Since the release of a frightening inflation figure of 22.22% on Monday, by Nigeria Bureau of Statistics (NBS) for April 2023, which is the highest recorded in seventeen years, Nigerians have expressed grave concerns over the continuous increase in food prices and other items, making life unbearable for them. This figure is against the March index of 22.04%, representing a 0.18% increase.
The NBS report stated, “In April 2023, the headline inflation rate rose to 22.22 per cent relative to March 2023 headline inflation rate which was 22.04 percent. Looking at the movement, the April 2023 inflation rate showed an increase of 0.18 per cent points when compared to March 2023 headline inflation rate.
“Similarly, on a year-to-year basis, the headline inflation rate was 5.40 per cent points higher compared to the rate recorded in April 2022, which was 16.82 per cent. This shows that the headline inflation rate on a year-to-year basis increased in April 2023 when compared to the same month in the preceding year (ie. April 2022).
“On a month-on-month basis, the All-Items Index in April 2023 was 1.91%, 0.05% points higher than the rate recorded in March 2023 (1.86). This means that in April 2023, on average, the general price level was 0.05% higher relative to March 2023.
“Food inflation rate in April, according to the report was 24.61% on a year-to-year basis, which was 6.24% points higher compared to the rate recorded in April 2022 (18.37%) and 24.35% recorded in the previous month.
“The rise in food inflation, the report added, was caused by increased prices of Oil and fat, Bread and cereals, Fish, Potatoes, Yam and other tubers, Fruits, Meat, Vegetable, and Spirits.
“The ‘All items less farm produce’ or Core inflation, which excludes the prices of volatile agricultural produce, stood at 20.14% in April on a year-to-year basis, the report said. It shows that it is up by 5.96% compared to the 14.18% recorded in April 2022. It is also higher than the 19.86% recorded in March 2023.
“The highest increases were recorded in prices of gas, air transport, liquid fuel, vehicle spare parts, fuels, and lubricants for personal transport equipment, medical services, and road transport.
“The contributions of items on the divisional level to the increase in the headline index were food and non-alcoholic beverages at 11.51%, housing water, electricity, gas and other fuel (3.72%), clothing and footwear (1.7%), and transport (1.45%).
“During the month under review, all items’ inflation rate (on a year-to-year basis) was highest in Bayelsa (26.14%), Kogi (25.57%), and Rivers (24.95%). However, Borno (19.06%), Taraba (19.64%), and Sokoto (19.90%) recorded the slowest rise in headline inflation on a year-to-year basis.
“On a month-to-month basis, however, April CPI recorded the highest increases in Cross River (3.05%), Bayelsa (2.92%), Rivers (2.62%), while Katsina (0.52%), Jigawa (0.74%), and Osun (0.96%) recorded the slowest rise on.
“In terms of food inflation on a year-to-year basis, it was highest in Kogi with (29.50%), Kwara (19.55%), and Bayelsa (29.38%), while Sokoto (19.55%), Taraba (20.20%) and Jigawa (20.68%) recorded the slowest rise.”
The implications of these data are, no doubt, mind boggling, even at a cursory appraisal. It smacks of pain, anguish and torment on the populace, as Nigerians are besieged with high prices and low purchasing power, with no possible solutions in sight. It means that Nigerians would continue to pay more for prices of goods, resulting in a drop in their purchasing power.
More worrisome is that most of the affected food price rises are the stable food for the poor and low in the society. They include yam and other tubers, bread, potatoes, vegetables, meat, fish, fat and oil, etc. The earnings of Nigerians by this report, obviously, will hardly carter for their daily necessities, with some states like Bayelsa, Kogi and Rivers topping the inflation spike chart.
The reason for the hike, NBS said, “The rise in food inflation yearly was caused by increased prices of Oil and fat, Bread and cereals, Fish, Potatoes, Yam and other tubers, Fruits, Meat, Vegetable, and Spirits.”
Some experts, however, have expressed their views on what the scenario portends for the economy and indeed, Nigerians.
Prof. Uche Uwaleke, a professor of finance and capital market, at the Nasarawa State University, said, “The increase in the headline inflation to 22.22% for the month of April did not come as a surprise in view of the rising inflation trend in many economies partly caused by the Russian conflict.
“Be that as it may, the reality is that the Nigerian case has a lot to do with domestic structural factors. It is worth mentioning that the NBS, in its April Consumer Price Index report, provided a clue as to the major items driving the inflationary pressure in Nigeria to include food, electricity, housing and transport.
“In the light of this revelation, what becomes clear is that the monetary policy tightening stance of the CBN alone may not address the challenge. The continuous rate hikes embarked upon since May 2022 has not yielded the desired results.
“The government needs to implement complementary fiscal measures aimed at boosting food supply as well as reducing firm’s cost of production caused by high cost of energy and transport. It is pertinent to note that inflationary pressure continues to be driven by the food index at over 24% reflecting legacy factors such as transport challenges.
“This partly explains why food inflation is reportedly highest in Kogi at over 29% and lowest in Sokoto at about 19%, a difference of about 10%.
“In order to increase food output and significantly bring down food inflation, the need to tackle the seemingly intractable security challenge facing the country as well as invest more in mechanized Agriculture cannot be overemphasized.”
Similarly, Dr. Yemi Kale, former Statistician-General of the Federation and Chief Economist and Head of Research at KPMG Nigeria, said that it is clear that the inflation rate was not driven by demand but by the cost of transportation.
He explained, “Both inflation and the money supply appear to have been unaffected by MPR since September 2021. Rather, inflation has surged, and the money supply is unbothered, suggesting the drivers of inflation are not demand. Seems to be more transport cost driven. We are just increasing finance costs and squeezing growth.”
Unfortunately, almost all the likely buffers- economic, social, and political, are bleeding. In the last seventeen years, according to the research made by this paper, the 22.22% inflation rate is the highest ever witnessed.
Economically, the Central Bank of Nigeria (CBN) is not winning the battle in spite of all the measures it has put in place to check it. Nigeria’s inflation rate continues its uptrend despite multiple interest rate hikes by the central bank to tame the rising rate. The CBN has increased the Monetary Policy Rate (MPR) from 11.5% to 18% between May last year and March 2023.
It has introduced Anchor Borrowing Scheme and other schemes, lent various kinds of money to the government including ‘Ways and Means’, devalued the currency, etc., but to no avail.
Socially, there is a huge infrastructure deficit. The roads that will aid transportation are critically in bad shape, given birth to a rise in transport cost, that impacts directly on increase in prices of food and other items. The railways that billions of naira was pumped into are not functional due to insecurity. Aviation fuel is scarce. This leads to a high cost of air fare. Insecurity has been fingered as being at the centre of the entire economic woes as farmers cannot go to farm, foreign investors in the country have fled and no new investments are coming in, business capital has been used to pay for ransom to kidnappers, armed robbers invade banks and cart away huge monies meant for businesses. There are allegations from different quarters that most of the funds allocated to security agencies disappear into private bank accounts both local and foreign, with no end in sight.
Politically, 2023 elections have been adjudged as the worst in the history of Nigeria’s elections after trillions of naira was invested in its conduct. It has been alleged that it was massively and brazenly rigged. It was also alleged that there were flagrant compromises occasioned by financial inducements across security agents, electoral officers and adhoc electoral staff. The country is now tense due to the outcome of the election as several parties are in court seeking justice.
Corruption is said to be at its peak in this government and that has utterly weakened the ‘Political Will’ to implement policies and programs decisively. For instance, the Tradermoni, school feeding program, micro and medium credit programs, meant to address inflation have failed.
Now, the borrowing spree! This administration has so much borrowed from local and foreign banks and agencies so much that Nigerians have wondered where the funds have been invested in, as there is little or nothing to show for the humongous debts that is standing at over N77 trillion, in the absence of ‘Ways and Means’ loan of over N22 billion. Upon this, President Buhari is asking the National Assembly to approve a $800 million dollar loan from the World Bank, less than two weeks of his exit from power.
Eminent Nigerians and experts have criticized the President’s move to borrow more at this twilight of his administration, asking him to shelve it.
Chief Olabode George speaking on Arise News, Monday, said, “The president should stop it.” Adding, “Do they want to share it before they go,” he queried.
Similarly, the Director General of World Trade Organization (WTO), Dr. Ngozi Okonjo-Iweala, speaking at the induction program for re-elected and newly elected governors in Abuja, on Monday, painted a bleak scenario of the nation’s economy. She said, “Nigeria’s gross debt level has climbed from N19.3 trillion in 2015 to N19.6 trillion in 2023. The debt-to GDP ratio has almost doubled from 20 per cent over that time period.
“While the debt-to-GDP ratio may not look alarming, as revenues decline, the burden of debt servicing has increased dramatically. The debt service to revenue ratio is certainly alarming at 83.2 percent in 2021 and 96.3 per cent in 2022, according to the World Bank. This means that at the federal level, after servicing our debt there is little room to pay for recurrent expenditure, let alone investment.”