As countries continue to record rising inflation caused by the Russia-Ukraine war, foreign affairs experts in Nigeria have predicted that citizens will experience more hardships in the months ahead unless the warring countries reach a lasting truce. A former Minister of Foreign Affairs and Professor of Political Science, Bolaji Akinyemi, and a former Director-General of Nigeria Institute of International Affairs (NIIA), Prof. Bola Akinterinwa, urged Nigerians to brace for the challenges ahead. The duo blamed the Federal Government for not preparing for uncertainties like this war. They noted that the war has strained Nigeria’s economy and pushed more families into poverty because of the rising cost of living.
Since February 24, 2022, the Russian Federation invaded Ukraine following the President of Ukraine, Volodymyr Zelensky’s proposal to join the North Atlantic Treaty Organization (NATO). As a form of response, the United States, the United Kingdom, and the European Union (EU) have each meted some economic sanctions against Russia. Russia is the main EU supplier of crude oil, natural gas and solid fossil fuels. In 2020, almost three quarters of the extra-EU crude oil imports came from Russia (29%), the United States (9%), Norway (8%), Saudi Arabia and the United Kingdom (both 7%) as well as Kazakhstan and Nigeria (both 6%). On June 3, 2022, the EU adopted a sixth package of sanctions, including a partial embargo on Russian oil. This has made the price of gas and other essential products become inflated in the EU and the rest of the world.
Nigeria’s inflation rate has defied monetary tightening.
The figures that were released by the National Bureau of Statistics (NBS) on August 16, 2022, showed that Nigeria’s inflation rate has defied monetary tightening. Nigeria experienced a 64 percent inflation rate in July, 2022, a level not seen in over one and a half decade. However, the trend is not specific to Nigeria. The annual inflation rate of its West African neighboring state, Ghana, accelerated for the 14th straight month to 31 percent. In July 2022, it accelerated from 7 percent to 29 percent.
Overseas, the United Kingdom recorded a 10 percent rate of inflation, 10 percent inflation rate in July 2022, the first time it has registered a double-digit increase in 40 years. In June 2022, the annual inflation rate in the United States hit a 40-year high of 9 percent, but slowed more than expected to 8. Speaking on the trend, Akinyemi said, “No country is an island of itself; about 40 countries import wheat from Ukraine. Then, the high price of oil, both crude and refined, affects practically all the countries in the world. Don’t forget that we are just getting out of the negative consequences of COVID-19 and Omicron. The price of cooking and industrial gas in Europe has gone up, which affects goods produced. That alone shoots up the prices of goods all over the world.”
Only effective leadership can save Nigeria’s situation, says Akinyemi.
Akinyemi said that Nigerians should expect their pains to continue. He added, “No matter the relationships between what is happening in the rest of the world with what is happening in our own country, it must be emphasized that there is no substitute for effective leadership that can manage the crisis of the world economy.” Effective leadership can cushion the negative effect of the world economy and an effective leadership style can actually take advantage of the negative aspect of the world economy. As an illustration, the news that came out of Saudi Arabia last week was that the profits of the Saudi Arabia crude export had gone up considerably; that Saudi oil exporting had taken advantage of the negative aspect of the world trade in crude oil. This is an example of effective management.
“While some are bemoaning Russia’s oil not coming into the market, others have actually used that advantage to increase their profit margin. In a case like Nigeria’s where there is thefts of half a million barrels of crude oil, there is no way it can take advantage of the scarcity or high oil price when it cannot meet the quota that OPEC ascribed to it. So, it is against that backdrop that I would say the Nigerian economy is not immune from the negative aspect of the Russian-Ukrainian war. It is not even the war directly because the ban on Russian export of oil should not affect a country like Nigeria; if anything, the prices in the oil market should have been of advantage to us.”
The Russian-Ukrainian war has caused shortage of wheat and flour in Nigeria.
Akinyemi said until the United Nations successfully brings about an agreement between Russia and Ukraine to restart the export of Ukrainian wheat to bring the flour into the world, again, the war will continue to affect the price of food. “Until the United Nations’ successful agreement between Russia and Ukraine to restart the export of Ukrainian wheat supplies to the world, again we have become victims of a shortage of wheat and flour. Consequently, the price of bread has shot up and there has been a shortage of bread leading to high prices and inflation in the food sector in the country. Even though the UN has arranged a new agreement to ease this shortage, it would take time for a sufficient quantity of wheat and flour to get into the world market and bring down the price of flour.”