1 00:00:02,440 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,280 --> 00:00:14,680 Speaker 2: These are very pricey and like let's last say, it 3 00:00:14,720 --> 00:00:17,160 Speaker 2: is all easy for us. 4 00:00:17,920 --> 00:00:21,239 Speaker 1: You might guess something of ten today, tomorrow you get 5 00:00:21,280 --> 00:00:21,680 Speaker 1: it for two. 6 00:00:24,600 --> 00:00:27,480 Speaker 3: Just keep hoping it to be better one day. 7 00:00:29,360 --> 00:00:33,360 Speaker 2: As we were just hearing from these Nigerians, times have 8 00:00:33,479 --> 00:00:38,080 Speaker 2: been difficult and the prime suspect seems to be the naira. 9 00:00:39,080 --> 00:00:44,159 Speaker 2: Over the past few years, the naira has experienced multiple downsides, 10 00:00:44,720 --> 00:00:49,600 Speaker 2: but most recently some upside too. What is still down though, 11 00:00:49,840 --> 00:00:53,760 Speaker 2: is Nigerian's spending power. They are yet to reap the 12 00:00:53,800 --> 00:00:58,240 Speaker 2: benefits of the naira's recent rebound. So how can you 13 00:00:58,320 --> 00:01:01,760 Speaker 2: go from being a weak currency to the best in 14 00:01:01,800 --> 00:01:05,960 Speaker 2: the world and then losing ground again? And what does 15 00:01:05,959 --> 00:01:09,440 Speaker 2: a stronger currency mean for the economy of one of 16 00:01:09,560 --> 00:01:13,679 Speaker 2: Africa's biggest markets. This is what we are going to 17 00:01:13,720 --> 00:01:16,920 Speaker 2: talk about this week with my colleague and Legos Bureau 18 00:01:17,040 --> 00:01:22,640 Speaker 2: chief Anthony ose Brown. I'm Jennifer Sabasanja and this is 19 00:01:22,680 --> 00:01:26,960 Speaker 2: the Next Africa Podcast, bringing you one story each week 20 00:01:27,000 --> 00:01:30,200 Speaker 2: from the continent driving the future of global growth with 21 00:01:30,280 --> 00:01:38,320 Speaker 2: the context only Bloomberg can provide. Thank you so much 22 00:01:38,360 --> 00:01:41,880 Speaker 2: for joining us. Anthony, you're very busy and it's an 23 00:01:41,880 --> 00:01:45,240 Speaker 2: honor to have you step away from watching what is 24 00:01:45,280 --> 00:01:48,080 Speaker 2: going on in Nigeria and mainly what is going on 25 00:01:48,240 --> 00:01:52,280 Speaker 2: with the naira. It's been a whirlwind, roller coaster day 26 00:01:52,360 --> 00:01:55,720 Speaker 2: after day for you and all of the team. Let's 27 00:01:55,760 --> 00:01:58,320 Speaker 2: just rewind back though to May of twenty twenty three 28 00:01:58,720 --> 00:02:01,880 Speaker 2: when Bulletin Abu, who's the current President of Nigeria came 29 00:02:02,040 --> 00:02:07,440 Speaker 2: to power. Bolatinubu has one Nigeria's presidential election. 30 00:02:08,480 --> 00:02:10,800 Speaker 1: So victory that will placed him at the helm of 31 00:02:10,840 --> 00:02:12,240 Speaker 1: Africa's biggest economy. 32 00:02:14,120 --> 00:02:19,680 Speaker 2: Can he fix the economy given his mandate? Should we 33 00:02:19,720 --> 00:02:22,160 Speaker 2: start there when we're thinking about the naira and the 34 00:02:22,280 --> 00:02:25,359 Speaker 2: roller coaster that has been the past year. What's your take? 35 00:02:26,200 --> 00:02:29,240 Speaker 1: I think that's a good point to start because before 36 00:02:29,360 --> 00:02:34,120 Speaker 1: that point, the naira was pegged against the dollar. President 37 00:02:34,200 --> 00:02:37,760 Speaker 1: to nob got inaugurated twenty nineth May and one of 38 00:02:37,800 --> 00:02:41,480 Speaker 1: the first things he said during his inaugration was that 39 00:02:41,960 --> 00:02:44,799 Speaker 1: the way the monitory policy has been managed before then 40 00:02:45,000 --> 00:02:49,440 Speaker 1: wasn't right and he was going to make sure reforms 41 00:02:49,440 --> 00:02:53,720 Speaker 1: are made. And within a week, the former Central Bank 42 00:02:53,800 --> 00:02:58,120 Speaker 1: of Nova sat and someone was appointed in acting capacity 43 00:02:58,840 --> 00:03:03,560 Speaker 1: and steps were immediately taken to remove the peg, the 44 00:03:03,639 --> 00:03:06,960 Speaker 1: nyira's peg against the dollar. And since then, as we said, 45 00:03:07,080 --> 00:03:09,840 Speaker 1: it's been a roller coaster right for the currency. 46 00:03:09,680 --> 00:03:12,000 Speaker 2: And Anthony, maybe you can talk us through the first 47 00:03:12,040 --> 00:03:17,160 Speaker 2: few months President Tuenibu was announcing new policy after new policy. 48 00:03:17,800 --> 00:03:22,279 Speaker 2: Are these reforms actually working in favor of the naira. 49 00:03:22,560 --> 00:03:25,000 Speaker 3: We could say it's waking. 50 00:03:25,520 --> 00:03:28,520 Speaker 1: They reduced the different shop between the parallel market rate 51 00:03:28,680 --> 00:03:30,959 Speaker 1: and the official market rate. 52 00:03:31,480 --> 00:03:32,840 Speaker 3: That has light little worked. 53 00:03:32,919 --> 00:03:35,480 Speaker 1: From about seventy percent the French ship between the official 54 00:03:35,560 --> 00:03:37,600 Speaker 1: rate and the parallel market rate, it. 55 00:03:37,520 --> 00:03:39,320 Speaker 3: Has dropped to almost nail. 56 00:03:39,520 --> 00:03:43,240 Speaker 1: In fact, we have had seen situations where the parallel 57 00:03:43,320 --> 00:03:47,960 Speaker 1: market rate is weaker or is stronger than the official 58 00:03:48,000 --> 00:03:51,280 Speaker 1: market rate, so that multiple rates or the rate to 59 00:03:51,280 --> 00:03:53,400 Speaker 1: the friend ship between the official market rate and the 60 00:03:53,400 --> 00:03:58,080 Speaker 1: parallel market rate no longer exists practically in the market, 61 00:03:58,120 --> 00:04:00,600 Speaker 1: and that means more people are willing to bring in 62 00:04:00,720 --> 00:04:04,360 Speaker 1: dollars through the official market than through the power market. 63 00:04:04,800 --> 00:04:07,760 Speaker 1: And that has also led to improved liquidity in the 64 00:04:07,800 --> 00:04:11,040 Speaker 1: official market. So we could say in that sense it 65 00:04:11,080 --> 00:04:14,400 Speaker 1: has worked. The naira is weaker, but somewhere around much 66 00:04:14,480 --> 00:04:18,080 Speaker 1: we saw it actually appreciated strongly and became the world's 67 00:04:18,120 --> 00:04:21,320 Speaker 1: best performing currency, moved up almost I think thirty to 68 00:04:21,440 --> 00:04:25,320 Speaker 1: forty percent before I say, losing ground in apriy again. 69 00:04:25,920 --> 00:04:28,240 Speaker 2: And how has this and some of the other reforms 70 00:04:28,279 --> 00:04:31,039 Speaker 2: t Nubu has put in place actually had an impact 71 00:04:31,160 --> 00:04:32,760 Speaker 2: on the economy in Nigeria. 72 00:04:33,600 --> 00:04:37,039 Speaker 1: Yeah, it's been a bit devastating for a lot of 73 00:04:37,080 --> 00:04:40,840 Speaker 1: people on our people on the streets. The sharp devaluation 74 00:04:41,000 --> 00:04:44,400 Speaker 1: and the currency, along with the partial remover of subsidy, 75 00:04:44,839 --> 00:04:48,200 Speaker 1: has led to a spike in inflation, which was already 76 00:04:48,320 --> 00:04:52,280 Speaker 1: rising even before the devaluation of the currency. So inflation 77 00:04:52,440 --> 00:04:55,880 Speaker 1: is currently at nearly a three decade high and keeps 78 00:04:55,960 --> 00:04:59,880 Speaker 1: rising as almost at ten three seven percent of the 79 00:05:00,120 --> 00:05:04,599 Speaker 1: about as of match food inflation is higher at forty percent. 80 00:05:04,680 --> 00:05:08,240 Speaker 1: And that's huge because if you consider them, most Nigerians 81 00:05:08,240 --> 00:05:11,839 Speaker 1: spend more than half of their incommon food. That means 82 00:05:11,839 --> 00:05:15,040 Speaker 1: they sharp rise and food prices has forced most of 83 00:05:15,080 --> 00:05:20,320 Speaker 1: them to prioritize food expenses above other necessary expense like 84 00:05:20,480 --> 00:05:22,760 Speaker 1: medical care and education. 85 00:05:23,120 --> 00:05:26,560 Speaker 2: For people who are not local to the region, to Nigeria, 86 00:05:26,960 --> 00:05:29,039 Speaker 2: what does that look like if you're going to the 87 00:05:29,040 --> 00:05:32,800 Speaker 2: grocery store. How is that translating Well. 88 00:05:32,760 --> 00:05:37,040 Speaker 1: Most Nigerians shop in the open market. One practical example 89 00:05:37,160 --> 00:05:39,200 Speaker 1: is Nigeria's popular jelove rice. 90 00:05:39,520 --> 00:05:40,760 Speaker 2: We love jela rice. 91 00:05:41,160 --> 00:05:42,000 Speaker 3: Yeah yeah. 92 00:05:42,160 --> 00:05:45,120 Speaker 1: So as at match, the price of rice, the main 93 00:05:45,279 --> 00:05:47,760 Speaker 1: ingredients for gelo of rice jumped up by one hundred 94 00:05:47,800 --> 00:05:50,880 Speaker 1: and fifty percent. That's almost nearly three times the normal price. 95 00:05:51,080 --> 00:05:53,240 Speaker 1: So a lot of people may no longer be able 96 00:05:53,279 --> 00:05:55,600 Speaker 1: to eat youell of rise on the daily basis because 97 00:05:55,600 --> 00:05:59,239 Speaker 1: the price has jumped up significantly and can no longer 98 00:05:59,240 --> 00:05:59,760 Speaker 1: afford it. 99 00:06:00,080 --> 00:06:01,880 Speaker 2: I bet that, Anthony. If you were to ask the 100 00:06:02,000 --> 00:06:07,479 Speaker 2: ordinary Nigerian versus maybe a market participant, whether Tinubu's reforms 101 00:06:07,480 --> 00:06:11,920 Speaker 2: are actually working, they may have strikingly different answers. 102 00:06:12,279 --> 00:06:15,560 Speaker 1: So on the streets, everybody thinks is failing. There's been 103 00:06:15,600 --> 00:06:19,039 Speaker 1: some trends on x where people have been trended in 104 00:06:19,080 --> 00:06:23,279 Speaker 1: tenubumas go. That's because they feel he's costing a lot 105 00:06:23,320 --> 00:06:26,800 Speaker 1: of suffering for people. So yeah, So there's a huge 106 00:06:26,800 --> 00:06:32,440 Speaker 1: differential between how investors and foreign portfolio investors and analysts 107 00:06:32,480 --> 00:06:35,200 Speaker 1: look at the economy and the way ordinary people on 108 00:06:35,240 --> 00:06:37,479 Speaker 1: the streets look at the economy. For ordinary people on 109 00:06:37,520 --> 00:06:39,840 Speaker 1: the streets. They are not seeing any benefits in what 110 00:06:39,880 --> 00:06:42,960 Speaker 1: the government is doing. But for the analyst, what Tenubu 111 00:06:43,040 --> 00:06:46,599 Speaker 1: is doing is writing and he's taking the steps in 112 00:06:46,640 --> 00:06:47,400 Speaker 1: the right direction. 113 00:06:48,120 --> 00:06:51,160 Speaker 2: And what about businesses, Anthony, is this a more stable 114 00:06:51,320 --> 00:06:52,800 Speaker 2: environment for the private sector? 115 00:06:53,440 --> 00:06:57,640 Speaker 1: Yeah, for the private sector for the long term. Most 116 00:06:57,680 --> 00:07:02,000 Speaker 1: of them see the likely positive outcomes of the current reforms, 117 00:07:02,279 --> 00:07:04,720 Speaker 1: but currently most of them are suffering. Most of them 118 00:07:04,720 --> 00:07:08,560 Speaker 1: have run into heavy losses basically because of the huge 119 00:07:08,600 --> 00:07:12,320 Speaker 1: devaluation and the currency or the nearly seventy percent evaluation 120 00:07:12,440 --> 00:07:16,120 Speaker 1: and currency has plunged most of them into losses. That's 121 00:07:16,160 --> 00:07:20,400 Speaker 1: because most of them had foreign currency obligations. Most of 122 00:07:20,440 --> 00:07:23,800 Speaker 1: them are struggling to survive. But most of them are 123 00:07:23,880 --> 00:07:27,320 Speaker 1: positive in the sense that if they survive the current 124 00:07:27,520 --> 00:07:31,360 Speaker 1: reforms and they are sustained, then they think in the 125 00:07:31,440 --> 00:07:34,000 Speaker 1: long run naturally will be a better place to operate in. 126 00:07:34,400 --> 00:07:36,440 Speaker 1: But in the short term, they are seeing a sharp 127 00:07:37,080 --> 00:07:40,560 Speaker 1: erosion of people's purchasing power. They are seeing a sharp 128 00:07:41,400 --> 00:07:44,520 Speaker 1: erosion of the groups that they've been having the last. 129 00:07:44,280 --> 00:07:45,520 Speaker 3: Few years in Nigeria. 130 00:07:45,560 --> 00:07:48,160 Speaker 1: Most of them will have to recapitalize and so they 131 00:07:48,160 --> 00:07:51,800 Speaker 1: are calling on equity from their parents, companies and from 132 00:07:51,840 --> 00:07:56,040 Speaker 1: shareholders to be able to recapitalize and survive the difficult period. 133 00:07:57,320 --> 00:07:59,480 Speaker 1: On the positive side, most of them are able to 134 00:07:59,520 --> 00:08:03,360 Speaker 1: meet their all our obligations currently from the market, which 135 00:08:03,440 --> 00:08:04,600 Speaker 1: was in the situation before. 136 00:08:04,720 --> 00:08:12,240 Speaker 2: Now stay with us after the break, we'll discuss how 137 00:08:12,320 --> 00:08:16,560 Speaker 2: the nyro's crisis and the president's reforms are affecting the 138 00:08:16,640 --> 00:08:21,560 Speaker 2: informal sector and what Nigeria could do to boost its economy. 139 00:08:25,560 --> 00:08:30,240 Speaker 2: Welcome back, So Anthony, tell us how's the naira and 140 00:08:30,480 --> 00:08:34,240 Speaker 2: also Tinubuo reforms affecting the informal sector which is a 141 00:08:34,240 --> 00:08:38,880 Speaker 2: significant portion of the economy and also small businesses. 142 00:08:39,480 --> 00:08:43,280 Speaker 1: I think the Agency put Nigeria's informal sector at almost 143 00:08:43,880 --> 00:08:47,160 Speaker 1: ninety percent or more of the economy, so this for 144 00:08:47,320 --> 00:08:50,280 Speaker 1: them is a huge deal. But one of the biggest 145 00:08:50,280 --> 00:08:53,400 Speaker 1: areas Tess factored them is in the working capital. So 146 00:08:53,440 --> 00:08:56,560 Speaker 1: suddenly they realize that they need more money to buy 147 00:08:56,600 --> 00:08:58,240 Speaker 1: the goods that they used to buy. 148 00:08:58,440 --> 00:09:02,600 Speaker 2: So Anthony, what's your sons, When will growth actually pick 149 00:09:02,720 --> 00:09:05,200 Speaker 2: up and where will it pick up? Is it the 150 00:09:05,240 --> 00:09:08,880 Speaker 2: oil sector for Nigeria or are there other sectors that 151 00:09:08,920 --> 00:09:10,319 Speaker 2: the country is looking to. 152 00:09:10,960 --> 00:09:14,560 Speaker 1: The oil sector is the low hangering fruit. Current production 153 00:09:14,760 --> 00:09:17,720 Speaker 1: crude production is around one point two three million barrass 154 00:09:17,720 --> 00:09:22,679 Speaker 1: a day, but Nigeria's potential capacity to produce crude is 155 00:09:22,760 --> 00:09:25,839 Speaker 1: somewhere around one point eight to two point six million 156 00:09:25,920 --> 00:09:30,120 Speaker 1: barrass per day. So if Nigeria were able to tap 157 00:09:30,360 --> 00:09:35,680 Speaker 1: into its available capacity, it could actually increase oil production 158 00:09:35,960 --> 00:09:39,240 Speaker 1: and were between forty to fifty percent in the next 159 00:09:39,480 --> 00:09:43,200 Speaker 1: few months. That has been difficult because of oil theft, 160 00:09:43,840 --> 00:09:48,280 Speaker 1: old assets that are difficult to push up, and then 161 00:09:48,800 --> 00:09:52,679 Speaker 1: a lot of bureaucratic challenges. But oil is one of 162 00:09:52,720 --> 00:09:57,160 Speaker 1: the easiest areas that Nigeria quick is a add growth 163 00:09:57,760 --> 00:10:01,480 Speaker 1: push grout. Then there's also the on aiir sector, reforms 164 00:10:01,520 --> 00:10:06,000 Speaker 1: around taxation and those areas are areas and nairaku boost 165 00:10:06,040 --> 00:10:07,920 Speaker 1: revenues and anthony. 166 00:10:08,080 --> 00:10:10,080 Speaker 2: Just to wrap up, I'm not going to ask you 167 00:10:10,120 --> 00:10:12,800 Speaker 2: to protect where the naira is going to go next. 168 00:10:12,880 --> 00:10:15,000 Speaker 2: I don't think that would be fair, but maybe you 169 00:10:15,000 --> 00:10:18,400 Speaker 2: can give us some insight into what to look for 170 00:10:18,559 --> 00:10:22,280 Speaker 2: in terms of what might drive the next price action 171 00:10:22,920 --> 00:10:26,840 Speaker 2: of the naira. There must be something that you're waiting 172 00:10:26,880 --> 00:10:27,320 Speaker 2: out for. 173 00:10:28,600 --> 00:10:32,440 Speaker 1: It's a bit difficult to say. In the short term, 174 00:10:32,600 --> 00:10:36,880 Speaker 1: the government is suspecting some influ so the government has 175 00:10:37,080 --> 00:10:41,320 Speaker 1: relied so far on portfolio inflows to drive liquidit in 176 00:10:41,360 --> 00:10:45,280 Speaker 1: the foreignes chain market. That seems to be running out, 177 00:10:46,360 --> 00:10:50,040 Speaker 1: so the government is now has to look beyond that 178 00:10:50,720 --> 00:10:54,920 Speaker 1: to get some influs in immediately. They're expecting a billion 179 00:10:54,960 --> 00:10:58,360 Speaker 1: dollars from the Afrasing Bank out of a three pint 180 00:10:58,440 --> 00:11:01,400 Speaker 1: three billion dollars that today asked for, they've already gotten 181 00:11:01,440 --> 00:11:04,120 Speaker 1: two twenty two billion. There's a World Bank loan that 182 00:11:04,160 --> 00:11:07,840 Speaker 1: they're expecting. There's two point two billion dollars maybe in June, 183 00:11:08,520 --> 00:11:11,720 Speaker 1: and then I think maybe another one billion dollars from 184 00:11:11,800 --> 00:11:16,319 Speaker 1: Africa Development Bank. If all these moneys come in between 185 00:11:16,360 --> 00:11:19,720 Speaker 1: now and June, maybe they will help support the nyra 186 00:11:20,280 --> 00:11:24,679 Speaker 1: and we could see some strengthening soon. But if they 187 00:11:24,679 --> 00:11:28,200 Speaker 1: don't come, then the naira will be in trouble. Beyond that, 188 00:11:28,559 --> 00:11:31,959 Speaker 1: the other support for the naira could be in increased 189 00:11:32,000 --> 00:11:34,880 Speaker 1: oil production. Then that will bring in more dollars to 190 00:11:34,920 --> 00:11:38,320 Speaker 1: support the currency. That's more sustainable in the long run 191 00:11:38,440 --> 00:11:42,280 Speaker 1: than the borrowings that the government is expecting because those 192 00:11:42,320 --> 00:11:46,680 Speaker 1: borrowings also means additional interest suspenses, which will eat away 193 00:11:46,720 --> 00:11:50,360 Speaker 1: at liquiditing the long run. Again, the last and most 194 00:11:50,520 --> 00:11:52,840 Speaker 1: sustainable one would have been to go to the MF 195 00:11:52,960 --> 00:11:56,480 Speaker 1: to take a huge loan. So analysts estimate that Nagua 196 00:11:56,520 --> 00:11:59,040 Speaker 1: could get up to twenty billion dollars if it's proved 197 00:11:59,120 --> 00:12:05,439 Speaker 1: the MF. But the Nigerian government actually sees the IMF 198 00:12:05,520 --> 00:12:08,439 Speaker 1: at of an anatma something that they will never discuss 199 00:12:08,559 --> 00:12:10,400 Speaker 1: or something that they would never want to consider. 200 00:12:10,400 --> 00:12:17,439 Speaker 2: That and our thanks to Anthony Os Brown, there are 201 00:12:17,520 --> 00:12:21,160 Speaker 2: Nigeria Bureau Chief speaking with us giving us his insights 202 00:12:21,200 --> 00:12:27,360 Speaker 2: in Legos. This program was produced by Leone Wadrago with 203 00:12:27,480 --> 00:12:31,280 Speaker 2: the help of emmele Ou. You can hear more stories 204 00:12:31,360 --> 00:12:34,800 Speaker 2: like this one on the Next Africa podcast, available every 205 00:12:34,840 --> 00:12:40,360 Speaker 2: week wherever you usually get your podcast. I'm Jennifer Zabastaja. 206 00:12:40,760 --> 00:12:42,120 Speaker 2: Thank you for listening.