" ITREALMS: Nigeria's inflation: Beyond the numbers by Elvis Eromosele - ITREALMS

Friday, February 23, 2024

Nigeria's inflation: Beyond the numbers by Elvis Eromosele - ITREALMS

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I was in Ikotun market at the weekend, shopping for groceries with Madam. While it was coated in romantic garbs, i.e. 'continuation of valentine', the aim was surreptitiously to see where one's money was entering in these times. A lady buying tomatoes just ahead of us, priced (haggled) up and down and finally exclaimed "We no kuku fit chop the money". 

Nigeria's inflation: Beyond the numbers by Elvis Eromosele - ITREALMS

This is precisely the stark reality in the face of soaring inflation rates, "we can't eat currency." Currency is meant to be spent even though the value has depreciated. The sad thing is that inflation isn't just a number on a report; it's a tangible force that impacts the lives of millions, particularly in a country like Nigeria where food prices are surging at an alarming rate. 


Consider this sampling of basic food prices: a paint bucket of garri went from N1, 600 to N2, 00, Spaghetti jumped to N950 from N600, a crate of eggs is now N3, 600 from N2, 800 and 50Kg bag of rice now sells for N77,000. The persistent rise of food prices hits the pocket hard. 


Unpacking the Numbers from NBS 

The National Bureau of Statistics (NBS) in its latest report reveals that Nigeria's inflation rate has climbed to a staggering 29.90 per cent in January 2024, up from 28.92 per cent the previous month. This relentless upward trajectory underscores the urgent need for proactive measures to mitigate the adverse effects of inflation on the populace.


The NBS report paints a grim picture of Nigeria's economic landscape, with inflation showing no signs of abating. The 0.98 per cent increase in January signifies that inflationary pressures continue to deepen, intensifying the challenges faced by both policymakers and ordinary citizens. 


Year-on-year comparisons further underscore the severity of the situation, with the January 2024 inflation rate a staggering 8.08 per cent higher than the same period in 2023. Moreover, on a month-on-month basis, the inflation rate surged to 2.64 per cent in January, indicating a rapid acceleration in price levels that outpaces the previous month's rate. It is not a pretty picture. 


The Food Inflation Conundrum

While inflation manifests across various sectors, the surge in food prices stands out as a pressing concern in Nigeria. The surge in food inflation in Nigeria stems from a blend of domestic and global factors that intertwine to create a complex economic challenge. At the heart of this issue lies the vulnerability of Nigeria's food supply chain, which is beset by various hurdles ranging from inadequate infrastructure to logistical bottlenecks. These obstacles hinder efficient production and distribution, contributing to price hikes and volatility.


Moreover, Nigeria's agricultural sector grapples with persistent productivity issues, including limited mechanization, outdated farming methods, land tenure disputes and lately insecurity and widespread banditry. Despite the country's vast agricultural potential, these constraints hamper its ability to meet domestic demand, leading to a heavy reliance on food imports. Consequently, fluctuations in global commodity prices, heightened by events like geopolitical tensions and adverse weather, ripple through Nigeria's economy, impacting food prices.

The depreciation of the Naira aggravates the situation by making imported goods, including agricultural inputs, more expensive. This, coupled with policy decisions such as the removal of fuel subsidies drove up production costs and consumer prices. As a result, ordinary Nigerians bear the brunt of these inflationary pressures, grappling with the rising cost of living and heightened food insecurity.


Last week, the president ordered the release of 42, 000 MT of grains to alleviate the situation. But in addressing this conundrum, policymakers must adopt a comprehensive approach that tackles supply chain inefficiencies, boosts agricultural productivity, stabilizes the currency, and implements sound fiscal and monetary policies. 


Echoes of Discontent

The discontent brewing amidst Nigerians affected by skyrocketing food prices resounds loudly across the nation. Several online videos prove this. From bustling markets to remote villages, ordinary citizens express frustration and concern over the relentless rise in the cost of living. In states like Niger, Kano, Kogi, and Ondo, where protests have erupted, voices demanding solutions to the economic crisis grow louder by the day.


Traditional rulers in the North, custodians of centuries-old wisdom and guardians of community welfare, are adding their weight to the chorus of discontent. Their calls for action reflect the palpable hardship faced by their people, worsened by policy decisions such as the removal of fuel subsidies. The Nigerian Bar Association, representing legal professionals nationwide, amplifies these concerns, highlighting the broader societal implications of inflation and its impact on access to justice and livelihoods.


The echoes of discontent serve as a glaring reminder of the urgent need for action. 


Charting a Path Through the Inflationary Storm

In the face of mounting challenges, navigating Nigeria's inflationary storm requires a many-sided approach that combines short-term relief measures with long-term structural reforms. 


The government’s immediate response must include interventions such as targeted subsidies for vulnerable populations and bolstering social safety nets to provide much-needed respite for those hit hardest by inflation. Simultaneously, efforts to address underlying structural constraints, including enhancing agricultural productivity and strengthening supply chains, are essential for tackling the root causes of food inflation. Moreover, fostering an environment conducive to investment and innovation can spur economic growth, laying the foundation for a more resilient and inclusive future.


Additionally, initiatives aimed at enhancing financial literacy and promoting savings can empower individuals to weather economic shocks more effectively.


Equally, efforts to address the structural constraints underlying inflation must be pursued with vigour. Beyond urgent investments in modern farming techniques, improving access to credit for smallholder farmers, and strengthening agricultural value chains, security must be given priority. Declare an emergency on security, if that is what it will take to keep farmers safe in their farms. Bandits that hold farmers for ransom must be stopped to unlock the sector's vast potential and foster food security.


Beyond Statistics, Towards Solutions

As Nigeria grapples with galloping inflation rates, the imperative to act decisively has never been more pressing. Beyond the statistics lies a stark reality where the rising cost of living threatens the very fabric of society. 


In the pursuit of solutions, policymakers must heed the voices of the people and prioritize measures that alleviate the burdens imposed by inflation. Only through concerted efforts to address both immediate challenges and underlying structural constraints can Nigeria chart a path towards economic stability and prosperity for all its citizens. 


In a nation where the struggle to put food on the table transcends mere numbers, the time for action is now.


*Contributed by Elvis Eromosele, a corporate communication professional and public affairs analyst, wrote via: elviseroms@gmail.com

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