Nigeria’s untamed inflation rates have become persistent nightmares for the citizens.
President Bola Ahmed Tinubu’s reign has been hellish for the masses in the last six months as hardship, Naira depreciation, and insecurity have put the nation on a precipice.
Like other inflation rates in the last twelve months, December’s inflation increased to 28.92 per cent from 28.20 per cent in November, the highest in 27 years, according to the National Bureau of Statistics.
The country’s food inflation, which accounts for the bulk of Nigeria’s inflation basket, rose to 33.93 per cent in December from 32.84 per cent a month earlier.
The direct implication is the rising cost of living for Nigerians as more people’s purchasing power shrinks.
Despite this, President Bola Ahmed has consistently told Nigerians to press on and be patient. But, Nigerians have queried how long the waiting game will last.
While the President begged Nigerians for the patient, a mudu of rice has moved to N1,900 from N1,500, beans (red) to N1,300 from N800, 1.4-litre of groundnut oil to N3,200 from N2500, a loaf of bread N1200 from N700, egg to N3,200 from N2,700 for a crate, garri (eed) N800 from N500 a mudu.
Umar Nasiru, a 46-year-old family man in Abuja, said “President Tinubu’s ‘Patient’ will not take care of more than a 100 per cent hike in food items, accommodation, clothing, education fees, and other prices which have all hit the rooftop.”
“Enough of the political rhetoric of ‘I will do this, I will do that.’ Nigerians are dying of hunger daily; we need food prices to come down”, he stated.
According to the World Bank, in the five months of 2023, accelerating inflation pushed 24 million Nigerians into poverty.
The bank’s latest Nigeria Development Update report for December 2023 disclosed that: “Sluggish growth and rising inflation have increased poverty from 40 per cent in 2018 to 46 per cent in 2023, pushing an additional 24 million people below the national poverty line.”
In 2022, the National Bureau of Statistics, NBS, Multidimensional Poverty Index, MPI, said 63 per cent of persons living in Nigeria (133 million people) are multidimensionally poor.
The National MPI is 0.257, indicating that poor people in Nigeria experience just over one-quarter of all possible deprivations.
The Central Bank of Nigeria, the country’s apex bank, in its last monetary policy committee meeting in July 2023, raised interest rates to 18.75 per cent to stymie inflation.
Similarly, the CBN lifted restrictions on 43 items in October to reduce the pressure on the foreign exchange market.
Tinubu, in December last year, listed the provision of N25,000 monthly for three months to 15 million Nigerians and tax waivers as solutions to the citizens’ economic hardship.
In spite of the government’s policies to address the hardship Nigerians face, the challenges have remained unchanged.
Since June last year when the Tinubu administration introduced fuel subsidy removal and floated the Naira, the majority of Nigerians are yet to have a reprieve.
This is as the country’s total debt stock jumped to N87.91 trillion ($114.35 billion) in September 2023, according to the Debt Management Office.
Meanwhile, while Nigerians languished in economic hardship, the twin policies of fuel subsidy removal and naira devaluation have raked in more revenue for the government.
Revenue accruing to the federation account increased in the last half of 2023 due to the fuel subsidy removal.
DAILY POST recalls that in the last six months, the Nigerian government made N907.05 billion in June, N966.110 in July, N1.1 trillion in August, N903.48 billion in September, N906.955 billion in October, and N1.783 trillion in November 2023.
Investors in the Nigerian Stock Exchange also made a rebound in 2023.
The Nigerian Exchange Limited achieved year-to-date growth of 45.90 per cent in 2023.
Speaking to DAILY POST in an interview on Nigeria’s soaring inflation, a renowned economist and former President and Chairman of the Council of Chartered Institute of Bankers, Prof Segun Ajibola described the country’s inflation as a monster.
He explained that inflation cannot be addressed overnight.
Ajibola said Tinubu’s administration should move away from rhetoric and be intentional about ending inflation.
“Inflation is a monster. It remains the world’s number one enemy (alluding to former US President Nixon). It cannot be ordered to conformity as it does not obey the last order. It cannot be panel beaten to shape overnight.
“It defies executive punches. Inflation can be tamed only through a three-pronged approach of the right diagnosis, prescription, and dosage.
“A carefully thought out process involving the identification of remote and immediate causes of inflation, the corrective measures to stem it and faithful implementation of those measures for optimal results are sine qua non.
“Against the above background, we can ask ourselves if we have followed the process with the required quality and quantity of willpower and determination.
“For quite some time, we have misunderstood the nature of inflation plaguing Nigeria’s economy. This economy is struggling with cost-push inflation.
“Unfortunately, most policy measures rolled out to arrest the monster are the ones meant for demand-pull inflation: contractionary monetary policies. No wonder the rising rate continues to defy the measures.
“I do not believe it is too difficult to understand the nature of inflation confronting Nigeria. The raw materials’ costs are going up due to Naira’s depreciated value.
“Manufacturers, SMEs, and the informal sector are all struggling with the rising costs of production driven further by increases in the cost of PMS, AGO, electricity, wages, transportation, logistics, etc. They struggle to pass on the rising costs to consumers.
“Those who could not succeed in doing that are closing down their factories and shops. Even multinationals are not spared. All these are leading to persistent increases in consumer and producer price indexes.
“Nigeria’s economy is also a victim of imported inflation. Because of the over-reliance on imported raw materials, food, medicals and other essentials, the depreciated value of the local currency continues to compound the rising international prices of those commodities.
“On food inflation, the problems of agriculture and farming are well known. Apart from the rising cost of farm inputs that are largely imported, farmers across the nation are saddled with challenges of insecurity, kidnapping and farmers/herdsmen clashes.
“Therefore, farm output of basic food items is badly affected. The prices of imported food items are climbing the roof.
“To redress the situation, we should avoid rhetoric and be intentional. Policies aimed at redressing rising costs of production, curtailing prices of fuel (letting the local refineries work), pushing down other associated costs affecting the manufacturers, subsidies on farm inputs, and guaranteeing the security of lives and properties and farmers, among others, are still in short supply.
“We need to initiate them and courageously implement them. Nigerians should produce what they consume and consume what they produce. Indian examples remain prominent in this direction.
“The solution, therefore, lies less in rhetoric but more in the art and science of understanding the peculiarities of the inflation confronting Nigeria, the right measures to tackle the monster and the will to implement those measures”, he told DAILY POST.
Prof Godwin Oyedokun, a don at the Lead City University in Ibadan, proposed eight key immediate measures the government at all levels should undertake to address the country’s rising inflation.
He told DAILY POST that, “There are several immediate solutions that could help reduce the suffocating prices of goods and services in Nigeria:
“Government intervention: The Government can impose price controls on essential goods and services to prevent excessive price hikes. This would involve monitoring and regulating prices to ensure affordability for consumers.
“Increasing productivity and efficiency: Enhancing productivity and efficiency in various sectors, such as agriculture, manufacturing, and service industries, can help reduce production costs. This can be achieved through investment in infrastructure, technology, and training.
“Addressing inflation and currency devaluation: Inflation and currency devaluation contribute to price increases. The Government can implement effective monetary policies and ensure exchange rate stability to control inflation and prevent further price hikes.
“Encouraging competition: Promoting competition within industries can lead to lower prices as companies strive to attract customers.
“The Government can facilitate a competitive market environment by enforcing anti-monopoly regulations and reducing barriers to entry for new businesses.
“Investing in agriculture: Nigeria has vast agricultural potential, and investing in the sector can help increase domestic food production and reduce reliance on imports. This can help stabilize food prices and make essential goods more affordable for the population.
“Expanding social safety nets: Implementing or expanding social welfare programs can help mitigate the impact of high prices on vulnerable populations. This can include targeted subsidies, cash transfers, or voucher programs to support those most in need.
“Improving infrastructure: Infrastructure gaps, such as inadequate transportation networks and unreliable power supply lead to increase in production and distribution costs. Infrastructure development can enhance supply chain efficiency and reduce costs, ultimately lowering prices of goods and services.
“Increasing access to credit: Limited access to affordable credit hinders business growth and productivity. The Government can support financial inclusion initiatives and create enabling conditions for businesses, particularly small and medium-sized enterprises, to access funding at lower interest rates.
“It is important to note that these solutions are not exhaustive, and a comprehensive approach involving multiple stakeholders and long-term strategies will be necessary to address the root causes of high prices in Nigeria.”
Also, the CEO of SD & D Capital Management, Mr Idakolo Gbolade, blamed the woes of rising inflation on the fuel subsidy removal and Naira floating policies of Tinubu’s administration.
However, Gbolade said that the government’s emergency policies on agriculture and coming upstream of Dangote and Port Harcourt refineries would help reduce inflation by the second half of 2024.
“The dual fuel subsidy removal policy and foreign exchange policy worsened the inflation rate. The expected measures to cushion the effect of these policies did not materialize in 2023. Hence, the country witnessed the highest rate of inflation in 27 years.
“The government proposed major policies like the declaration of a state of emergency on agriculture, single-digit interest loans to companies and SMEs, and creating an investment-friendly climate, which need to be urgently implemented.
“The high rate of food inflation was also tied to the subsidy removal policies and US dollar liberalization; so once we start overcoming the scarcity of the US dollar, it will positively affect the cost of goods and services.
“The coming of the Dangote and Port Harcourt refineries will help to retain US dollars in the system, and will help strengthen the Naira.
“If the government’s policies are properly implemented, we can see inflation slowing down by the middle of 2024,” he told DAILY POST.
