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Monday, September 26, 2022
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OBITUARY FOR THE NAIRA – BY GREYSTONE SOLICITORS

I was with some group of Korean Foreign Investors today at a luncheon at the Eko’La Meridian. I used the opportunity to sample opinion on the reaction of investors to our current economic regime under President M.Buhari.The responses I got left me very sad and worried.

The trillions of Naira of “virtual capital” that were miraculously created under President Godluck Jonathan through securitzation when the market was buoyed-along by optimism vanished in a flash because the Nigerian market is driven by fear.

In fact, the equity bubble has already been punctured and the process is well underway. What we are witnessing is essentially the breakdown of our “modern” day banking system. And what it will leave us in its wake is a Naira that is not only weakened but totally worthless and useless as a means of exchange.

As the downgrades on collateralized debt obligations and mortgage-backed securities continue to accelerate, there’ll likely be a frantic “flight to cash” by investors, just like the recent “surge” in Capital Market. This could well be followed by a series of spectacular bank and non-bank defaults. The demand for dollars will surge and the Naira, already on live support, will eventually give up the ghost.

The reality of the Nigerian economic situation is that Banking is done by felons and in order to produce and manufacture, you need to obtain loan from men who produce nothing. Who have no factories and do not contribute to national growth quotient.

When money flows to those who deal, not in goods, but in favors – when you see that men get richer by graft and your laws don’t protect you against them, but protect them against you – when corruption is being rewarded and honesty a vain-sacrifice – you may know that your society is doomed.

This will mean a final OBITUARY of the Nigerian Naira.

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