Monday, January 9, 2017

Re: USA Africa Dialogue Series - Re: BDC operators’ president ‘worried and disturbed’ as naira plunges to 490/$ | TheCable


I do not think that most people understand the depth of our current problem arising from our recent rapacious history.

The total demand is SPECULATIVE plus REAL, but the Speculative outstrips the Real so much that were things to be left alone for them to chase the DOLLAR demand, with all the Naira floating around (albeit within a small band of "barons") we would not get to the bottom of the "Let Supply and Demand Determine the Rate"  saga until we get to N1000 to $1.  That is Henry Boyo's point, which I am with.

Ultimately, curbing our foreign appetites, economy diversification and import substitution are key, but time is the enemy.  Curbing our foreign appetites is attitudinal, but we must be pragmatic about it because those substituted imports must largely exist first, lest the contraband market will fluorish.  Import substitution is related to economy diversification - from just depending on oil and gas for income FOLLOWED by expenditure, to income for CAPITAL deposition leading to PRODUCTION for internal consumption and export.  But such production requires INDUSTRIALIZATION, which depends on EDUCATED WORKFORCE, TECHNOLOGY and POWER.

Technology, we can purchase, but we are back to our POWER (Electricity) deficit - and to a lesser extent educated workforce - making up for which requires some time.

Bolaji Aluko

On Mon, Jan 9, 2017 at 1:59 PM, Okechukwu Ukaga <> wrote:

A key problem is the fact that we officially have, not one exchange rate but many (up to 5 different rates according to reports). Again, I continue to believe that we should let the market determine, leave the "bureau de change" business alone, but focus on import substitution and export promotion policies as was to mitigation the prevalent foreign exchange problem. Money, like water, tends to find its level naturally. Trying to force people to sell a sarce resource at a less than optimal price is ultimately an exercise in futility.

On Jan 9, 2017 5:15 AM, "Mobolaji Aluko" <> wrote:

My People:

I continue to be with Henry Boyo on this issue....on the short run, our foreign exchange problems cannot be solved by orthodox supply and demand economics....

Time is the enemy here.....

Bolaji Aluko


Economy: The floodgates have been breached

The naira exchange rate was officially devalued by about 50 per cent last year, in deference to the presumed intelligent advice of financial experts who insisted that the much higher black market rate was a true reflection of the real value of the currency.  Regrettably, the distortional and oppressive impact of devaluation on our already ailing economy and beleaguered citizens was clearly not well-thought out before adoption. Consequently, we may have been stampeded to sacrifice a pound of flesh for no tangible benefit.

Alarmingly, despite the horrendous social agony instigated by the June 2016 devaluation, the experts in whom we reposed so much faith in remain unperturbed and have suggested that further devaluation will again become necessary, because last year's devaluation was apparently unduly delayed.

Indeed, if the naira is further devalued to match the present almost N500=$1 parallel market rate, the gift of prophecy will be unnecessary to advise that the parallel market rate will approach or even exceed N1000=U$1 by December 2017. The article titled, "Economy: The floodgates have been breached", was first published on this page on June 20, 2016; a summary of this article follows hereafter. Please read on.

"The Central Bank of Nigeria's decision to float the naira in response to the dollar demand and supply, in such austere times, will probably be ultimately remembered as another policy shift which breached the gates and unleashed devastating floods that swept away any flickering hope of economic diversification or credible inclusive growth. The serial devaluation inspired by the IMF's Structural Adjustment Programme in 1986, was another such event that disenabled our economy, traumatised our people and challenged our traditional value system in many ways.

Conversely, the IMF and other reputable international and local experts had actually encouraged the belief that Nigeria's economy will be enriched if we embraced SAP! Regrettably, 30 years later, the same IMF and its cohorts have again commended our government for swallowing the bitter pill of 50 per cent naira devaluation, which, as usual, they claim to be the strategic path to economic recovery.

Ironically, President Muhammadu Buhari who stoutly resisted devaluation between 1983 and 1985, and later also made naira exchange rate parity, a campaign promise in 2015, has unexpectedly capitulated to the odious demand for more naira devaluation, despite the contrary historical evidence of the unfulfilled expectations of a benevolent impact of this policy. President Buhari's volte face is intriguing, particularly after his public admission that his economic experts always talked above his head and never truly convinced him that devaluation would favour our economy.

Invariably, as the devastating impact of the present 50 per cent naira devaluation paralyses industries and businesses, more Nigerian youths will still be propelled to join the desert caravan to North Africa en route Europe, choralled in suicidal bath tubs to cross the Mediterranean Sea in search of job opportunities, which offer reasonable living wages.

Indeed, the only immediate apparent advantage of the present devaluation is an increase in government revenue, from the extra N100 that will be printed for every dollar earned from crude oil, notwithstanding the inflationary impact of such monetary expansion in a market where surplus naira is already an existing challenge to the CBN'S effort to battle inflation. Nonetheless, the expected revenue shortfall from lower crude prices should be significantly compensated by the 50 per cent increase in naira allocations for each dollar shared. In effect, this cash bounty should significantly reduce or possibly eliminate the over N2tn 2016 budget deficit. However, the subsequent revenue excess created by devaluation, may still be shared in addition to the proceeds from previously budgeted loans to fund the deficit, without enacting a fresh supplementary Appropriation Bill to account for this expenditure.

Incidentally, in order to restrain the inflation rate, fuelled by the increased expenditure, the CBN may ironically be propelled to increase its debt burden with further borrowing to sterilise part of the naira surplus. Ultimately, the commercial banks, specifically, will earn close to N500bn annually from the high interest paid by the CBN to remove such 'troublesome' excess funds from the market.

Indeed, such fiscal rascality has prevailed since 1999, when revenue expectations were usually deliberately understated, with inappropriately low crude oil price benchmarks, to contrive fake budget deficits, which were subsequently approved and processed as public debt, despite the suspiciously high double digit interest rates, which were clearly inappropriate for such sovereign loans. Indeed, if more realistic crude benchmarks had predicated the same budgets, such oppressive, additional government loans would have been happily avoided; conversely, the culture of fiscal irresponsibility is further magnified with the increased allocations from the excess revenue consolidated from the higher than the budgeted benchmark for crude oil prices.

Hereafter, we will assess the direct impact of the present 50 per cent naira devaluation on critical factors such as inflation, productivity, employment and public confidence in holding the naira as a store of value.

Inexplicably, the additional revenue from naira devaluation will ultimately provide little succour for the economy, as it will further fuel inflation and reduce the purchasing power of all incomes and consumer demand. Furthermore, since local industries are still also largely dependent on raw material imports, all import bills will invariably also rise by about 50 per cent if N300=$1. Additionally, the industrial sector's already disenabling production cost burden will unfortunately, become compounded with another 50 per cent price increase for the diesel and gas required to power their plants. Worse still, with inflation approaching 20 per cent and increasing production cost, the bloated working capital, consequently required to sustain businesses will unfortunately also attract well over 20 per cent rate of interest to ultimately make Nigeria's industrial output less competitive against import substitutes.

Labour agitation for wage increase will also become strident to further threaten already ailing businesses. The predictable outcome will be serial retrenchments and business closures, with serious implications for our economic and social security, while faith-based organisations may again become beneficiaries of increasingly vacant factory/warehouse spaces. Nonetheless, retirement will also become a nightmare for wage earners whose pension contributions will depreciate by more than 50 per cent. Sadly, pension earners may become near destitute if inflation exceeds the current 16 per cent, especially if petrol also sells for N300/litre without subsidy and electricity tariff inevitably also spikes by over 50 per cent, because of the magnitude of devaluation.

Furthermore, investment values in the stock market will depreciate from over $45bn when $1 exchanges below N200 to less than $25bn with N300=$1 exchange rate. Indeed, the value of our homes and all naira denominated assets, including the cash in your pocket and savings accounts have all now lost up to 50 per cent of the previous dollar value, while the oppressive burden of paying outstanding import bills, and other dollar denominated loans may send such debtors to early graves. Frankly speaking, our collective net worth has now been cut in half, with just a stroke of the pen, but it is unlikely that the speculated inflow of foreign exchange, from portfolio investors, will ever approach $20bn as speculated before this devaluation.

However, since the CBN's devaluation policy is fixated on dollar demand and supply, and obviously denies the pivotal role of systemic naira surplus, as the prime cause of devaluation, further naira devaluation will become inevitable, and the economy will sadly unravel. Invariably, if the surplus naira syndrome remains untamed, a naira exchange rate beyond N500-$1 will be possible this year. Incidentally, the N1, 000 currency note is now valued just over $3 in the official market. Surely, the naira will never command public confidence as a safe store of value and will continue to slide, so long as the CBN continues to auction the dollar for higher naira bids, in a market already plagued with excess naira supply."

On Sat, Dec 31, 2016 at 1:21 AM, Mobolaji Aluko <> wrote:

Joshua Gogo and Ayo Obe:

First, Season's greetings to both of you!

Secondly, I will respond to you together, since you express "fears" about my suggestions.

A/  First, I want to make it clear that I hope that the experience that Nigeria is going through NOW in terms of foreign exchange pangs and pains - which is where we were sixteen years ago, with virtually the same discussions - will result in a more permanent RE-STRUCTURING of the productive capacities of our country, so that in future we will be able to deal with it in a more constructive manner.  I remember that during the OPEC crisis, the USA used its bad experience to require smaller, more fuel-efficient cars.  Cars have become bigger again, but have remained fuel-efficient.  The recent oil crisis made Obama to talk about a more energy-independent USA, and now indeed they are.  Our problem in Nigeria is that often once a problem goes away, we return to our bad habits, so that when the problem returns, it returns as seven times seven devils, worse than before.

So the more permanent solution to all of this crisis is decreasing our foreign items consumption (imports), increasing our domestic production (both for domestic consumption and for export), which is related to diversifying our economy and increasing jobs by all means necessary.

So all the devices that I am suggesting below are second-order aspects of solving the problem.  If you consider them band-aids, I won't object, but without bandages, wounds can become septic!

B/  Now to my five suggestions:  Joe Attueyi, Joshua Gogo and Ayo Obe don't like my Suggestion 5 (ban the Black Market).  But if I had written about Suggestion 1 that we should "probe and tax" idle funds in banks - rather than just "tax" them, I believe that at least Joshua would have relaxed a bit.

Here is the issue: suppose you have a person - an individual in Nigeria - who just has N5 billion idle in his bank account.  For goodness sake, will you not ask what business made him have such excess fund?  How much TAX has he or his business paid to make such a huge surplus?  If he or she is probed, and it is shown that it is legitimate money, and he and his business have paid the adequate tax - then no problem.  Presumably, the money is fixed in some deposit in the bank, so that the bank is paying some interest to the depositor, in order to use the fund for lending to the real sector - fine - so the fund is not REALLY idle.

I remember some time in the past when former IG Tafa Balogun was being investigated,  It was a 70-count charge;

with a summary:



*N12 million to buy 1,500,000 shares in First Bank  (SEIZED)

*N50,050,000 to acquire another 1,500,000 shares in Union Bank (SEIZED)

*N148 million to buy 1,500,000 shares in Guinness Nigeria (SEIZED)

*N500 million to buy treasury bills for Caledonian Telecommunications (SEIZED)

* N350 million for a block of six three-bedroom flats at Olusegun Aina Street, Park View Estate, Ikoyi, Lagos in the name of Ceejay Properties Nigeria (SEIZED)

*Millions of naira to purchase properties (ALL SEIZED)

    - Lagos: (i) a five-bedroom detached house at Victoria Garden City; and

    - Abuja: (i)  two double duplex apartments at Plot II Tunis Street, Wuse Zone 6 Garki Abuja; (ii) Shakur Plaza at Plot 102a Cadastrel Zone A3 Garki,  (iii) Yasuha Plaza at 1046 Adeola Adetokunbo Street Wuse II,  (iv) two double duplex apartments at Plot 110 Tuius Street Wuse Zone 6, Garki, Abuja


all valued at N13 billion.


Many of the properties are in the names of some of the companies listed on the charge sheet, viz:


(i) Yeboa Investment, (ii) Caledonian Telecommunications, (iii) Renovations Constructions, (iv) Aworo Investment, (v) Olatrade,  (vi) Yeboa Nigeria and  (vii) Ceejay Properties Nigeria.


Tafa Balogun DENIED that he owned many of the bank accounts listed against his name or his companies, but NOBODY ever came forward to claim ownership separate from him.  So how does one just have all kinds of monies in banks without anybody knowing who has them?

Also, recently, I understood that because of BVN, there are about 1 million accounts in banks that have not been claimed because of fear that they will have to account for the monies in them.  Does that not show some funny business?  What about billions of naira of unclaimed dividends?

And so on......

So in our economy that needs money to be invested in our real sector, bank accounts need to be PROBED to see how to free them up for developing our economy....

That is what I am about - and not necessarily a witch-hunt.

Suggestion 2 stems from Suggestion 1 - ensure proper taxes were paid before such an accumulation, and then ENCOURAGE surplus-owners to invest in our Stock Market.   If you have suspicions about some companies, then proper advice can be given to those who wish to invest in the market.  It should not be seen as punishment (By the way, Lee Kuan Yew of Singapore REQUIRED Singaporeans to SAVE, with such savings being used by banks and others to develop Singapore.  Why can't we adapt that?)

Finally, with respect to Suggest 5:  yes, I hope that Black Market trading be made "equal, in perception and treatment, to trafficking for prostitution, drug trade and the arm's trade."  I remember Margaret Thatcher once saying that it was not just a matter of economics: "A country which loses the power to issue its own currency is a country which has given up the power to govern itself. Such a country is no longer free. And it is no longer democratic - for its people can no longer determine their own future in national elections.To surrender the pound, to surrender our power of self-government, would betray all [that] the past generations down the ages lived and died to defend."

She was an early Brexiter, but when we just say that others can determine the value of our Naira,  I feel like Thatcher!

And there you have it.

Bolaji Aluko

On Fri, Dec 30, 2016 at 7:31 PM, Ayo Obe <> wrote:
I shudder with dread at recommendation 1!  I know so many of us silently applauded when one of the Buhari administration's first actions was to ban the deposit of dollars into domiciliary accounts.  We thought it would mean that those who had benefited from President Jonathan's "dollar rain" (and yet had not had the decency to help him win the election) would be caught with their hot money in their greedy little hands.

What did we know?  We weren't economists.  We forgot that it took Nigerians a lot of time to build up confidence in the domiciliary account system, so that they would keep their foreign exchange in Nigeria, and thus at the nominal disposal of Nigeria, rather than some other foreign nation.  We forgot how suspicious we had been when the Dom account made its debut, so sure had we been that at some point our government would just change the rules, move the goalposts ...

But now, with the naira only waiting for the year to actually turn  before hitting N500 for one dollar, I think we know better.  And that is why I shudder with dread at Bolaji's first proposal.

As for proposal 5 ... good luck with that.  The other day the DSS was in the 'black' market arresting forex dealers who were not selling at the govt dictated rate.  Remind me again, how (US$1.00 = N490.00), how's that going?

I invite you to follow me on Twitter @naijama

On 30 Dec 2016, at 5:24 PM, Joshua Gogo <> wrote:

It would be quite interesting and enriching to read a full articulation of your five-point proposition
below. Such articulation will greatly avoid misinterpretations and knee-jack response to them. However, knowing you personally, I can say some of the measures you have proposed are strongly at variance with your long perceived belief in economic freedom, liberty, individual responsibility, and economic democracy.
 Let me express some first thoughts on your propositions:

"(1) idle DOLLAR or NAIRA funds left in banks month-in, month-out or year-in, year-out   - eg in the ranges N10-100 million, N100 million to N1 billion, and N1 billion and above - should be taxed, and the tax revenue used as venture capital.  (There are many civil servants and others who have stored stolen money secretly in banks.)"

a) This suggests that harding working, value creating individuals and entrepreneurs who drive the economy and create surpluses and growth should be punished just because they do not consume as much as they produce and create. It suggests that we should all just live a subsistence economic life that ensures we don't have surpluses and safeguard. In a society without social security, public health care, income insurance and other social support systems, doesn't such policy become more disastrous than you intend?
b) Do you really believe that the banking systems will exist if people do not create and leave long term deposits in the banks, which should be turned around by the banks to perform their financial intermediation functions in transforming these long-term deposits into  loans and credits to the productive sectors and enterprises that need them?
Should depositors be punished where the Banks (non-banks) have simply failed in doing the work of banks? Have these depositors not been punished enough by the intolerable inflations, depreciations and devaluations that have battered their deposits and that resulted from poor and incompetent economic management?

I agree that taxation, or non-payment of taxes, is a critical problem. However, the tax should be applied at the point of earning. For those who are not able to show how they earned their deposits or if they paid the taxes on the incomes that generated those deposits, as you mentioned, these individuals or corporation should be prosecuted for either tax evasion, or properly taxed, or be granted amnesty under certain conditions that will truly benefit the economy and the people of the country. 
Just brazenly confiscating deposits will immediately lead to a bank run, banking and economic collapse and untold capital flight, as all those individuals and corporations who produce more than they consume will simply take their monies out of the country as they create it. The Naira this proposition seeks to save will completely be decimated.

"(2)   in the alternative, they should be "amnestified" if they invest them in the Stock market.

a) The Nigeria Stock Market is so illiquid, small and vulnerable to rigging and all kinds of  brazen malpractices and manipulations, as it also reflects the general corruption and disregard for rules, that it is not even considered a functioning market in global financial and investment conversations. Financial reports submitted by most traded companies are so incorrect and forged that most sane investors will not even consider investing in the NSE beyond in a few global brand names. Quite frankly, when it comes to price discovery and information integrity, a number of investors are more comfortable dealing in Oshodi market than the Nigeria Stock Market. Like I said, the exceptions are for a few companies that have implemented the multinational parents' corporate governance and financial standards, imposed by their MNC parents.
Does your proposition (2) above seek to punish hardworking Nigerians simply because they refuse to throw away their hard earned money to conmen who swindle investors with impunity on the NSE? How many companies on the NSE are real companies? And where is the information, with  integrity and authenticity, on the traded firms that investors need to invest in the NSE? Have you ever heard, in recent experience in Nigeria, of any insider trading case or any market participant  punished/penalized for rigging, manipulation or any form of malpractice?

 (3)  large withdrawals of currency from banks should be fully discouraged (that is already being done;  in developed countries, you are immediately marked down as suspicious if you go in and start withdrawing more than $10,000 at one time.)"

I agree with you on this.

(4)  to periodically mop up excess (illicit?) naira,  rather than change the currency notes wholesale, there should be episodic "colour exchange" of currency"

Sure, changing the look and feel of currency Notes is necessary from time to time for security and to reflect technological changes, or even to correct some anomalies in the overall economy. Equally essential are stability, durability and predictability that have their virtues. I agree with you on the need to discourage individuals from hoarding large sums of cash, however, it is not clear how this will in the short and intermediate run help solve the problem of depreciation. This is because the immediate pressure on a local currency when you change it is to drive down the value of all the currency Notes in circulation including those in the hands of hardworking people and poor people, who may not have the means and relationship with the banks to quickly change them out either to the new domestic currency Notes or foreign currency. To the extent we are willing to accept this collateral damage, sure,frequently changing the currency will help discourage currency hoarding.

"(5)  Ban the Black Market hard to drive it far underground......see below (my article of 2001, where you will see that we were EXACTLY where we are today about fifteen years ago.)."

Well, only extremely few individuals think the voluntary exchange of assets by law abiding individuals is a criminal activity
to be treated as such. Moreover, this is a country where the majority of the individuals (not the individuals with the highest volume of demand) are just trying to source for forex to pay for high quality education and healthcare that are not available in the country, and also trying to import goods and services that Nigerians need but are not available in the country. On the supply side, you have millions of poor people who are trying to find a fair price to change US$ and other currencies sent to them by friends and family, even as the banks seek to swindle them out of these funds using the artificial exchange rates. Given that this very free and democratic market for forex will not disappear because it is of need, the proposal (5) will only expose free, law abiding, hardworking citizens to the resultant risks and criminal organizations that will take over the market from the BDCs that currently operate it. Think of the drug, prostitution, immigration and arm's trades and tell us how being driven underground has not created innocent victims, criminalized the same victims and spawned a lucrative industry for criminal organizations that neither pay taxes from their profit nor have not endangered society further. Yet these are activities (except immigration) at which most would ordinarily frown. Does your proposition (5) seek to make free exchange of currency equal, in perception and treatment, to trafficking for prostitution, drug trade and the arm's trade? 

Do we really want to implement these policies proposed above  just to ensure incompetent people continue to run the government and we don't want to hold them to account?

I'm sure your articulation of 4 of your 5-point proposition will help inform and change my first thoughts on them, because I know you are an insightful thinker and will sure have a perspective that has escaped me.
kind regards

I agree wi
On Fri, Dec 30, 2016 at 6:39 AM, Mobolaji Aluko <> wrote:

Joe Attueyi:

Let me suggest five "Boyo Solutions":


 (1) idle DOLLAR or NAIRA funds left in banks month-in, month-out or year-in, year-out   - eg in the ranges N10-100 million, N100 million to N1 billion, and N1 billion and above - should be taxed, and the tax revenue used as venture capital.  (There are many civil servants and others who have stored stolen money secretly in banks.)

 (2)   in the alternative, they should be "amnestified" if they invest them in the Stock market.

 (3)  large withdrawals of currency from banks should be fully discouraged (that is already being done;  in developed countries, you are immediately marked down as suspicious if you go in and start withdrawing more than $10,000 at one time.)


 (4)  to periodically mop up excess (illicit?) naira,  rather than change the currency notes wholesale, there should be episodic "colour exchange" of currency


eg You can suddenly switch the colour between N1000 and N200, and between N500 and N100 - and hold the colour change steady for two years.

 (5)  Ban the Black Market hard to drive it far underground......see below (my article of 2001, where you will see that we were EXACTLY where we are today about fifteen years ago.).

And there you have it.

Bolaji Aluko

The Black (Parallel) Exchange Market Should Be Banned in Africa


By Mobolaji E. Aluko,

Monday, June 11, 2001




I have never changed money in Nigeria's Black (Parallel) Market, and don't

intend to any time soon.  Nevertheless, back in August 2000, on my last

trip to Nigeria, I went with one of my many hosts to an open site in

Ikeja, Lagos State to watch him exchange a few hundreds of his own dollars.


As we drove up to this open foreign exchange market (this was at about 7

pm), quite a number of at least 2 dozen  people were sitting around, and

very quickly a Mallam (whose turn it appeared was to attend to the next

customer) came to us to ask quite directly what denomination we had and

how much we were willing to exchange.  "500 US dollars" my host said.

"115 Naira" the Mallam said the Dollar to Naira exchange rate  (I don't

quite remember the exact amount that he said).  "120 Naira or I will

leave," my host said.


Without much further haggling, the Mallam ran into this non-descript White

house just beyond the open yard, and came back with a bundle of Naira

under his Babanriga, and handed the bundle to my host, who counted quickly

and saw that it was N118.  He handed all the money back, and we made to

leave, but the Mallam quickly said, "Ah, oga" - and brought the rest of

the money out to give my host.  At that point, my host counted quickly

further, then surrendered his 500 dollars, and the quick deed was done.


Just like that.


I know that the Black Market is legal in Nigeria, but when we left the

eerie scene, I had to ask my host again:  "Is this legal?"  He said "Yes.

Don't you see all newspapers quote parallel market rates all the time?"

"But how do you know that his Naira are real, not fake, and how does he

know that all the dollars you gave to him are not fake?"  There was no

immediate response, but I think that there was a matter of faith on both

sides.  Certainly, finger-testing $500 (5 $100 notes) could not have been

a big problem for the Mallam,  but how my host could so quickly be sure

that all the N60,000 bundle that was handed to him was kosher is still a

mystery to me. [I could relate another situation where all the dollars

handed to a close friend in a similar parallel market exchange were not

kosher - but I won't!]



African and Non-African Countries: Relative approaches to the Black Market


I relate this encounter in preparation to asking the question:  should the

Black Market in Nigeria be so openly and legally done, and has it not

considerably hurt the value of our Naira over the years?  Should it not be

BANNED once and for all NOW and a concerted effort be employed to run ALL

of its operators out of town?  Can a country be so helpless about controls

of its own currency for even the government to appeal to its parastatals

not to engage in changing money in the Black market any longer, as

president Obasanjo was recently reported to have "appealed", or more

accurately "banned" such activity? Or when the governor of our Central

Bank makes optimistic statements about the appreciation of the Naira in

the parallel market?  Why must our president unilaterally ban government

officials from patronising a market if it is legal?  Otherwise, why is

legislation not enacted to BAN it right away, hence making government

patronage of such an activity a moot point?


Why do I ask these?  For one, trading in the Black Market in Europe, Asia

and most Latin American countries is completely ILLEGAL and has been so

for as long as we know.  It must be for good reason.  If we look at the

foreign exchange rates of their currencies, they have largely not had

large mood swings, and if they had, certainly not due to the parallel

market, but due to occurrences such as wars, etc..


Table 1 below shows this for 30 non-African countries between 1980 and

1999, none of which closes its eyes to ANY Black market within its

borders.  On the other hand, Table 2 also shows the historical trend for

both official and parallel market exchange rates for 30 African countries.

Table 3 shows the historical trend specifically for Nigeria.





Table 1:  Official Exchange Rates Per USA Dollar ($) in selected

non-African Countries



Country     Currency    1980   1990    1994     1995   Mid-1999   Ratio*

                         (1)    (2)    (3)       (4)    (5)       (6)




Austria      Shilling    20.7  14.5    12.1     11.0      13.3      0.643

Denmark        Kroner     6.5   5.8     6.8      6.2       7.2      1.108

France          Franc     5.1   5.1     5.4      5.0       6.4      1.255

Germany  Deutschemark     2.8   2.2     1.7      1.6       1.9      0.679

Greece        Drachma    30.0 175.6   296.0    242.0     314.0     10.467

Sweden         Kronor     4.8   4.5     8.5      7.5       8.5      1.771

Switzerland    Franc      1.8   1.7     1.5      1.3       1.6      0.889

UK             Pound      0.4   0.55    0.68     0.66      0.63     1.575

Russia        Rouble      1.3   1.5  1231.0   3232.0      24.3     18.692

USA           Dollar      1.0   1.0     1.0      1.0     1.0      1.0

Argentina       Peso      0.25  0.25    0.99     0.99    1.0      4.0

Brazil          Real    405.5  650.6    0.85     0.8     1.8       ?

Canada        Dollar      1.05   1.05   1.34     1.38    1.48     1.41

Mexico          Peso      1.01   2.5    3.1      3.5     9.5      9.41

Venezuela     Bolivar     4.5    4.0  102.0    170.0   607.0    134.9

Australia     Dollar      0.89   0.88   1.62     1.31    1.5      1.69

India          Rupee      8.0   15.0   31.1     33.8    43.4      0.417

Japan           Yen     290.0  150.5  109.0     99.0   121.0      0.42

Malaysia    Ringgit       0.6    1.2    2.6      2.5     3.8      6.33

Phillipines    Reso       2.6    3.6   27.3     23.8    38.0     14.6

Singapore     Dollar      1.0    1.0    1.6      1.5     1.7      1.7

Indonesia     Rupiah      1.25   1.3 2102.0   2267.0  6875.0     5500

Iran            Rial      0.6    1.0    1.35     1.4     1.8       3

Iraq           Dinar      0.06   0.06   0.25     0.30    3.75    62.5

Saudi Arabia   Riyal      2.5    3.4    3.7      3.8     3.8      1.52

South Korea      Won    260.0  350.0  808.0    795.0  1158.0      4.45

China           Yuan      3.75   4.45   5.79     8.68    8.25     2.2

Taiwan        Dollar      7.75   8.25  26.7     26.3    32.3      4.17

Thailand        Baht      7.9    8.4   25.4     25.0    36.9      4.67

UAE           Dirham      5.01   3.75   3.68     3.68    3.75     0.75



*Ratio = (5)/(1).  A ratio lower than 1 implies an appreciation of the

currency relative to the dollar over the years stated





Table 2 Historical foreign exchange rates for 30 African countries


Country     Currency    1980   1990    1993     1994   1999     Ratio*

                         (1)    (2)    (3)       (4)    (5)       (6)




                       1.  Official exchange

                       2.  Parallel (Black) market exchange rate


CFA Count's* CFA Franc 1. 211.3  272.3  283.2   555.2    620.0    2.93

14 countries)          2. 209.5  281.8  288.0   586.4    625.0    2.98


Botswana          Pula 1.   0.8    1.9    2.4     2.7      4.6    5.75

                       2.   0.8    1.9    2.8     2.9      6.6    8.25


South Africa      Rand 1.   0.8    2.6    3.3     3.6      6.1    7.63

                       2.   0.9    2.7    3.5     3.8      4.8    5.33


Zimbabwe        Dollar 1.   0.6    2.5    6.5     8.2     38.3    63.8

                       2.   1.1    3.3    7.7     9.4     16.0    14.5


Kenya         Shilling 1.   7.4   22.9   58.0    56.1     70.3    9.5

                       2.   8.2   23.3   91.7    66.8     70.0    8.54


Zambia          Kwacha 1.   0.8   30.3  452.8   669.4   2388.0   2985

                       2.   1.3  121.2  531.0   805.4     -      619.5


Uganda        Shilling 1.   0.1  428.9 1191.0   979.4   1454.8   14548

                       2.  75.7  685.8 1515.8  1292.8   1230.5   16.3


Ethiopia          Birr 1.   2.1    2.1    5.0     5.5      7.9     3.76

                       2.   2.8    6.0   13.3    12.0      8.0     2.86


Ghana             Cedi 1.   2.8  326.3  649.1   956.7   2647.3  945.5

                       2.  15.9  360.8  665.7   976.4   2700.0  169.8


Nigeria          Naira 1.   0.5    8.0   22.1    22.0     92.3  184.6

                       2.   0.9    9.3   56.8    71.7    105.0  116.7


Guinea           Franc 1.  19.0  660.2  955.5   976.6   1105.0     58.2

                       2.  41.7  693.3 1156.9  1074.1   1150.5     27.6


Liberia         Dollar 1.   1.0    1.0    1.0     1.0     41.9   41.9

                       2.   1.1    5.5   40.0    45.0     60.5     55


Libya            Dinar 1.   0.3    0.3    0.3     0.3      0.4     1.33

                       2.   0.5    1.0    1.7     1.6      2.3     4.6


Egypt            Pound 1.   0.7    1.5    3.4     3.4      3.4     4.86

                       2.   0.8    2.6    3.4     3.4       -      4.25


Algeria          Dinar 1.   3.8    9.0   23.3    35.1     66.6    17.5

                       2.  10.9   29.8  106.8   128.7    135.0    12.4


Mauritius        Rupee 1.   7.7   14.9   17.6    18.0     25.2     3.27

                       2.   7.8   15.7   18.3    18.4     24.0     3.08


*The CFA countries (the 14 members of the CFA Zone were: Benin, Burkina

Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Cote

d'Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal and Togo.

Guinea-Bissau became the 15th member on August 1, 1997) have their

currency pegged to the French Franc, but in January 1994, the CFA franc

was devalued by 50 per cent to CFA Fr100 to the French franc


Sources for Tables 1 and 2:

          1.  African Development Indicators 2000; World Bank, DC, USA

          2.  London Economist Intelligence Units World in Summary





Table 3:  Average Naira Exchange Rates (1970 - 2001)



     Year             $1 = Naira               BP1 = Naira   Head of State

     -----           -----------               -----------   -----------

     1970              0.7143                     1.7114         Gowon

     1971              0.6955                     1.7156           "

     1972              0.6579                     1.6289           "

     1973              0.6579                     1.6289           "

     1974              0.6299                     1.4795           "

     1975              0.6159                     1.3678  Gowon/Mohammed

     1976              0.6265                     1.1317 Mohammed/Obasanjo

     1977              0.6466                     1.1671       Obasanjo

     1978              0.6060                     1.2238           "

     1979              0.5957                     1.2628  Obasanjo/Shagari

     1980              0.5464                     1.2647       Shagari

                       0.9   PMER

     1981              0.6100                     1.2495           "

     1982              0.6729                     1.1734           "

     1983              0.7241                     1.1216           "

     1984              0.7649                     1.0765       Buhari

     1985              0.8938                     1.1999 Buhari/Babangida

                       1.7    PMER

     1986              2.0206                     2.5554       Babangida

                       3.9    PMER

     1987              4.0179                     6.5929           "

                       5.9    PMER

     1988              4.5367                     8.0895           "

                       6.7    PMER

     1989              7.3916                    12.0695           "

                      10.7    PMER

     1990              8.0378                    16.2419           "

                       9.3    PMER

     1991              9.9095                    17.4955           "


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