets and, you know, demand for foreign exchange. I think that the central bank has just got the estimated, you know, the demand for foreign exchange. So it's very key. I'm just interested to know that a lot of Nigerians are demanding foreign exchange, not because they need it, but because of the fear of how much the Naira may be further devalued in the future. So a lot of people are dollarizing their savings, a lot of people are showing up dollar notes, locking down dollar notes for the fear of what Naira may be in the future, so they can sell more later on. So it's a very complex web of reform that needs to happen. However, it must happen because if it doesn't happen, a significant chunk of Nigerians will become poor by this time next year. Okay, fine. Just as a way of deterring a bit, although we have talked about this before now, but I still just want to get another opinion concerning this Naira redesign because from all of you and cry, you know, the central bank is still going ahead with its policy in as much as some people have said that it might bring some devastating effect. Others are saying that it is a welcome development. You have talked about this, but I just need you to reiterate on the effects of this new policy, or this Naira redesign by the central bank of Nigeria. Yes, they're ministering to this conversation and I still believe that it comes with a lot of mixed realities. Number one, there's nowhere in the world where you redesign currency and you want to engage a demand supply dynamic in 45 days, there is no bear in the world. Even when the Queen of England died, the estimation is that it will take up to 2024 to be able to properly reprint and fizzle out old notes with the Queen's design on them to ensure that they now have King Charles III and the likes. So technically it takes a lot of time because you need to plan about the design, you need to plan the execution, you need to plan the rollout of these monies. You also need to manage the possible impact on inflation and where the whole thing can spiral out of control, especially in a very, very, very aggressive demand driven and obsessive economy like Nigeria. In a very high consumption driven economy like Nigeria, you need to be very careful how you manage it. And what's off, you're trying to do all of these things in 45 days and that's where the pressure is. So it's not a bad idea fundamentally in terms of redesigning your notes, but the style of the execution, the timing of the execution is a bit very, very, very worrisome. Although there's a convention that it's also, the plan is also to discourage wood buying as the central bank will be in position to influence supply of a new currency. We don't really know how that will go yet because we know that a lot of these things happen behind closed doors. And then again there's going to be some inequality around wood buying as well or wood selling, whatever the case may be. You know, it's going to be a Tesla who has the highest bulk of the new notes. And you would agree being an endurance will be very hesitant to accepting old notes because by then wood has been on the street that it's going to be illegal from the 1st of February. So a lot of things that are mounting pressure on this policy and it's scary that either way it goes is going to lead to inflation because the pressure and the crunch time to deliver on this policy is not really, really going to serve the economy very good. So the policy is not bad but it could have still, you know, it could have been executed within a much more reasonable frame. But clearly there's also some particular undertone to do out of this policy which is really going to make it very difficult to properly execute without being, without spiraling out of control into variables like inflation and exchange rate and the likes. Well, thank you so much Agospu for finding time to share this inside turn. Of course the Forex challenge in Niger and of course the Naira redesign, we do appreciate your time. Thank you so much for having me, Jay. Really nice speaking with you again. Thank you so much, Agospu. And that's the size of the show for this week. I am Justin Halkadounye. Many thanks for watching.