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More from @FinPlanKaluAja1

Kalu Aja

@FinPlanKaluAja1

4 Oct

In April 2006, Nigeria paid off all her foreign debt.

It was a good deal, Nigeria essentially paid $12b to settle over $30b in debt, in effect an over 50% discount.

Should Nigeria have used $12b to build rails or pay debt?

A very short trend

Borrowing is front loaded consumption.

When Nigeria Borrowed $30b (principal plus interest) she essentially consumed "tomorrow's $30b earnings "today".

To repay, Nigeria has to take current earnings and apply to current obligations.

What are the current earnings? Crude oil

Let's step back, did Nigeria actually borrow $30b?

No

$30b represented principal and accrued intrest..As long as a loan were "open", intrest accrued.

The debt had ballooned not because Nigeria borrowed more but that Nigeria serviced the loan less
..

Read 6 tweets

Kalu Aja

@FinPlanKaluAja1

1 Oct

The usual dose of how Nigeria was once great, what went wrong & what potentials Nigeria has.

Never has so much potential been wasted by so few on behalf of so many than in Nigeria.

Failed State? far from it, but failing in creating an inclusive economy for all.

Happy Birthday

The problem is easy to see, low growth and even that "growth" is below the rate of population growth....

Nigeria, largest economy in Africa, with largest number of people living in poverty in Africa. it is that stark.

Read 4 tweets

Kalu Aja

@FinPlanKaluAja1

25 Sep

In my days of innocence, I went on a business call with a female colleague to a shop in Shoprite Lagos.

Bored, I did some window shopping, I saw these ladies shoes, all with just the left pair, I picked it up, there was "323" written on a sticker on sole.

I reasoned "was it N32, 300.00? Or left shoe alone

Curious, i asked the shop attention? "How much are these shoes? They look too nice for N32k"

The shop owner looked over at me, in my nice suit and said, "its actually N323,000 a pair"

Three Hundred and Twenty Three Thousand!!

Wait what?

N323,000 how?

My perplexed expression was so innocent, so she explained.

"They are Louboutins..see the red soles.."

I was still not inhaling properly, back then i think Nestlé stock was like N500 a share, I was calculating...

Read 4 tweets

Kalu Aja

@FinPlanKaluAja1

24 Sep

Is there anything like a Risk free Investment?

Well what is risk? Risk is the chance you may not achieve your investment objective, in financial lingo its called Volatility of returns .

So "risky" means more volatility of returns, lower risk means lower volatility of returns, higher risk means higher volatility of returns. So higher risk translates to a greater propensity for higher returns NOT a guarantee of higher returns.

Similarly lower risk translates to a lower propensity for volatility NOT a guarantee of zero volatility.

Read 6 tweets

Kalu Aja

@FinPlanKaluAja1

14 Sep

@SECNigeria

@SECNigeria guidelines on Cryptocurrencies.

I will post then "translate"

"The position of the Commission is that virtual crypto assets are securities, unless proven otherwise."

This means Cryptocurrencies are now regulated by SEC..

You need SEC approval to sell them

"Thus, the burden of proving that the crypto assets proposed to be offered are not securities is placed on the issuer or sponsor of the said assets."

If you are selling anything even remotely resembles a digital currency, SEC regulates you, you have to prove its NOT Crypto.

"Issuers or sponsors are expected to satisfy the burden of proving that the virtual assets do not constitute securities by making an initial assessment filing."

To sell cryptocurrencies, you have to file an assessment

Read 4 tweets

Kalu Aja

@FinPlanKaluAja1

10 Sep

Just a few facts.

1. Nigeria does not produce enough food to feed her citizens...how do I know, well food is expensive because supply is low.

2. Nigeria imports food to make up the difference..Imports are paid in USD

3. Importers prefer "CBN" dollars to fund imports because its "cheaper".

4. If you stop CBN funding food imports, then importers will fund via BDC or "autonomous" sources, at a higher exchange rate.

5. Simply put, imported food will be more expensive tomorrow

Effect?

6. Consumer Price Index is made up of food items, if food prices rise, inflation will rise.

7.If inflation rises, Naira value will fall, meaning more Naira to fund food imports even if demand stays same.

8. Essentially a self defeating circle of high inflation and food prices.

Read 4 tweets

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