In recent months, Nigeria has found itself in the clutches of an economic crisis marked by soaring inflation rates, depreciating currency, and escalating insecurity. Under the leadership of President Bola Ahmed Tinubu, the plight of the masses has intensified, leaving citizens grappling with unprecedented challenges. As the nation approaches the brink, the dire implications of this crisis extend beyond simple statistics, with millions of Nigerians experiencing a significant reduction in their purchasing power. The National Bureau of Statistics reported that December’s inflation surged to 28.92%, up from 28.20% in November, marking the highest rate in 27 years. Particularly concerning is the spike in food inflation, accounting for a significant portion of Nigeria’s inflation basket, which rose to 33.93% in December from 32.84% the previous month.
These alarming figures translate into a sharp increase in the cost of living for Nigerians, impacting staple foods such as rice, beans, groundnut oil, bread, and eggs. Despite President Tinubu’s call for patience and resilience, citizens are questioning the sustainability of the waiting game. Umar Nasiru, a 46-year-old resident in Abuja, emphasized the inadequacy of patience in the face of a staggering 100% hike in food items, accommodation, clothing, education fees, and other essential commodities. The stark reality is that Nigerians are grappling with hunger on a daily basis, prompting a desperate plea for immediate relief.
Poverty index reveals 133 million were multidimensionally poor.
The World Bank’s Nigeria Development Update for December 2023 revealed a grim picture, stating that accelerating inflation had pushed 24 million Nigerians into poverty within the first five months of 2023. The report disclosed that sluggish economic growth and rising inflation had elevated the poverty rate from 40% in 2018 to a staggering 46% in 2023, plunging an additional 24 million people below the national poverty line. In 2022, the National Bureau of Statistics’ Multidimensional Poverty Index painted a bleak picture, indicating that 63% of Nigeria’s population (133 million people) were multidimensionally poor. The index, with a value of 0.257, reflects that poor people in Nigeria experience just over one-quarter of all possible deprivations. The economic hardships faced by the population prompted the Central Bank of Nigeria to raise interest rates to 18.75% in a bid to hinder inflation during its last monetary policy committee meeting in July 2023.
President Tinubu’s proposed solutions, such as providing ₦25,000 monthly for three months to 15 million Nigerians and offering tax waivers, have failed to alleviate the economic hardships faced by citizens. Since the introduction of fuel subsidy removal and the floating of the Naira in June of the previous year, the majority of Nigerians are yet to experience any respite. Instead, the country’s total debt stock surged to ₦87.91 trillion ($114.35 billion) in September 2023, according to the Debt Management Office. While Nigerians languish in economic hardship, the twin policies of fuel subsidy removal and Naira devaluation have paradoxically contributed to increased government revenue. In the last half of 2023, revenue accruing to the federation account witnessed a substantial boost due to the fuel subsidy removal. Investors in the Nigerian Stock Exchange also experienced a rebound, with the Nigerian Exchange Limited achieving a year-to-date growth of 45.90% in 2023.
University professor proposes measures to address inflation.
Renowned economist and former President and Chairman of the Council of Chartered Institute of Bankers, Prof. Segun Ajibola, characterized Nigeria’s inflation as a formidable monster. He emphasized the need for a comprehensive and intentional approach, stating that inflation cannot be tamed overnight. Ajibola underscored the importance of understanding the specific nature of Nigeria’s inflation, pointing out that the country is grappling with cost-push inflation, driven by the depreciated value of the naira. According to Ajibola, the rising costs of production, exacerbated by factors such as increased costs of raw materials, insecurity, and other challenges, contribute to the persistent inflationary pressures. He urged the government to move beyond rhetoric and implement policies aimed at addressing the root causes, including subsidies on farm inputs, efforts to reduce production costs, and ensuring the security of lives and properties.
Prof. Godwin Oyedokun of Lead City University in Ibadan proposed eight immediate measures to address rising inflation. These include government intervention through price controls on essential goods, increasing productivity and efficiency, addressing inflation and currency devaluation, encouraging competition, investing in agriculture, expanding social safety nets, improving infrastructure, and increasing access to credit. Oyedokun emphasized the need for a comprehensive and multi-stakeholder approach to tackle the root causes of high prices in Nigeria. Idakolo Gbolade, CEO of SD & D Capital Management, attributed the rising inflation to the fuel subsidy removal and Naira floating policies but expressed optimism that emergency policies on agriculture and the coming online of Dangote and Port Harcourt refineries would help reduce inflation by the second half of 2024.
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Gbolade highlighted the importance of implementing proposed measures, such as declaring a state of emergency on agriculture and creating an investment-friendly climate, to mitigate the impact of existing policies on inflation. Nigeria finds itself at a critical juncture, with inflation-induced poverty gripping the nation. The complex interplay of economic policies, external factors, and domestic challenges requires a concerted effort from the government, policymakers, and the private sector to address the root causes and alleviate the suffering of millions of Nigerians. As the nation grapples with this economic crisis, the urgency for comprehensive, targeted, and effective measures has never been more evident.
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Central Bank of Nigeria: Website
