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Many Nigerians are suffering as a result of the current downturn in the economy made worse by inflation which reduces purchasing power, lowers standard and increases cost of living
| By Anayo Ezugwu | Apr 25, 2016 @ 01:00 GMT |
LAST Saturday is a day Antonia Ejenike, a civil servant, who lives in Enugu State will not forget in a hurry. She went to the market with N70,000 to buy provisions for her children who were due to return to school after the Easter holidays. She had paid for a few items on her shopping list when she frantically started search for the bulk of money in her bag. She could not believe that much of the money had disappeared into thin air without her purchasing all the items on her shopping list unlike before. Her initial reaction was that somebody must have robbed her. Sadly, she went back home with the few things she bought.
When she got home her children welcomed her but expressed surprise that she did not get all their requirements. She narrated her experience still convinced she was robbed. But when they calculated the price of items she brought home, the money tallied. It was then she realised that hyper-inflation in the country had robbed her of her purchasing power. She had to explain to the children that they would have to tighten their belt because there is no way out of the current hardship in the country.
Like the Ejenike’s many Nigerians are groaning under the current economic downturn in the country. The situation is made worse by the ongoing fuel scarcity which has been on for more than a month. Many Nigerians are sleeping at the filling stations to buy fuel at prices higher than the official prices of N86. Some filling stations now sell fuel at N150. The increase in the price of fuel has affected the cost of goods and services. The scarcity in particular has also affected the ability of Nigerians to generate their own power through their generators in their houses. This is because of the perennial power outages in the country which has thrown the country into perpetual darkness.
Consequently, many households are finding it difficult to pump water from their boreholes as the Water Boards are also not supplying water. The scarcity of potable water even in urban areas has made many children to trek for miles to fetch it. For instance, Bright Obasi-Mbasi, a resident of Ajuwon, a suburb of Lagos, narrated the worst experience he has had in his 40 years on earth to Realnews about what his children suffered to fetch water for them to do their house chores on Saturday, April 9. “Saturday is a day I won’t forget in a hurry. When my children went out to fetch water in the morning to enable me and my wife prepare for the business of the day, we thought they would come back early but to my greatest surprise they spent three hours before returning.
“I queried them for coming back late but the eldest child asked me to follow them to see the distance myself. I followed them and discovered that it was a very far place within the neighbourhood and the number of people on queue to fetch water was much. None of the boreholes around us pumped water because there was no electricity and fuel to power the generator. The hardship we are passing through now is much for us and everything in the market has doubled their price,” he said.
Obasi is not alone in agonising both the worsening standard and rising cost of living in Nigeria. Mama Remedy, a trader at Ajuwon Market, said the increase in food items is really affecting her business as sales have nose-dived because people could not buy much because of inflation. “Well, why I am still selling at the rate of N400 for a painter of garri is because, I am selling based on the old price I bought them. For some people, they sell N500. Some sell above and it also depend on how much they bought. In this our market, there is no uniform prices of commodities. While others sell higher, some sell lower but the problem is that there is a general increase in the prices of these commodities. Previously, garri especially used to be very cheap. But it’s price went up around January after Christmas. So, I do not know the reason why the commodity is becoming so costly this time when it is supposed to be very cheap,” she said.
Faith Daniels, another trader, said the price increase in the market is a normal thing as prices change every second. “I went to market last two weeks in the place we used to buy the commodities, they sold to me at a very higher price I decided not to buy with the hope that the price will come down a bit if I come back another time. When I went back to the same place a week after, to my greatest surprise, I found that the same commodity has added N1,500 to the price they sold it to me the first time. I had no choice than to buy it at that the price,” she said.
Realnews investigations show that price increase varies from one product to another and from one state to another. But the painful truth is that people buy food items and pay most of their bills with pains. Though the country’s populace are used to crumbled economy from ages, low income earners, have been at the receiving end of this recent rising prices because their wages are static for now.
Since the fall of naira against dollar, there is hardly any commodity in the market that has not witnessed a steady price increase. A market survey conducted by Realnews showed that a bag of rice, which is a staple food in Nigeria, now sells for N13,700 as against N8,000, previously The prices vary depending on the brand.
Another product whose price has increase is Bread. A loaf of bread which was formerly sold for N200 is now between N250. A bag of pure water now sells for between N130 and N150 against its former price of N80. Findings on the prices of perishable goods also showed that such items appear to be the worst hit as they are unusually scarce and expensive. Accordingly, against its previous price, a basket of tomatoes and pepper now sells for N10,800, while a bag of beans now goes for N20,000. Prices of fish have also gone up. Eight pieces of dried fish are sold for N1500 as against N1,000 previously.
Before the economic meltdown, a big tuber of yam sold for N200 and N250, but now goes for N400 and N500. A paint-can of Garri (Red) now goes for N450 against N280, while (White) is N350 as against N200 previously. Also, kerosene that is the preference of low income earners for cooking, has been on the high side, a litre at the Nigerian National Petroleum Corporation, NNPC, filling station goes for N83, while others sell between N120 and N150 per litre. The official price of the product is N50.
Supporting these findings, the National Bureau of Statistics’ Consumer Price Index report for the month of March, released on Tuesday, April 12, showed the inflation rate rose from 11.4 percent in February to 12.8 percent. The 12.8 percent index for March, which is the highest in almost four years, is an increase of 1.4 percentage points from what was recorded in February. The last time Nigeria recorded inflation that high was in May 2011 when the rate was 13.15 percent.
“In March, the Consumer Price Index, which measures inflation, recorded a sharp rise for the second consecutive month. The headline index increased by 12.8 percent (year-on-year), roughly 1.4 percent points higher from rates recorded in February (11.4 percent), reflecting an increase in the prices of goods and services across the nation to a year-on-year high last recorded in July of 2012.
“The higher price level was reflected in faster increases across all divisions, which contribute to the index with the exception of the restaurants and hotels division, which increased, albeit at a slower pace for the second consecutive month. Transportation costs, the planting season, and foreign exchange movements created significant upward pressures on the food index,” it said.
The National Bureau of Statistics stated that on the average, Nigerians paid the sum of N135.69 per litre for petrol. According to the report, consumers in Nasarawa State paid the highest amount of N166.67 for the product. This was followed by Cross Rivers and Sokoto states, where petrol was sold at N160 per litre. Residents bought the product at N143.17 in Zamfara; Yobe, N145.54; Taraba, N153.3; Katsina, N155.58; Jigawa, N143.08; Imo, N143.08; and Gombe, N151.67. Similarly, the product was sold for N144.58 per litre in Enugu; Edo, N129; Ebonyi, N155; Bayelsa, N146; Bauchi, N156.67; Anambra, N136.47; Akwa Ibom, N148; Adamawa, N133.5; Abuja, N104.9; and Abia, N148.13.
Apart from the Bureau’s statistics, even the International Monetary Fund, IMF, in the first quarter of 2016 also pointed out that the Nigerian economy is currently facing substantial challenges. It said lower oil prices have significantly affected the country’s fiscal and external accounts. The Fund stated this in the conclusion of its 2016 Article IV Consultation with Nigeria, by its executive board in its document dated March 31. The IMF, however, welcomed recent monetary policy tightening by the CBN, and recommended that the central bank targets price stability to maintain inflation within the target range.
The IMF noted that while the non-oil sector accounts for 90 percent of the country GDP, the oil sector plays a central role in the economy. It pointed out that lower oil prices have significantly affected Nigeria’s fiscal and external accounts, decimating government revenues to just 7.8 percent of GDP and resulting in the doubling of the general government deficit to about 3.7 percent of GDP in 2015.
The revelations from both the National Bureau for Statistics and the IMF show that the economic woes are creating obvious social tension which is blowing across the nation.
Interestingly, the government is not folding its arms. Both the fiscal and the monetary authorities are marshalling out measures to improve the situation. Kemi Adeosun, minister of finance, said that the passage of 2016 budget will enable the economy to bounce back to live. She pointed out how the President Muhammadu Buhari-led government plans to restructure the Nigerian economy through borrowing, targeted investment and diversified growth. Adeosun outlined the government’s economic blueprint while addressing captains of industries at the Lagos Business School breakfast meeting in Lagos State, on April 10.
She said: “We must collectively adopt a blueprint that equips the future generations to be creative and dynamic, that allows us to articulate a vision of a Nigeria, with a strong educational foundation; rich in depth of knowledge with a breadth of skills, an expansive infrastructure capable of servicing the needs of a nation of 150 million Nigerians.”
Detailing what she described as an “expansionary budget for investment and growth,” the minister said, “We must find the money, and create a system that enables targeted expenditure, based on the nation’s priorities. This expenditure will be efficient and impactful, focused on creating wealth for the majority.”
The government plans to borrow N1.8 trillion and invest in areas of priorities like transport, roads, housing, power and health. “We are committed to a countercyclical budget expenditure model. This has been a success in other nations, offsetting the risk of recession and creating an economy which is not based on either fragile consumer spending or over-reliance on oil,” Adeosun said.
This expenditure is anchored on the four economic pillars of Buhari’s administration. They include stimulating economic growth to achieve a real GDP growth of 4.2 percent in 2017; reducing the cost of governance and strengthen institutions to combat corruption extract inefficiencies in public service; increasing government expenditure on infrastructure and fund the budget deficit and negative trade balance cost effectively.
Expectedly and against doubts of a renewed fiscal indiscipline, the minister stressed: “We must safeguard this borrowing, ensuring that the wastage within the existing systems is firmly addressed. We cannot mortgage our future based on a system that has failed us for generations. We must be careful in our borrowing and prudent in utilisation,” she said.
Similarly, Godwin Emefiele, governor, CBN, said the apex bank had injected more than N1.3 trillion into the real sector to stimulate the economy. At a seminar for finance correspondents and business editors in Ibadan, on February 8, he said the interventions by the bank are centred on agriculture, micro, small and medium enterprises, MSMEs, and infrastructure intervention.
According to him, the interventions include the Agricultural Credit Guarantee Scheme Fund, ACGSF, the Commercial Agricultural Credit Scheme, CACS, the Agricultural Credit Support Scheme, ACSS, the N300 billion Real Sector Support Facility, RSSF, the N220 billion Micro, Small and Medium Enterprises Development Fund, MSMEDF, the Small and Medium Enterprises Refinancing and Restructuring Facility, SMERRF, the N75 billion Nigeria Incentive Based Risk Sharing System for Agricultural Lending, NIRSAL, the N213 billion Nigeria Electricity Market Stabilisation Fund and only recently, the Anchor Borrowers’ Programme launched by President Muhammadu Buhari.
Despite these measures, the Nigerian masses are yet to feel the impact. Suffice it to state that it might take a while to yield fruit. But the earlier the better before the masses starve to death as a result of the current economic hardship in the country.
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