• Monday, May 20, 2024
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Hardship persists in Nigeria despite Naira rebound

Innovating Nigerian markets: Fighting poverty – ARETE Book Club

…High inflation dampens hope of drop in food prices

Nigerians have continued to gnash their teeth in great pains over the rising cost of food items. In the last few weeks, there was great optimism that any appreciation in Naira would lead to appreciable drop in goods and services in the country, but that has not happened despite a noticeable improvement in the exchange rate of naira against US Dollar.

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The Central Bank of Nigeria’s (CBN) measures have led to the appreciation of the Naira against the US dollar both at the official and parallel markets.

However, this has not positively reflected in the lives of Nigerians, as indicated by the latest Consumer Price Index (CPI) report from the National Bureau of Statistics (NBS).

Food inflation, which makes up over 50 percent of headline inflation, continued to increase for the 15th consecutive time, reaching 40.01 percent in March compared to 37.92 percent in February.

The CPI, measuring price changes of goods and services, also revealed that March’s food inflation rate was 15.56 percentage points higher than March last year, which stood at 24.45 percent.

In addition to food inflation, headline inflation accelerated to 33.20 percent in March, up from 31.70 percent in February.

The Nigerian currency depreciated to its lowest point of N1,825/$ in mid-February leading to a surge in prices of food and other commodities.

However, different measures put in place by the CBN under the leadership of Olayemi Cardoso led to the sudden appreciation of naira.

Measures such as clearance of forex backlog, steady supply of dollars, the sales of dollars to Bureau De Change (BDCs) operators, and the hiked the monetary policy rate (MPR) to 22.75 percent from 18.75 percent.

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As at Thursday, April 18, Naira was N1,154/$ at the official market. While the Nigerian currency is being traded between N1,100 and N1,000 at the parallel market.

Prices remain adamant to naira rebound

The appreciation of naira hasn’t reflected in the quality of life of the masses. The appreciation only reflected in prices of few commodities while many remain stagnant or keep increasing.

For instance, there is a price reduction in the prices of foreign rice and noodles. A 50kg of foreign rice which was sold between ₦75,000 to ₦80,000 in March now costs ₦60,000.

Also, a carton of noodles, particularly Indomitable, sold between ₦10,000 and ₦10,500 now costs ₦6,000.

On the other side, prices of local staples continue to rise. For instance, a paint of garri, which was sold between ₦2,000 and ₦2,500 in March, now costs between ₦3,000 and ₦3,500.

A tuber of average yam now costs between ₦2,500 and ₦3,000, it was ₦2,000 in March. A crate of eggs is now ₦4,000 from ₦3,500 a month ago.

Aside from food, prices of other commodities such as gadgets, clothes, shoes, etc remain on the high side.

According to the 2023 State of Food Security and Nutrition World report, the number of Nigerians who are food insecure has increased by 133 percent in three years. It jumped from 63.8 million people between 2014 and 2016 to 148.7 million people between 2020 and 2022.

FG moves to tackle rising food prices

On Thursday, the federal government began enforcement raids at various supermarkets and markets in the Federal Capital Territory, Abuja, to check compliance with price and quantity regulations. This initiative targets a reduction in food prices across the country.

The government plans to extend these surprise inspections to markets in Lagos, Port Harcourt, Kaduna, and Ibadan to investigate and address any instances of unfair market practices such as price manipulation and cartel formation.

Adamu Abdullahi, the executive secretary of the Federal Competition and Consumer Protection Commission (FCCPC), mentioned these efforts during an enforcement operation aimed at curbing illegal pricing activities in grocery stores.

The operation led to the closure of 4U Supermarket and the removal of 33 bags of contaminated rice from a branch at 58 Adetokunbo Ademola Crescent, Wuse II.

On Wednesday, the commission had directed its staff to increase surveillance of markets to pinpoint businesses inflating prices for subsequent enforcement.

This action responds to consumer complaints about increasing goods prices, which contradict the naira’s recent appreciation.

The Federal Competition and Consumer Protection Act (2018) Section 69 specifies a fine for violations. The penalty is either 50 million naira or 10% of the company’s annual revenue, whichever is higher.

Section 69 read, “A person who violates any of the provisions of this part commits an offence and is liable on conviction to a fine not exceeding N50m. A Body corporate that violates any of the provisions of this part commits an offence and is liable on conviction to a fine not exceeding 10 percent of the turnover of the Body corporate in the business year preceding the date of the commission of the offence.”

Ajuri Ngelale, the special adviser to the president on media and publicity, conveyed that the President Bola Tinubu has instructed consumer protection bodies to align local prices with the naira’s increased value.

He emphasised the ongoing need to work towards reducing inflation quickly.

Ngelale stated that as refineries begin operations by early 2025, Nigeria’s financial situation should improve, leading to a stronger naira and its reflection in market prices.

The presidency expressed optimism about the future, indicating that the positive effects of reforms would become more apparent as the administration continues.

Ngelale highlighted the potential impact of combining Nigeria’s growing purchasing power with unprecedented access to consumer credit, suggesting that by the end of the president’s first term, Nigerians would appreciate the election of a leader with a financial and business background.

“Once you join the rising spending power of Africa’s largest population with the historic availability of trillions of naira for consumer credit that will bolster the real sector, you will see why Nigerians will be most pleased that they elected a financial engineer and businessman as president by the end of his first term in office, even as the signs are increasingly more evident today,” the presidential spokesman stated in a recent interview.