The three months of rising inflation in 2023, with the recent figure standing at 22.04 per cent, has put pain, frustration and agony in the faces of Nigerians and the country’s economy.
DAILY POST reports that like a drowning person, Nigerians are overwhelmed by the rising food prices and the cost of goods and services. It is now a commonly accepted reality that there is no time one visits the market without an increase in the prices of goods and services.
The prices of foods, goods and services keep jumping, ballooning without a commensurate increase in the purchasing power of Nigerians. The implication is that more Nigerians would likely slip into poverty as their ability to access basic needs shrinks due to declining purchasing power.
According to the National Bureau of Statistics’ March Inflation report, the country’s inflation increased by 6.12 from 15.92 per cent in 2022 despite the government’s effort to tackle the trend.
Retrospectively, when President Muhammadu Buhari was elected into Office in 2015, Nigeria’s inflation stood at 9.01 per cent, representing a 13.03 per cent increase compared to today’s 22.04 per cent.
This means that prices of goods and services have increased more than 160 per cent over the eight years of Buhari’s administration.
Mr Michael Abdul, a teacher in the Federal Capital Territory, said it is most painful that salaries have remained stagnant amid rising inflation.
Abdul said the situation was immensely frustrating.
“It is terrible that Nigeria’s inflation rate keeps increasing without any visible efforts by the government to address the situation. Earlier, Ghana’s February inflation went up as high as 52.8 per cent, but it dropped to 45 per cent in March. What did they do? I believe there is something fundamentally wrong with Nigeria”, he said.
Also, Adebayo Yusuf, a trader in Abuja, said there is no day he goes to market that he does not meet price increase in goods.
“Majority of the time I go to the market, there is always an increase in prices. It ranges from N50-N200 price increase, coupled with an increase in the transportation cost, it is regrettable, this is Nigeria”, he said.
Although the Governor of the Central Bank of Nigeria, Godwin Emefiele, speaking in the ongoing World Bank/International Monetary Fund Spring Meeting taking place in Washington, had said that CBN would not relent in efforts to fix inflation and stabilize the country’s banking sector, Nigerians and some experts have ran out of patience.
Emefiele had never hesitated in explaining to Nigerians what CBN is doing to tame inflation, including its recent move to increase the Monetary Policy Rate to 18 per cent. Still, the substance of the activities by the apex bank is not felt as the consequences of rising inflation beat Nigerians differently.
“We all know that the global economy still faces many challenges. We will not remove our eyes on monetary policy, which is to focus extensively on how to moderate inflation. Still, at the same time, ensure that banking system stability remains resilient and strong as it is right now”, he assured.
But the former president and Chairman Council of the Chartered Institute of Bankers, CIBN, Prof Segun Ajibola, in an exclusive interview with DAILY POST, on Monday, said that far from everyday rhetoric Monetary Policies and measures to tame the rising inflation, Nigeria must reduce or cut down the entire vulnerability on the global market.
He explained that Nigeria, especially the incoming government, must look inward and be self-sufficient in food production, supply and energy production to undo the ugly trend of rising inflation.
According to him, Nigerians and Nigeria’s economy are at the receiving end.
He stressed that though inflation is inevitable, the country must not make it an incurable cankerworm.
“The former president of the US, Richard Nixon, said inflation is the worst enemy. It is a muster, a cankerworm, a visitor you avoid hosting. Once it visits you, it becomes your elephant or a master.
“The problem is your decision to receive or not receive the visitor (inflation); it is instead a matter you do alone so long as you maintain an open economy, you interact with the rest of the world, some of this comes with what is called imported inflation. If you are vulnerable to the rest of the world, you will discover that your local initiative may not be enough to curtail inflation.
“Ghana’s inflation was 45 per cent, while Nigeria’s was 21.4 per cent, and you see the trend increasing over time. One reason is that our economy is vulnerable to the rest of the world.
“We are an import-dependent country on necessities and even luxury items. When you look at the exchange rate against the dollar, you will see that the Naira has been under severe pressure for some time now.
“And most of the local items, food, spare parts, clothing and medicals are imported with the exchange rate regime, so there is a cost element pushing the prices up, which is dependent on foreign materials.
“When you come home, we are also under pressure from essential inputs like electricity, power in general; people rely on diesel and PMS. Industries use energy sources for survival; their prices are going up daily.
Other critical macro-economic variables are also significant challenges, such as ease of doing business, security, taxes and levies that are duplicated. Whether you are a trader or a businessman anywhere, all companies are exposed to the high cost of production, which is passed on to the consumers. So price increases are inevitable.
“Meanwhile, monetary policies have a circle because they are market-driven, not through executive fiat, so when Cash Ratio, Monetary Policy Rate, and Liquidity ratio are adjusted to fight inflation, you don’t see the impact immediately. There is a Transmission mechanism, so it must take months for the result to be felt.
“So, the authorities may be fighting inflation, but the effect may not be immediate, whereas the impact of cost-push inflation is immediate. You know our system, as soon as the price is impacted upward, it is immediately adjusted on products and services.
“All these contribute to the consumer food price index and price of goods and services in general. As you adjust to taking care of today, another issue arises: an endless battle between the Government and Nigerians.”
On the solutions, the ace economist said it was not rocket science.
“Nigeria must work towards reducing its vulnerability to the global market through self-sufficiency in domestic food and energy production.
“We must reduce our vulnerability to the rest of the world by localizing the production of foods and others. Let’s produce what we use.
“The problem with inflation is that we need a long-term objective to fight the short-time problem. What can be done to improve food supply to our agriculture sector, the iron and steel industry to supply spare parts, medical services, and education? All these affect our foreign exchange reserves; this is what the world bank and International Monetary Fund look at. If we can do things on our own to conserve spending on importation to align with the slogan, Let’s produce what we use’.
“Then we can look at the energy crisis. We can make our refineries work to cut down on expenditures on the importation of petrol. Let’s reactivate our local production capacity to help our foreign exchange reserve. We have to start looking at it industry by industry.
“It requires a lot of planning to achieve the long-term benefits; we can start today for the betterment of the economy tomorrow”, he stated.
Also, the CEO of SD & D Capital Management, Mr Idakolo Gbolade said the government’s instrumentality of interest rate adjustments and other monetary policies alone could not tackle inflation.
He said the contending challenges of forex scarcity, weakness of the Naira and high-cost production were among many issues mitigating against monetary policy measures to tame inflation.
Gbolade said the incoming government must put in place realistic measures to improve the country’s performance in the energy sector, cut down government costs, and consider removing fuel subsidies for the economy to stabilize.
“The instrumentality of interest rate adjustments alone cannot tame inflation in Nigeria, with other factors affecting inflation left unattended.
“The scarcity of foreign exchange, weakness of the Naira and high cost of production are amongst many factors mitigating against measures taken by the Central Bank of Nigeria.
“The oil sector’s performance in the economy has also contributed to reduced foreign exchange earned by the government, coupled with debt servicing, which has had a tremendous impact on CBN interventions in importing raw materials and other essential services.
“The ball is in the court of the incoming government to ensure optimal performance of the oil sector to increase revenue, cut waste in government and take measures to remove fuel subsidy while providing qualitative palliative to alleviate the suffering of the masses”, he said.