•Reduce tax, dues steeply •Pull back on spending not geared towards human capital •Give Julius Berger equity to fix power •Give CCECC equity to connect ports by rail to all regions •Import food immediately at zero duty to crash food prices and inflation •Customs should reduce dollar-based charges •NNPC, NAFDAC, JAMB, FIRS should offer payment holidays. •Offer tax credit to firms that increase workers salaries •Ban importation of some products relating to food and clothing to save FX •Impose moratorium on some debts
•Reopen northern borders •VP’s ECONOMIC ADVISER: Inflation is killing
Protests broke out in Minna, Niger State capital, and Kano metropolis on Monday as residents took to the streets to demand an end to soaring cost of living in the country.
Their action was understandable: Inflation was shooting through the roof.
The Federal Government immediately responded by convening an emergency meeting to address rising food prices and urged millers and major traders to make their reserves available among other measures.
The situation is apparently dire as the report of the National Bureau of Statistics, NBS, for January this year had revealed that consumer inflation rose for the 12th straight month, highest in more than 27 years, in December 2023 to 28.92% year-on-year from November’s 28.20%, with food prices surging.
The food inflation rate, which accounts for the bulk of Nigeria’s inflation basket, rose to 33.93% in December from 32.84% a month earlier.
The NBS said prices rose for a broad range of food items, which include bread and cereals, oil, fish, meat, fruit and eggs; with economic analysts saying “inflationary pressures are only likely to build from here,” citing second-round effects from the removal of fuel subsidy last year and Naira weakness.
The NBC then predicted that inflation would breach 30% by the end of the first quarter of 2024.
President Bola Tinubu had, last May, embarked on Nigeria’s boldest reforms in decades by scrapping a costly, but popular fuel subsidy and devaluing the currency to try to stimulate economic growth.
But growth is yet to pick up while inflation has worsened.
Purchasing power
This happened as the soaring inflation continues to eat deep into the purchasing power of many Nigerians, taking staple foods from the table of many and increasing the poverty level in the country.
January and February typically witness reduced demand post-Yuletide, leading to lower prices. However, 2024 has seen an unexpected defiance of this trend in food prices.
Sunday Vanguard survey, covering Lagos, Abuja, Port Harcourt and Maiduguri, reveals increased prices for garri, beans, yams, corn, bread and cooking gas.
Rice prices range between N65, 000 and N68, 000 per bag while tomatoes’ prices have increased in Lagos.
The survey shows that prices for cooking gas and charcoal are steadily rising.
A garri seller in Orile Market mentioned a significant increase in paint rubber garri price from N650 to N850 since December.
In the same market, a Derica (tomato can) of beans, which sold for N600 in December, now sells for N750.
At face value, the size of yams that cost N1, 400 in December has increased to N1, 600.
The same is true with the price of bread in the Orile area of Lagos.
Compared to Iyana Ipaja Market on the outskirts of Lagos, the differences in the prices of agricultural products above are negligible.
Sacrifices
While poor Nigerians are making sacrifices for the survival of the nation by enduring the hardship that comes with adjustment in petrol pump prices, the political officeholders seem not to care.
Rather than Nigerian politicians cutting the cost of governance, they are busy living large and spending scarce resources on luxury.
Sunday Vanguard thus spoke with some top economic analysts on the tasks before government at all levels.
Only improvement in agric will solve food crisis – Prof Tella
Sheriffdeen Tella, a professor of economics at Olabisi Onabanjo University, Ago Iwoye, Ogun State, said, “The two policies implemented were actually in order. But the problems created thereafter ought to be expected and prepared for which did not happen.
“The major problems are massive depreciation of naira, rising cost of production and what looks like galloping inflation.
“I support most of the measures taken but not the modus operandi.
“The provision of palliatives by FG through states was good but the states did not implement the palliatives simultaneously. Some have not even been implemented till now.
“So, the conditions have worsened for many citizens. There’s a need to check what happens with palliative implementation in troubled states.
“Only improvement in farming, agriculture and industrial production will solve the problems with financial and fiscal interventions and reduction in security problems.
“Then we start working on production with largely domestic inputs.
“For exchange rate, there is a need to ban importation of some products relating to food and clothing, go for a moratorium on some debts, and increase oil and gas exports with proceeds to solve debt repayment and servicing with excess as reserves for intervention in the FX market.”
There is urgent need to create policies that will tackle inflation – Yahaya, Chairman, Arewa Economic Forum
Chairman of Arewa Economic Forum, Mallam Ibrahim Yahaya, on his part, said, “While allocations have been increased to the other tiers of government by the Federal Government, it hasn’t impacted on the people.
“So the Federal Government needs to do the needful by creating policies that will have direct inflation-mitigating effect on the people, especially the most vulnerable and it should be done as quickly as possible because people are at their tethers ends.
“The government has done what it deemed necessary but it hasn’t done what’s needed to alleviate the expected sufferings of the people most especially those in the North bedevilled by insecurity, poverty and lack of necessary support from the Federal Government.
“The sufferings are further enhanced by the closure of the northern borders thereby hindering trade and movement of people.
“Equally, whilst saluting the doggedness of our security forces, we note also that their needs are not adequately met to assist them in discharging their duties.
“Therefore, the government’s policies haven’t met the most basic of the needed assistance that the people need and deliberate government modernisation of the agricultural sector and funding of small and medium-sized businesses.”
States need to pay owed salaries, gratuities, pensions, and contractors — Tope Fasua, aide to VP Shettima
Mr Tope Fasua. Special Adviser on Economic Affairs, Office of the Vice President, said, “Over the weekend I did a market survey. The inflation is killing. I have informed the bosses.
“State Governors are getting double from the Federation Account Allocation Committee (FAAC). “All of them are busting their budgets this year.
“They should please start to pay owed salaries, gratuities and pensions; pay owed contractors; urgently issue contracts for projects with high local content e.g. roads and housing.
“Our people need to be able to survive the skyrocketing cost of living. That paint can of beans is N5, 000; five big yams go for N9, 000; basket of onions N3, 000, I haggled but I know that these guys too are just trying to survive.
“It is not good enough for the National Bureau of Statistics to simply supply us with new inflation numbers monthly and for us all to go to sleep afterwards, waiting for next month.
“With the infrastructure I have in mind, the idea is to put in place a level of awareness, a response system, and regulation in place to tackle inflation before it runs away.
“The best time to put such a system in place is a time like this – with inflation at 28.92 per cent (a 24-years high number), and the huge struggle to tame that runaway plunderer of value.
“What Nigeria needs is not just to react to inflation numbers, playing the role of price-takers, and panicking.
“We need to put in place right now, and for the future, systems and policies that will help us manage inflation today and in the future, ensuring that we don’t have wild swings.”
Import food immediately at zero duty to crash prices — Aja, Financial Education Instructor
Kalu Aja, a Certified Financial Education Instructor (CFEI), on his X handle, raced through what federal and state governments should do: “Every federal agency should immediately do a steep reduction in taxes and dues charged. Suspend IGR for now, pull back on spending not geared towards human capital.
“Give Julius Berger 5% equity of NNPC Ltd (they pay) and ask them to fix power. Same with CCECC, give them 5% of NNPC equity to connect all ports by rail to all regions.
“Import food immediately at zero duty to crash prices of food and inflation. Customs should immediately reduce the dollar-based charges. NNPC, NAFDAC, JAMB, even FIRS should offer payment holidays.
“The Federal Inland Revenue Service (FIRS) can offer a tax credit to companies that increase workers salaries. Same for states, pull back on taxes and levies.
“Federal Government should sell 10% of NLNG, use funds to state a nationwide affordable housing program, that’s jobs and consumption. Get the youth out of social media and into the job market. “Outsource if necessary the patrolling of the Nigerian nautical waters to prevent the stealing of crude oil. “Drop this national pride; if a Western Navy will assist, let them block oil theft completely.
“Cut the executive and NASS budget by 25% to give savings to BOI and banks to set up equity funds and grants to MSMEs. We are in survivalist mode, not IGR mode, once we cross this phase, then IGR can restart”.
Palliatives failed due to poor implementation — Ucheagwu, GM, Valmon Securities
Dr. Chukwuma, Ucheagwu, the General Manager of Valmon Securities Limited, said, “The current administration is running market-oriented policies which is a paradigm shift from a managed economy. These reforms’ objective is to correct the distortions in the system and sanitize the market.
“It is important to note that these reforms are not short term and would bring about pains as the reform runs its full course. The removal of fuel subsidy and unification of the foreign exchange rate are key to the market-oriented policies. These twin policies are at the heart of main causes of high cost of living and inflation. The two variables are the root causes of the high inflation rate.
“In economics, price is determined by the interplay of demand and supply. When demand is higher than supply, price increases and vice versa. In Nigeria we are predominantly a consuming nation. Our penchant for foreign goods is high hence the demand pressure on the equation is very high. Nothing meaningful has been done to address the supply side. Sources of government revenue are lean. We are more of a mono-product nation and our export base is narrow. We depend more on oil revenue to earn foreign currency while we chase the scarce available foreign currency for import leading to a perennial negative balance of trade.
“Another factor stoking food inflation and exacerbating hardship is the heightened insecurity across the country. Banditry, kidnapping, farmers/herders’ rift, and terrorism are rife in the country. This situation has severely hampered farming even for subsistence purposes. The supply of food product is constrained hence increase in price.
“The remedial policies put in place by the government in form of palliatives have not achieved the desired result due to poor implementation. We understand that the Federal Government sometime last year released a certain amount of money to the State Government to provide palliatives to their people based on need purposes.
There is no record that this initiative was well implemented. The federal government also released certain items to the Representatives in the National Assembly for their constituencies. It is not clear whether the objective was achieved. Given these failures, the government must rethink the strategies of dishing out these palliatives or hand-outs as it appears because they have not succeeded in addressing the challenge. We understand that governments (State and Federal) have placed orders for CNG-powered vehicles to cushion the effect of the high cost of transportation, but we have yet to see this happen.
“Given the recent protest, the government should devise strategies to solve the problems of hunger and transportation in the short term. State governments should implement social welfare plans for their people.
While the issue of minimum wage is being addressed at the federal level, governments should dole out allowances to workers in the interim. Government should assist farmers in all possible ways to achieve food security. There should be a food bank sponsored by the government to help the most vulnerable in society.
There should be mass transit vehicles to relieve transportation challenges, and this should be done urgently. The government should subsidize Medicare. The vulnerable should be able to access Medicare at little or no cost.
VANGUARD
