Many Nigerians have become poor due to high inflation rates challenging the Nigerian economy. According to the National Bureau of Statistics (NBS), the inflation rate was 16.82 percent in April 2022; it lies above the projected 13 percent for 2022.
The causes of high inflation include insecurity, poor economic policies, the devaluation of the naira, and pre-election campaign spending. Nigeria can curb high inflation rates via effective economic policies.
Inflation is a continuous rise in the prices of commodities in the market. The price of every commodity in the market has tripled. A cursory look at prices in the Nigerian markets reveals that the inflation rate is beyond the NBS estimate.
In Nigeria, the cost of production has increased tremendously. Prices are rising daily yet the NBS reported that the headline inflation rate slowed down in April 2022 when compared to the same month in the previous year.
Many Nigerians are passing through pain as they can no longer eat twice a day due to the high prices of commodities in the market. Many Nigerians have reduced their consumption due to the prevailing high prices in the market. Macroeconomic studies have shown that consumption expenditure is one of the main drivers of economic growth. A reduction in private consumption in Nigeria may affect the GDP growth for 2022.
In Nigeria, food inflation hit the highest at 18.37 percent in April 2022 from November 2021. The Central Bank of Nigeria (CBN) recently reported that various interventions in agriculture had led to the drop in food import bill. The drop in import bill has not resulted in the affordability or availability of food items in Nigeria.
Many Nigerians were plunged into poverty in 2021 by high inflation rates, according to the World Bank. The current food inflation problem challenging the Nigerian economy may aggravate economic hardship in 2022, and many Nigerians may fall into poverty in 2022.
The high inflation rate in Nigeria is associated with high exchange rates, insecurity, and infrastructural deficiency. The devaluation of the naira is a challenge in Nigeria. It has pushed up the prices of imported raw materials, cost of production, and the prices of commodities in the market.
The average exchange rate in the parallel market is now as high as N610 per dollar against the official exchange rate of N416.08 per dollar. Most importers of food, raw materials, and machinery do not have adequate foreign currency from the official channels; as a result, they access the parallel market at a higher rate.
Insecurity in the northern and Middle Belt regions contributes to high inflation in Nigeria. Many farmers have not resumed farming because of the fear of being kidnapped, raped, or killed by terrorists.
Infrastructural deficiency contributes to high inflation in Nigeria. Most of the roads in Nigeria are not in good condition. The high cost of moving products from rural areas to urban areas impacts the consumers negatively. According to the former Director-General of Infrastructure Concession Regulatory Commission (ICRC), Chidi Isuwa, Nigeria had about 200,000km of the road network.
He stated further that only about 60,000km got paved; a large proportion of the paved road was in unacceptable poor condition due to insufficient investment and lack of adequate maintenance.
The erratic power supply is aggravating the high inflation problem in Nigeria. The majority of businesses depend on self-generated power sources to power their operations. The high cost of running and maintaining power-generating plants enhances the problems of inflation, unemployment, and low growth rate in Nigeria.
The current high inflation in Nigerian markets is associated with poor economic policy. The federal government must address the prevailing high inflation in Nigeria by formulating and implementing viable economic macroeconomic policies.
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High inflation in Nigeria is associated with a drop in the supply of agricultural produce to the markets. Many farmers are still practising small-scale farming methods. Nigeria’s population requires mechanised farming to produce adequate food for consumption.
In Nigeria, high inflation rates can be curbed via effective monetary and fiscal policies. The government must manage the exchange rate via an effective monetary policy. Infrastructure development is a pre-condition for investment to strive in any nation.
Nigeria’s government should embark on more infrastructure development and restore peace and security in the northern and Middle Belt regions to put inflation under control in the interest of the poor in Nigeria. The Nigerian government needs to employ the services of qualified economic managers to formulate and implement viable economic policies to drive the Nigerian economy on the path of growth and development.
