There is no doubt that poverty bestrides our land. Many people are genuinely suffering. We have returned to the times of hyperinflations, low standard of living, and economic dilemma. Everyone wants solutions to the hydra-headed financial and economic problems. But it is not easy. We have no choice but to come up with solutions before it is too late.
The sachet water, commonly known as ‘Pure Water’ all over Nigeria, is the most popular source of drinking water in most cities and villages across the country. Last week, reports emerged that the price of a sachet of water has jumped from N10 to N20. The doubling of the cost of sachet water is very symbolic. Over the years, as inflation made a mess of the value of the naira and the spending power of Nigerians, the sachet water had held firmly to its price.
As the saying goes, ‘water is life’. Biologically, water is essential to the human body. Every one of our cells, organs, and tissues uses water to help with temperature regulation, keeping hydrated, and maintaining bodily functions. Besides, water acts as a lubricant and cushions our joints. Drinking water is excellent for our overall health. And it is not a luxury but primarily a need. The desire for water is not like a craving for sweets, chewing gums or alcohol. It is as essential as eating food and it is also vital while eating food. Scientifically, 60 per cent of the human body is made up of water. While the brain and heart are 73 per cent water, the lungs are about 83 per cent water.
These may explain why the price of water has been relatively inelastic. The cost of sachet water held firm, while other goods caved to inflation, perhaps because of the catastrophic consequences of this critical item becoming unaffordable to most Nigerians. Now the price of ‘Pure Water’ has finally doubled. This issue is a severe problem for the Nigerian masses and it is symptomatic of the country’s economic crisis. It is no longer a point of argument that hardship has overtaken the land .
According to official statistics, Nigerian inflation hit a four-year peak in February as food prices jumped by more than 20 per cent, putting enormous financial pressure on households already faced with biting unemployment, shrinking purchasing power and a stagnant economy, at a time of mounting insecurity.
Inflation in Nigeria had remained in the double digit category from 2016 but it now seems to have gone berserk since February 2020, probably driven by the impact of the coronavirus epidemic that also induced a sharp drop in the demand for and price of oil, Nigeria’s main export, alongside a weakening of the naira.
According to the Nigerian Bureau of Statistics (NBS), food prices, which make up the bulk of the inflation basket, rose to 21.79 per cent in February, a jump of 1.22 percentage points from January. The recent inflation rate is the highest since the 17.78 per cent rate in February 2017.
Further analysis of the recent NBS report makes for dire reading. It states that the consumption expenditure of Nigerian households fell in the full-year 2020, while that of the government increased during the same period. Disposable income declined in Q4 2020. At the time consumption expenditure dwindled among Nigerians, that of government rose by 61.58 per cent in 2020 – a puzzle that is not difficult to explain, given the increased debt profile of the country.
Additionally, the report states that on a month-on-month basis, the core sub-index increased by 1.21 per cent in February. This report was down by 0.05 per cent when compared with 1.26 per cent recorded in January. The highest increases were in the costs of passenger transport by air, medical services, miscellaneous services relating to dwellings, hospital services, and passenger transport by road. It also includes pharmaceutical products, paramedical services, repair of furniture, vehicle spare parts, maintenance and repair of personal transport equipment, motor cars, dental services and hairdressing salons, and of personal grooming establishments.
Insecurity has taken a toll on agricultural activities, with grave implication for food inflation to drive up the other indices. The unending Boko Haram insurgency, kidnapping, banditry, and herder-farmer crisis have displaced millions of crop farmers from their farmlands, making it difficult for them to produce adequate food.
Neither the urban nor rural areas are exempt from the negative inflation. The urban inflation rate increased to 17.92 per cent (year-on- year) in February from 17.03 per cent recorded in January. The rural inflation rate rose to 16.77 per cent in February from 15.92 per cent in January.
The COVID-19 pandemic, spiralling unemployment, a shrinking fiscal space, burgeoning external debt (currently estimated at $32 billion), exchange rate volatility, and acute insecurity challenges experienced in the country all contribute to the worsening inflationary trend in the country. Nigeria is yet to come out of the impact of last year’s lockdown and severe restrictions owing to the pandemic, which virtually paralysed the economy. Neither has it exited from the severe worldwide economic global implications of a debilitating, once-in-a-lifetime scourge.
Insecurity has taken a toll on agricultural activities, with grave implication for food inflation to drive up the other indices. The unending Boko Haram insurgency, kidnapping, banditry, and herder-farmer crisis have displaced millions of crop farmers from their farmlands, making it difficult for them to produce adequate food. The states ravaged by insurgency and banditry have witnessed an ugly situation whereby the displaced farmers now mostly live permanently in Internally Displaced Persons (IDP) camps, thereby threatening Nigeria’s food security.
Most of the states in the North-Central geopolitical region, regarded as the country’s food basket, are currently engulfed in farmer-herder crises and reprisals, as well as banditry. From Benue to Plateau to Taraba, Niger and the Kogi States, farmers have abandoned their farmlands out of fear of being kidnapped, maimed, or killed by bandits, herders or other armed criminal elements that have infested the areas. Additionally, some unscrupulous elements procure food and stock these to create artificial scarcity as a way of increasing prices.
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The deplorable state of our roads and multiple tariffs imposed on trucks that convey foodstuffs add to food insecurity, and fuel inflation. Bad roads lead to the frequent breakdown of vehicles, constant replacement of vehicle parts and repairs. Transporters naturally shift these costs to the consumers, thereby making the prices of foodstuffs go over the roof.
The alarming inflationary rate in Nigeria is mainly a consequence of the depreciation of the naira and the concomitant increase in the price of imported goods. Other reasons may include a rapid rise in net import, expansion of public expenditure, rapid growth in money supply and expansionary fiscal policy. There is also the problem of the frequent budgetary deficit.
The Nigerian economy is currently witnessing a decline in the value of money. This results in the ambiguous losses and gains of lenders and borrowers, and sellers and buyers. Furthermore, increasing uncertainty owing to spiralling inflation does not encourage savings and investments, leading to economic decline due to low investment. All said and done, rising inflation is a challenge of economic thinking that requires bold measures to tackle.
As the prices of foodstuffs and other essential commodities increase, the long-suffering Nigerian masses are being pushed further into the dungeons of poverty and misery, and the gap between the rich and the poor continues to increase. Pensioners and other fixed-income earners are badly affected as the purchasing powers of the naira is getting drastically weakened.
Managers of our economy need to take urgent steps to arrest the alarming inflationary trends and ease the burden on hundreds of millions of Nigerian masses suffering from the current economic malaise.
If the tension burst into the streets at the level of pure water consumers, we are in real trouble and democracy will be under threat.
These economic pressures have reached alarming rates and require bold emergency actions.
Nigerians are going through so much stress and strain, with no end in sight. People are angry against society, and some are confused and perplexed. Their anger is unchanneled, unfocussed and has reached an explosive point.
One can boldly posit that the killings and violence in Nigeria are expressions of the level of anger and frustration people have.
Violence and anger are now statements to attract attention and satisfy the desire to be heard. Little wonder, non-state actors are popping out everywhere and challenging Nigeria’s sovereignty. Poverty has become weaponised, and ‘stomach infrastructure’ is almost becoming the primary reason for government expenditure, as most states in Nigeria spend over 85 per cent of their revenue on recurrent expenditure.
Managers of our economy need to take urgent steps to arrest the alarming inflationary trends and ease the burden on hundreds of millions of Nigerian masses suffering from the current economic malaise. If the tension burst into the streets at the level of pure water consumers, we are in real trouble and democracy will be under threat.
The government should block income leakages due to corruption, mismanagement, wastages, and inefficiency in public expenditure, while deploying strategic policies to enhance the disposable income of Nigerians .
The Central Bank of Nigeria should urgently come up with creative policies to tackle inflation. The control of money supply, policies to increase the competitiveness and efficiency of the economy, putting downward pressure on long-term costs (supply-side policies) and fiscal policies like higher income tax rates could reduce spending, demand, and inflationary pressures.
On the part of Nigerians, from our leaders to the masses, this unique period calls for greater patriotism and sacrifice. It is time to appreciate the depths of our problems, and there should be a realisation that the country currently titters at the brink of disintegration.
With rising insecurity, ethnic tensions and tribal clashes, and anomie that permeates Nigeria, further unpatriotic acts may be the unfortunate spark that ignites the flame that may finally consume Nigeria as a corporate entity.
The current generation of Nigerians should ensure that we are not the ones that sang the ‘Nunc Dimittis’ to a once-great country.
The challenge for leaders is how to protect the masses from worsening inflation and the attendant drop in living standards. The leaders should demonstrate accountability, integrity, empathy, and passion demanded by these challenging times.
On their part, the masses should equally eschew all acts capable of worsening an already bad situation. They should strive to be responsible citizens and not engage in acts capable of sabotaging government efforts to get the country out of the woods.
There is no doubt that poverty bestrides our land. Many people are genuinely suffering. We have returned to the times of hyperinflations, low standard of living, and economic dilemma.
Everyone wants solutions to the hydra-headed financial and economic problems. But it is not easy. We have no choice but to come up with solutions before it is too late. A stitch in time saves nine.
Dakuku Peterside is a policy and leadership expert.