According to the National Bureau of Statistics (NBS) Consumer Price Index (CPI) and Inflation Report of May 2022 released in Abuja recently, Nigeria’s inflation rate increased to 17.71 percent on a year-on-year basis in May. This is worrisome. This is not an abstraction. Buyers and sellers are groaning because of the biting inflation. Salary earners are hard pressed into making difficult choices. The purchasing power of the naira is woeful. The naira has depreciated over 100% in the last five months. What are the options for the Nigerian government?
The implication of a high inflation rate in any society is far-reaching and damaging. It impacts negatively on wage earners whose emoluments are usually systematically eroded and devalued by the high cost of goods and services.
This may snowball into labour crisis in a country. Inflation means more money chasing fewer goods and services. It follows that a society experiencing inflation is operating as a consumer rather than a producing economy. Such a society is import-dependent.
By the time President Muhammadu Buhari ends his tenure in 2023, Nigeria will have enjoyed twenty-four unbroken years of democratic governance. The current government gave hope of “change” during the campaigns that successfully brought her to power.
But the question is: have things changed for the better? The inflation index is usually used by economists to appraise the government’s economic performance. If we go by the current index, the obvious conclusion is that the government of Nigeria has failed woefully. Our country is gradually slipping into what is called run-away inflation.
That a high Court of competent jurisdiction could fix the salary of the Chief Justice of Nigeria at N10 million, is an indication of how worthless the Naira may be.
This is not the time for blame trading but to call on all relevant bodies as well as the Nigerian Economic Society to find a way out of this economic quagmire.
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This should be urgently done! Two major sectors that must be immediately addressed are the power and energy sectors. It is shameful that no government under the People’s Democratic Party that ruled Nigeria, and produced three presidents – Olusegun Obasanjo (1999-2007); late Umaru Yar’Adua (2007-2010); and Goodluck Jonathan (2010- 2015) – in 16 years was able to build a new refinery in a country that ranks number five in the crude oil production in the world.
The electricity sector is not different. It is a sector used to “cash out funds” by corrupt politicians and public servants. Goods produced in Nigeria are uncompetitive due to the high cost of production. High cost of power and energy negatively impact the cost goods in Nigeria.
It is also a thing of shame that a country with a population of over 200 million people would depend on food importation. Government must come up with an agricultural Marshall Plan, even if it means engaging the NYSC as an agricultural intervention corps until the country becomes self-reliant in food production. The food crisis has been further exacerbated by attacks from bandits and terrorists as well as outright dislocation of farming communities.
Be that as it may, the inflationary trend in the country is the source of stress, depression, and mental health problems for many citizens. Ghana is witnessing protests from its citizens due to the high cost of goods and services.
The government of Ghana recently went into an agreement with organised labour unions in the country and increased the wages of workers; agreeing that the “Cost of Living Allowance (COLA)” will be paid at a rate of 15%of base pay from July 01, 2022. The Nigerian government should be proactive by taking concrete measures to arrest the ever-increasing inflation.
There are many other measures government must take in order to assuage the pains inflation has brought on the average income earner. Government should provide more houses for low-income earners.
There should be constant expansion and improvement of mass transit for the public. The burden of the unemployed on family members and other relatives who are working should also be reduced since high “unemployment” means many people are idle and not productive.
Government must protect local industries, encourage the establishment of new productive firms and promote a “buy Nigeria” culture. Capital flight in the form of health and education tourism must be checked. The time is nigh for this government to put some forms of austerity measures in place. A stitch in time saves nine.
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