 Welcome back, apart from depleting the purchasing power of the people, the country's currency which lost more than 200% of its value in the eight years of Buhari has lost whatever is left of it. Now consequently people now struggle to finance the basic needs given that prices have escalated more. Food items, transportation, drugs and essential products among others have become unaffordable or into the impact of petrol prices. This is happening as income remains static with 30,000 NW minimum wage and 37.7% unemployment rate according to KPMG. Across the state some governors struggle to pay the minimum wage while others owe several months of salaries and pension arrears. Now international finance and economic analyst Mokhtar Mohamed joins me now on this discourse. Good morning to you Mokhtar, thanks for joining us on Business Insights. Thank you, thank you so much for having me Justin. It is indeed a pleasure. How's the United States today? Well they have done economic challenges, they are dealing with the pressure and pressure but again they have structures that guide against affecting their poor people because their credit system is still there to help the vulnerable, comparable to ours but I think they have done their challenges especially in pressure and pressure because costs of goods and services and also energy has gone up here too but they have done something about the normally paid petrol and tax that have been suspended so that have brought down the cost of living a little bit for their citizens. Okay, wow, it's good that we're even starting this way to know that it is not just a Nigerian thing, it is a global issue and we talk of global finance and economics. The United States is having its own share of the inflationary issues, rightly said they have structures in place so how come over the time, over the years, we have refused to see these things the way they are and we are not actually working in that light of ameliorating the effects on the average Nigerian? I think when you're used to doing things the way you used to do things before all of a sudden you need to change it, there's always a challenge. I always tell people change, change is tough at the beginning, you get messy in the middle and then towards the end it could be very glorious, gorgeous because of the structure that would have been put in place. We are used to enjoying a lot of things free in a country like the United States, they don't see anything free, they say there's no free lunch in the US, there's no free lunch anywhere but again we don't have structures. The policy that have been taken are good policies but those policies are taken when you have a good foundation. Once the foundation is good then you begin to lay down the structures. So what we've seen the government of Nigeria do thus far is to come out with the structure but the foundation to drive the structure so that it does not affect a lot of vulnerable Nigerians, we're not in place so it's not their time to fix those foundations but again if you build your house without the foundation and you're trying to rebuild it when you already have maybe the structure of it, it costs a lot of pain because a lot of the structure may have to give for it to happen. So definitely that's what the challenge we're having as a nation. It's not because the policies are not right but again they come with a lot of pains, a lot of pains. Okay Mohammed, the times are really very hard and Nigerians are feeling the impact of it or that they want bearing the brunt. We have talked about this several times on the show. I asked you at one time if the government is actually biting off more than it can chew with all of the policies coming at the same time the floating of the Naira, the deregulation of the downstream sector specifically for PMS and Nigerians have had to suffer all kinds of hardship. Right now PMS has been sold at about 617 Naira or even higher in some states of the federation. You know just how can Nigerians cope because a lot of experts including yourself have said that subsidy removal is something that we should have done a long time ago. Definitely, subsidy is what we should have done a long time ago which we didn't do. So like I said in one of your program it's like you're supposed to have a surgical operation 15 years ago and you didn't do it and you're not doing it now it will come with more pains. So what are we Nigerians supposed to be doing? I think more than Nigerians need to begin to I've seen a lot of social media jokes of people saying that we're getting more healthy. So we do more trekking. We do more of home and beds are going to become less attractive these days because if you cannot trek to the home bed then you better sit in your house. So but that's an enlightening but I think what Nigerians need to do is to begin to also restructure our minds and begin to make sure that we do what we ought to do when we have to do it. If it's not necessary for you to be in a place I don't see any reason why you should be there and again it's not that the Nigerians in our government also need to lead the way. If we continue to see seven convoys of car in the government entourage, if we continue to see politicians keep living large them and their families members then you are making a more clear of our suffering. So in as much as you lie down to the people to come out with some other strategy and some people who have come up with a strategy instead of going to to office with car and some of them take buses those that used to use Uber and Naran these days no more take Uber and if they have to take Uber they also do it jointly with some colleagues to get to the office. So those are short-term strategies that they are putting in place but we need to see the strategy from the government. The government is if you're running a government based on capitalism. Capitalism is all about wealth creation and when you talk about wealth creation in capitalism it might not be equal wealth creation. The rich might keep getting richer but the poor will not be poorer like they used to be because the rich is supposed to provide a I mean the government is supposed to to provide the environment whereby the rich has increasing jobs for those people. So it has to be a private driven economy when you talk about capitalism. Capitalism is all about private sector driven economy. So we need to see government come up with policy. We need to see government take a bite also. We need to see government come up with a little bit of policy that can help the ordinary Nigerian begin to stand on its feet not just all about pain, pain, pain. There must be a little stability for ordinary Nigerians especially going forward at a time like this. Okay Mohammed, going forward it is hard because I can imagine that the labor and the federal government and TUC they are actually on under these costs for about eight weeks to see how they can actually cushion the effects of all of the subsidy removal that you know that are plaguing Nigerians as it were because right now salaries have not been increased transportation costs you know have more than doubled. Not everyone you know have the luxury or has the luxury of joining their colleagues to get to work. Even some colleagues are even charging colleagues you know to get to the office because it's that it's that hard. But the issue right now is that in the wake of all of this the federal government had talked about palliatives, 8,000 lira you know to about 12 million households for about six months. Even as smart as the federal government has suspended it and has talked about a review of it all. What should we be doing in the immediate issue because Nigerians are really suffering some of them cannot even afford to get staples to eat. You see I think it's painful yes and again what should the government be doing immediately. First and foremost I think the government should begin to look at the civil service. If you are so active to see where subsidy should go in your first inaugural speech I think you should also be so emotional to say worker salary is reviewed immediately. Even if you have to go and think about it because you said this first subsidy going was not on your speech. So you should have added the improvement for workers packages on your speech even if it was not there too. So what I'm saying is that we're seeing a government that have shared the highest revenue thus far in the month of July. They said they shared the highest revenue they ever shared because NNPC for the first time was able to remit back to the federation account. So we see a government that is now growing in terms of financial independence and they have to look at their own people also to make sure that the people also are growing. Now the first thing when you talk about palliative I don't believe palliative in salary increment is one of the best palliative. It could be but there are other palliative that must be structural palliative that because when you increase salary the cost of goods and services have gone up sometimes salary is not able to to improve commissary to what is obtained in terms of inflation and pressure. So what I expect the government to do is supposed to be looking at structures maybe tax holidays for workers for the next two years. This is what labor should be talking about not just about bringing buses for transportation after six months, seven months some of these buses are no more working. They should begin to think about looking at taxes for workers. Let workers stop paying taxes on their salaries. Let their taxes just be there for the time maybe for the next one year to the two years and also increment in salary that also will help them be able to drive their consumers. Nagina is a consumer driven economy because of our population. So and once that economy is not governed by buying and selling the economy is going to come to a halt. So they need to begin to do that structural changes when they come to palliative not just financial changes. So if you do that for two years remember that I'm saying and suspending salary or taxes on salary doesn't mean that I'm suspecting taxes on value added service value added taxes are still there. So it's a win-win situation for the government and what they are earning in terms of subsidy remover is not going to be comparable to what they will be paying in terms of incrementing salary or taxes. We must come to a play where by government should begin to take a bite of their revenue. So if I'm in the labor team I will not be talking about salary increment. I'll be also be talking of things like then if you are in grade level 14 or there about you need to be thinking about okay what are those other incentives that we can give to them in terms of of of consumer loan that government was okay you can take consumer loan at a single digit it's all about something have to give way for something. So the government itself must begin to take a bite of their revenue and begin to think of the people because with that the people they cannot be a government. I heard of the MPC meeting you know what should we be looking at specifically the central bank of Nigeria because in my opinion I think raising the NPR for that would actually worsen the economy because over time the NPR has been increased and it's as though inflation has remained very stubborn. And just to remember I told you problems were very good that we're treating we're not we're treating the symptoms instead of dealing with the disease. NPR was not the challenge in Nigeria it was never a challenge you know the challenge was exchange rate volatility and that's why you are seeing the kind of pressure you are seeing in terms of goods and services. You don't just copy and paste what you see the Americans doing they have structures in place to meditate against impact on their ordinary Niger but we don't have the structures. So NPR is not the problem the problem that they need to be tackling is the problem that have to do with the exchange rate volatility. How can CBM make sure that we have a stable exchange rate? And the only way they can measure we have a stable exchange rate is to begin to grab ends into our effect system. Either through foreign direct investors or through diasporary maintenance or through sales or food oil and also through trading in the non-agric sector. Those are the four areas that we drive an income into our economy. We need to begin to look at those places what are the what are the systems we can put in place to improve the drive of effects into our economy so that we have enough liquidity. Floating the network does not mean you should not intervene because you cannot just allow your currency to market forces market forces thrive on volatility and that is why today the exchange rate is a good place for market forces to thrive on because they thrive on volatility. Once you bring instability then the volatility comes to an end and then you begin to attract the right type of investors. What you attract in terms of volatility in your economic as speculators. So and what is driving volatility is because of the lack of liquidity in the system as we got the exchange rate. So the CBM need to tackle that they need to come up with strategy on how to attract liquidity into the system and if you do that you will indirectly be addressing inflation pressure because if you get the narrative stable at what the Bank of America have said between 600 and 650 then you have drive down inflation by almost 10 percent. That is what the CBM should be looking at and the best way they can look at that is to continue to intervene in the market in the area of liquidity meet legitimate demand either for manufacturers for people that are traveling, pay off the airlines that you are owning. So that will drive confidence into your economy. The foreign investors that you are expecting to come to your economy will not come to your economy when there is volatility. They will only want to come when there is stability in the exchange. When they know that the exchange rate is priced rightly then they will come in. If you don't have it priced rightly no foreign investor wants to come in at 718 error and be exiting at 650 error. It is a loss for them. So you must make sure you create that stability and that is the work of the CBM because that is a monetary policy decision that must be taken. Okay let's still talk about our foreign exchange regime. Would you really say we are actually getting it right because when they talked about the float of the night initially most people or school of thought believed that it's actually the best way to go but it seems as if there's a big divide between what we have in the I&E window and of course at the parallel market. Just see it happens like that. That's what I'm talking about volatility. Remember when before we came with the I&E window, when we came up with the I&E window at 300 and I think 350 the market went as high as 500 and then when we were able to meet legitimate demands liquidity was in the system. We saw that it settled at 360 before we had the COVID destruction that actually happened in the economy. So it's still the same thing I would say we need to attract liquidity. That's why you are seeing those volatility is not because the policy is bad is not because the policy will not work. The policy would definitely work in the long run but we need to begin to look at how can we make this policy work in the area of liquidity. So we need to know that the policy will work in the long run but again like you rightly pointed out is causing a lot of challenges. The difference are there but I can assure you that this difference will not last for too long. I believe that the Naira will definitely stabilize between 600 to 650 in the long term but in the short term we might see the probability between 700 and 750. At the time we begin to maintain towards stability. You attract the foreign direct investors and the portfolio investors and once they start coming in there you could also see who will drive down that volatility in that space. So somebody said is it the right policy? Yes it's the right policy but do we have the right structure to make sure this policy come out successful? That is what I think the CBN should be working towards and the only way you can work towards that is if you attract a lot of liquidity into the system. I think you see the right policy. You see the right policy. We could see that with a lot of things. If you look at the inflationary price of about 23.7% and by and by the exchange rate movement of almost 200% and you also see the petrol price at almost 217% then you realize that it's not as bad as we thought it would be even with the removal of subsidy and the floating of the Naira but I believe in the long term it will be better if we can be able to address this little foundational problem that will help this structure stand strong. All right Mohammed as we begin to round off let's still talk about this fuel price because I feel there's a bit of a insincerity in some quarters per se because I know the issue of foreign exchange is something that we have to bring to bear but even before that I mean these marketers they had old stock all of a sudden because of the variation in the Forex market sometime last week they just skyrocketed the price of petrol. I don't know in my late times I would have thought that since they had actually they're actually selling old stock they should actually maintain the price until maybe when they get new stock and they have seen or reflected the new price then it might change because all of a sudden we don't even know what to expect right now we're paying 617 Naira who knows how much we will pay in the months of August. Okay like I said market forces when you leave market forces with that regulation then you have to challenge we have the downstream regulatory commission they are supposed to regulate this they are supposed to be just regulating the market so if what is happening is because there's no regulation the regulation does not mean there's no regulation they should be to have flat fixed price of goods and then am I mean of petroleum product especially it doesn't mean that oh when we deregulate I can come in with my own and sell at 800 Naira or 700 Naira another club or can just decide we want to sell at 800 Naira no it doesn't work like that so that I have to do regulation work they are not really doing what they ought to do I can assure you because if they are doing what they ought to do there won't have the problem that we are having as it is as it stands and so I think regulators are not up to the again we need to work on that. You see I said something I said market forces market forces thrive when there's no strong structures because the structures are not their things will be done haphazardly whether the price will increase next month remember that they are not telling us exchange of volatility and the last time could oil was in the $5 per barrel and now it's going to $80 that mean in January where we expect Saudi Arabia to cut down their production where they are seen could move to about 95 or 100 Naira per barrel that mean we might be buying for almost 1000 something Naira if we are not beginning to refine on our own so it's still boiled down to that issue that they say local refiner local refining of petroleum a particular producing nation like ours is the key to dive down price all right thank you Mohammed just one final words a word rather for you know Nigerians because they are actually bearing all of the brunt and not everyone can afford to walk from home you know because the labor policies in their workplaces might not really permit them working from home they have to go the extra mile you know to get to work and to get the daily bread as it is now so how do they persevere in your opinion just you are putting me on the line you said that one thing is that if you have a labor force that is not technology compliant is the time they need to be technology compliant also they need to begin to think of increasing the allowances maybe transport allowances must be increased for their workers if you have not increasing the salary yet you should look at their transport allowance and decide to increase their transport allowance I heard them somebody that is what Godman and Akila be saying that he has increased the transport allowances of his company staffs of his workers so I think everybody should take a key from that begin to see how they can improve upon increment in that regard and again government must with the sense of urgency come up with policy for the ordinary Nigeria if you can tell me what to tell the ordinary Nigerians I've said the pain is still going to come the pain is still there the pain we've not seen the end of this pain I can tell you that we're not seeing the end of this pain but if we get it right I keep staying it there is light at the end of the tunnel all right it will be a gorgeous end if we get it right because we might see where economy will pick up for the next 10 years who have stability in battery every sector of our economy if we're able to get this right all right thank you so much I'm okay Muhammad would you appreciate your time my pleasure always a pleasure my name is Justin Akademi many thanks for being a part of the show and I'll see you again next time bye for now