From the farmer in the northern city of Borno to the business owner and working class down south in Lagos and Aba, households and businesses across Nigeria are under pressure, and so is President Muhammadu Buhari.
Soaring food prices which have been fanned by President Buhari’s abrupt border closure, falling disposable incomes – a symptom of three years of negative GDP per capita growth – rising insecurity in the north which has put a strain on agriculture output, and record-high unemployment and underemployment are among the problems facing Africa’s most populous nation as it marks its 59th year since gaining independence from the British, October 1.
On the streets of Nigeria’s showcase capital Abuja, things may look fine, with wide boulevards and increased security, as Buhari is expected to preside over a military parade and deliver a speech celebrating Independence Day.
But no matter how the government tries to paper over the cracks, the signs of pressure in Nigeria are there for all to see.
Consider this example.
Since Buhari’s indefinite border closure in late August, which the government says is aimed at curbing smuggling, the price of basic food items has soared, causing severe hardship for households.
The price of just about everything, from vegetables to rice that comes into the country legally or otherwise through its land borders, is up by an average of 50 percent.
BusinessDay survey across various markets in Lagos shows that a bag of foreign rice now sells for N22,000 as against the N14,500 it sold for five weeks ago before the border closure, indicating a 52 percent rise in price.
Meanwhile, Lake Rice, a brand of locally-grown parboiled rice which was sold for N13,500 five weeks ago, now sells for N16,500, a 22 percent rise in price.
Similarly, a carton of frozen turkey goes for N20,000, 54 percent more than it cost five weeks ago, while a kilo sells for N2,000 as against N1,300 before now.
A carton of frozen chicken (‘Orobo’) now sells for N19,000 as against N12,000 it sold five months ago.
Price of vegetable oil has also increased by 22 percent from N1,800 for a five-litre gallon to N2,200. The increase means most of these food items are increasingly going beyond the reach of many Nigerians.
“How do I afford buying a bag of rice for N22,000 when I earn only N30,000?” said a buyer at Mushin market who gave her name as Chukwu.
“What will I have left to feed my children and for our upkeep,” Chukwu said, highlighting the conundrum faced by Nigerians struggling to make ends meet. “We have been managing since but with the recent border closure which has led to increase in food items, things are worse for us.”
The reading for food inflation for the month of September is likely to capture the price growth triggered by the border closure when it is released early October.
Businesses are also reeling from the closure which has had a ripple effect across West Africa, with factories and traders struggling to import key raw materials and having to use alternative routes for their exports, according to the Lagos Chamber of Commerce and Industry, a private sector advocacy group that draws membership across various sectors of the economy and works with some 2,000 local companies.
“The border closure is causing untold economic hardship and is threatening to put a lot of companies, particularly those that do cross-border trade, out of business,” Muda Yusuf, director general of the chamber, said.
“No one is certain when the borders will be re-opened. This kind of self-inflicted pain is the last thing the country needs after three years of tepid economic activity,” Yusuf said in an interview with BusinessDay.
He said LCCI is currently locked in discussions with the government to find a solution but it is lacking urgency from the government.
The border closure, which Buhari ordered to curb smuggling of rice and other commodities, is the latest tack by Nigeria to protect its foreign-currency reserves by curbing imports.
The central bank has restricted access to dollars for the import of more than 40 items it says can be sourced locally, while the country wants to become self-sufficient in the production of staples such as rice.
Economists say the government and central bank’s protectionist approach is unsustainable and advise instead that local manufacturers be aided to be more competitive by investing in infrastructure from power to roads and improving access to cheaper finance.
Other interviews this month with average Nigerians showed that life is also getting harder for parents with wards to fend for. The month coincides with when children went back to school after a two-month break. It’s a new session which implies fresh school fees in a country where quality education is expensive.
Ade Bakare (not real name), a middle-aged sales manager at a consumer goods firm, paid around N1.5 million for his two children receiving secondary education in Lagos.
“That’s two times my monthly salary and a hefty 50 percent of my savings,” Bakare said.
He told Business Day that he was on the lookout for cheaper schooling alternatives for his children, as the next payment is not sustainable as it could swallow all he has left in savings when payment falls due in four months’ time.
Bakare is one of the privileged 1 percent with savings of over N1 million in a country where half of the population live below $2 a day and only around a quarter of bankable adults own a basic bank savings account.
For most Nigerians who live from hand to mouth, which means they spend virtually everything they earn to sustain themselves on a daily basis, there’s little or no spare cash to tuck away in a savings account.
What’s worse is that some Nigerians are facing their many struggles without jobs. There was a spike in unemployment to a record 23 percent in 2018, according to state data agency, the National Bureau of Statistics. That number may have grown worse on account of the forced closure of some companies who were driven out of business by rising costs of operation.
In the case of Ude Tochukwu, who was laid off his factory work in January after his employers shut down their manufacturing plant, he has struggled on all fronts since then, whether it’s feeding his family or paying school fees.
“The priority is feeding. I don’t have any money for school fees at this time,” Tochukwu said.
His firm is not the only one to have capitulated under the pressure of high cost of operations and sluggish sales growth.
The cumulative sales growth of the five largest consumer goods firms in Nigeria declined 5 percent in the first half of 2019, according to Business Day’s analysis of the companies’ financial data.
The companies include Nestle, Unilever, Flour Mills, Nigerian Breweries and PZ Cussons.
Four CEOs of leading consumer goods firms, who sat for an interview with BusinessDay this month, bemoaned the impact of weak consumer demand on their companies’ profitability.
They said the economy faces the risk of a real sector-induced economic recession if sales growth continues to print lower than inflation.
“The handwriting is on the wall as far as weak purchasing power is concerned and the government is even now compounding that pressure with the border closure and other anti-market policies,” said one of the CEOs who did not want to be identified criticising the government.
“We have laid off many of our staff to balance rising costs with falling revenues and I can say same for most of our peers,” the CEO said. “This is a risky trend as it could cause a real sector-induced recession that takes longer to heal than one caused by commodity price cycles.”
Up north, the biggest problem for Nigerians, predominantly farmers, is insecurity. Nigeria’s food insecurity fears have heightened in recent months owing to spate of insurgency in war-torn northeastern state of Borno and kidnapping that has forced many farmers to abandon their farmlands.
The situation has further led to decline in food production which has translated to hunger and high cost of food products across the country.
“The number of farmers going to their farms has reduced in the northeast states surrounding Gombe. They do not want to take that risk of being cut off or kidnapped,” said African Farmer Mogaji, head of agriculture and agro-allied group, LCCI, in a response to questions.
“Also, in the Southwest region, the number of famers is also reducing and the number of private investors too because they are scared of going to the farmlands,” Mogaji said.
He said that a lot of farmers are not planting because of the high rate of kidnapping happening in the environment where their farmlands are located.
Agricultural output has suffered as a result of this violence.
The sector recorded slower growth in the second quarter of the year following a 1.7 percent expansion compared to 3.1 percent in the first quarter, according to Gross Domestic Product (GDP) data published by the National Bureau of Statistics (NBS). “This stemmed from disruptions to farming activities in April and May by armed bandits in the North which invariably led to shortage of crops and increased food prices in both months as evidenced in inflation numbers,” analysts at Lagos-based financial advisory firm, ARM Securities, said.
These many problems should worry President Buhari who secured a second term this year.
“The solutions to these problems are well documented. All that the country requires is a leader with the political will to implement bold reforms,” an economist who did not want to be named said.
Nigerians turn to betting to ease income pressure
The consequence of a relentless rise in unemployment coupled with cost of feeding, clothing, housing, healthcare, transportation, communication and essential furnishings is that it is killing the hope of a better nation in many Nigerians, especially those with low incomes. At a betting centre sitting in the heart of Mushin market in Lagos mainland, several youths throng in as early as 8am, surfing the next opportunity to hit a jackpot.
From bus conductors to apprentices, artisans, undergraduates or even bankers, people are aggressively seeking means to make extra cash, to augment the paltry revenue from their routine jobs, Victor Olawoore, 28-year-old undergraduate student of the University of Lagos, told Businessday on a visit.
Their constant cry is that they can’t make enough.
The experience of Olawoore who runs the betting centre along two others shows that some customers would rather go hungry or owe, just for a chance to bet. Olawoore himself relies on forecasting for customers and the goodwill of winners to sustain his schooling needs.
“Some people come here with their last money. And at the end of the day, most of them lose their money. But they still believe it is a good way make money. And it is when they win, they able to compensate me with cuts. Once in a while, I also play N100 or N200 for real sports. I won’t deny that things are very hard in the country,” he said.
The highest Abayomi, a former graphic designer, has made in his betting history is N29,000, an amount higher than his monthly salary as a cashier at a local store.
Akeem Ahmed, on the hand, has had to abandon his furniture business for commercial motorcycling. The N1,000 he makes daily from articulating furniture pieces could no longer suffice to raise his five children who are all in nursery and primary level, as well as feed his wife and himself.
With a hire purchase debt of N370,000 to settle, N80,000 naira on his children’s academic expenses, Ahmed struggles fiercely to ensure his take-home grosses about N4,000. And on bad days when he’s trapped in the net of extortive police officers, he could lose an amount that could have taken a week of hard labour to gather.
“The government has to see how employment opportunities can increase for the youths. To work in a day, we have to purchase compulsory permit of N700. In the evening you will pay another N100 for working on the road. There is threat for us on all sides and it is overwhelming,” he said. “And when you are idle, you might begin to nurse a terrible idea. That’s why we have to get out and search for legitimate things that can fetch money.”
LOLADE AKINMURELE, JOSEPHINE OKOJIE & TEMITAYO AYETOTO
