Dear Subscriber,

Sharing the spoils as the economy swelters

In the words of William L. Marcy, “To the victor go the spoils” – the winner of a conflict gains additional benefits beyond the subject of the conflict. 

The human traffic to Abuja has been hectic, definitely not as tourists but in search of the gravy train. This seems to be the thinking after a contentious election and the longest political campaign in Nigeria’s recent history.

The people are fatigued after a grueling struggle to access their own naira, both old & new notes, and staying in long queues at ATMs. They now had to queue for petrol and pay approximately 200% more than the previous price of N200/ltr. The democracy dream is almost becoming a nightmare for most Nigerians.

The great news is that this time, there seems to be bright lights at the end of the tunnel, and it is likely that vested interest will be subjugated to national interest. This is likely to set the people free from the shackles of crony capitalism. According to Karl Marx “political power, properly so called, is merely the organized power of one class for oppressing another”.

However, making new appointments without policy change and institutional reform is an exercise in economic futility, because it doesn’t take long before the new guys get married to the natives.

Q3 is make or break – External vulnerabilities will soon show up

Nigeria will have to meet its Eurobond maturity of $500mn in July 2023. It will need to pay its defaulted obligation under the Azura Power Project. The true position of the net external reserves will determine how fast the real effective exchange rate will emerge. Investors, creditors and the markets are awaiting concrete steps and policy moves in the next two (2) weeks. Whilst the Barbarians at the gate struggle over the political spoils, the problems will only compound. As popularly said, “There are no shortcuts to success. If you want it, you’re going to have to work for it”

There is a desperate need to eliminate the restrictions and liberalize the forex market. Our projections on exchange rate convergence towards the N680/$ level will only be possible if there is increased dollar supply from invisible flows. Like we know, you cannot make an omelette if you don’t break eggs.

In this month’s edition of the LBS Breakfast Session, Bismarck Rewane and the FDC Think Tank unveil the Nigerian macroeconomic outlook and the short & long-term impact of policy changes on consumers, businesses, and investors.

Do enjoy your read!!!