 Thanks for staying with us. We take our second and final hot topic for the day and Nestle Nigeria posts 104 billion narrow loss for 2023. There's the headline here and we have Frank Elana, an economic analyst and senior writer with Tech Cabal. Good morning and welcome to the program, Frank. Good morning. Always a pleasure to be on the show. Yeah, when we hear Cabal, we think of Cabals in Nigerian government. We know that. Okay, so this headline to the common eye is scary to an eye like mine that is not so business or economic inclined. I just see it as scary. To post 104 billion narrow loss, to me I don't know what that is. Explain to us the implication of such a development. Okay, so it's an unfortunate situation, but it's also not one that is so surprising and given the recent economic quagmire that the country has been in for, if you like, for the entire eight months or for the entire nine months that this government has been in office, you know, what Nestle has reported is essentially driven by the forex problem that the economy is currently facing. Since the routine of the Naira, i.e., if you like the devaluation of the Naira, many businesses has taken a hit. You know, the Naira has also tumbled to record highs. At one point, we were talking about 1,700 to 1,800 in the parallel market, official market rate was at 1,500. That's a very significant jump from last year. If you cast your mind back, say around May, the official market around May was around 400 and 455 Naira. Now the official market is at 1,500. If you are a business that practically imports all your raw materials from outside the country, that is going to take a deep cut from your cost. I was talking with somebody recently and we're talking about how companies' budgets that are set from last year are no longer going to be tenable because if you have set a budget, say, we're going to spend 100 billion Naira based on certain metrics, based on certain items that you're projecting for in the market, this year alone, prices have gone up like, say, 300%. Every other week, if you go into the market, something has shifted. No price, no item today is the same price. The funny thing is that if you're buying them from outside a country, if you're buying them from outside a country, the prices are not changing. It is just that the conversion rate is changing at an alarming rate. So for companies like Nestle, that has taken a deep, or that has eaten deeply into their projections for 2024. And what that led them to was to take a loan from their parent company, that's Nestle USA. And of course, that loan has to be collateralized. That loan also is an interest based loan. So over a period, that loan has accumulated. And the challenge here is also that just repatriating that money has become also a challenge with all the CBN policies that has come into play in the past few weeks and all that. So that is currently what Nestle is facing. It's facing a massive jump in Naira devaluation and also inflation of commodities in the market. I get really worried. When the budget for 2024 was brought to the public domain, the Naira was pegged at $750 to the dollar, if I'm not mistaken. And the oil price was $77.96. That's how that budget was now. We know that the central bank of Nigeria has begun even selling that same dollar to the Bureau de Change operators at a rate of $1,350 or something like that. If a company like Nestle, a very big company like Nestle is struggling, help us understand how foreign investment is possible in Nigeria. What do you see the future of FDI in a country like Nigeria where this kind of fluctuation is our Naira is fluctuating the way it is fluctuating? Because I don't understand. So what you've seen is a contradiction in policymaking. At one point we heard that the BDCs were banned. But they were not allowed to do this, to do that, to get dollars from the market. In fact, they were going to be wiped out, all of that. And even the Sibian went as far as using the EFCC to arrest a lot of them on the streets. And then all of a sudden we're now hearing that the Sibian has turned around again. They want to start selling dollars to the BDCs. And now they can now operate, but then with certain criterias that are laid out. And it is a bit confusing because it breeds an environment of uncertainty. And investors don't know what is going to happen next week. If, for instance, the Naira jumps astronomically because this policy doesn't work in the short term, you can expect that the Sibian will panic again and will want to tweak his policy immediately to sort of, in their language, raining the Naira. So in that kind of uncertainty, investors are likely to withhold their capital. They would not want to be a part of that kind of environment. Because first of all, in investing, you want a predictable environment. You want to be able to say, if I put in this, this is what I'm going to get out. Even though you're a high-risk investor, you're not high-risk. You're not high-risk for an unpredictable environment. First of all, there needs to be certain things that you can say, this is what's going to happen here. It's the same thing. It's not just about the BDCs alone. Also, the moves that they made with Binance and also the whole plan, or the whole blim that has been treated and hits on Binance, making Binance look like Binance was solely or majorly responsible for what has happened to the Naira. It is a bad signal. There's nothing good about that signal. Without you want to explain that, oh, yeah, they were indeed speculating the Naira on Binance platform and all that, that does not give any credence to the signal that you're sending out to investors. Two Binance executives come into the country, once they come and negotiate with the government, according to what we heard, and the government arrests them, and they start trying to muzzle out some agreement from arresting them. That's like pointing a gun to somebody and saying, you must agree to this, you must put your pain to this and all that. If not, we're not going to release you people and all. It doesn't give any positive news to the investors community. It also means that the government is not responsible. Because over time, we have said that the big problem is not those who are speculating on dollars. Oh, yeah, they have a part to play, but speculating on the Naira is a function of a bad system. If you have built a bad system, people will take advantage of it. If you don't correct that bad system and then you go and pursue those who are speculating on them, all right, all you will just succeed in doing is maybe get yourself a relief for the short time. But when they really should crop up, come up again, you are going to start drowning again, because there is no supply of dollars in the market. That is a given. The $26 billion that the CBN was talking about, that went through Binance for instance, does not belong to the CBN. It didn't even come through the banks. It came to me through individuals. It's Nigerians that brought this money in. That is if that money is actually what they say it is that it is up to $26 billion. But it is true pair to pair, people trading with themselves. That's what they did there. So first of all is to ask yourself, why do we not have enough dollar supply in the market? That's what you're supposed to be addressing. First of all, have you addressed the issues around cost of governance? Zero. We haven't done that. We heard that they're going to do something about the Orosanya report. But the truth here is that you can't do anything about Orosanya report if you, the government, has not shown leadership. First of all, in cutting your own cost of governance, you have almost 50 ministers. I'll keep shouting that. You have almost 50 ministers. The highest the country has ever seen. These guys are collecting salaries and doing nothing. What are you doing with them? Before you start talking to us about Orosanya report, for instance, cost those ministerial appointments. That's how you start. Then you start talking about, okay, the other day we heard that they're going to reduce the number of people that go with the president on a trip. Just this trip that they're going to embark on in Qatar, the president's son is going to be there. The president is either, I don't know who that other one is, Atash Sheyid, that's a Tony, that's also going to be there. That's a lot of assistance, SSA to media. Several people doing the same work that are going to embark on that trip. There is no sincerity in the government and which is why, if you're going after BDCs, you are only trying to solve the problem from the top, as in from the head. You're trying to just wipe the windows outside the house, whereas inside the house is a mess. First of all, cleaning inside, looking worse. That is a whole lot of dirt that the government can turn itself out and then rescue itself from the problem that we're facing. If we don't do that, going after Binance, going after BDCs will only result in companies like Nestle reporting losses. Because you're not addressed why consumers don't have enough money to buy things. That is what Nestle is facing. Consumers cannot buy the prices in the market because their wallets are shrinking. How do you address that? That's what you're supposed to be talking about. Production, production, exports. If Nestle cannot export, that's a problem for everyone. Okay. Well, it's been a marathon, but I think we covered a lot of grounds here with what you have said. Unfortunately, we don't have time to continue. We'd like to thank you, Frank, for coming on the program. As always, it was our great pleasure to have you. Thank you. Always a pleasure to be on the show. Thank you so much. We've been talking with Frank Eleanya, Economic Analyst and Senior Writer with Tech Cabal on our program this morning, and this is where we draw the curtain on the day's edition of the breakfast. We hope that you had a wonderful time. Let's do it again tomorrow. My name is Nyam Gul Agadji. Up next is the news.