In spite of the negative economic outlook of 2024, ever resilient Nigerians are expectant this new year of a near-miracle that will free them from the strangulating shackles of poverty, hunger and misery that hallmarked last year.
Experts have always attributed the economic malaise to the rather desultory and impulsive approach of the current administration to tackling the economic challenges it inherited from the Buhari government.
According to the buffs, the twin-policies of fuel subsidy removal and the drastic devaluation of the naira, which the administration carried out immediately it mounted the saddle, were done without putting in place adequate buffers to effectively manage the consequential negative headwinds. The economy resultantly went into a terrible tailspin from which the nation is yet to recover.
Less than 48 hours after President Bola Tinubu had announced the fuel subsidy withdrawal on May 29, 2023, petrol price rose steeply from N189 per litre to between N480 and N540 per litre, an increase of over 200%. Today, it is N998 per litre from the Nigerian National Petroleum Company Limited (NNPCL) outlets and N899 from those of its rival, Dangote Refinery and Petrolchemicals. The prized commodity sold for over N1,000 before both oil behemoths decided to slash the price in a veiled competitive fray.
The value of the naira, which was less than N1,000/$ before this administration came in, now oscillates between over N1,500 and over N1,600 to the dollar. The local currency weakened to N1,541/$, a 0.3 % depreciation compared to the closing rate of 2024, which was N1,535.82/$. The Naira had recorded a 40.9 % depreciation in 2024 when compared to the official rate at the close of 2023, which stood at N907.11/$, thus defying the Central Bank’s introduction of several foreign exchange policies aimed at market transparency and attracting foreign investors.
Throughout 2024, the economy went through peaks and troughs, engendering high inflation. The costs of food items, transportation and others spiralled almost beyond the rooftops, throwing the larger population of Nigerians into unprecedented poverty and misery. Hunger was the practical expression in many homes.
A recent 2024 World Bank report revealed that 47% of Nigerians now live below the international poverty line of $2.15 per day, a significant rise from the 38.8% recorded in 2023. That implies that 105.09 million Nigerians are now living below the poverty line in 2024, going by the latest (2023) Nigeria’s population of 223.8 million! The mirthless situation became so stifling that exasperated Nigerians rose and seeped into the major streets in August, last year, like a torrent, in an orgy of anti- hunger protest, signposted, especially in some northern cities, with a despoiling and burning binge and christened ‘10 days of rage.’
It was a bummer, which should not be allowed to continue this year. A constellation of concerned Nigerians, including economic experts and interest groups, have been espousing that line of thought since the dawn of the new year through various platforms. The slew of thoughts largely admonish the Tinubu administration to change its approach to steering the ship of the economy, to revive it and save it from collapse.
Hence, some of the immediate tasks before President Tinubu and his cabinet as they settle down for the serious business of governance this year include bringing down inflation rate, drastically reducing the astronomical prices of foodstuffs, transportation, medicals and other items as well as strengthening the Naira to reduce the nadir of poverty and misery among the population.
These are particularly germane because delay is dangerous. The latest World Bank report implies that the significant rise of poverty rate in Nigeria from the 38.8% rate recorded in 2023 to 47 % in 2024 underscores deepening economic challenges in Nigeria, where incomes have struggled to keep pace with rising costs. While annual inflation eased slightly from 33.4% in July to 32.15% in August 2024, the report says, low wages have continued to drag down household earnings. This economic strain pushed an estimated 14 million more Nigerians into poverty in 2024 alone.
“Nigeria has been grappling with economic hardships for several years. Security concerns, slow growth, and persistent inflation have worsened poverty and food insecurity in Africa’s most populous nation. President Bola Tinubu’s recent economic reforms, including the removal of energy subsidies, have further increased the cost of living, leading to widespread protests,” the global bank reports.
It also looks toward 2026, projecting that the poverty rate in Nigeria could reach 52% if the present situation does not improve. In other words, approximately 116.38 million Nigerians will further fall into below the poverty line in 2026 if the current conditions do not change. To counter this, the global bank recommends that there must be reforms aimed at shielding the most vulnerable population from inflation and promoting more productive employment opportunities to enhance livelihoods and economic stability.
President Tinubu himself acknowledged the need for this in his new year broadcast in which he pledged his government’s commitment to reducing inflation from the current 34.6% to 15% by increasing food production and promoting the local manufacturing of essential drugs and medical supplies.
This, Tinubu said, will be complemented by the establishment of the National Credit Guarantee Company by the second quarter of 2025 to expand credit access for individuals and underserved groups, such as women and youth, and to drive economic growth and re-industrialization.
It will be a miracle of the decade if the president, indeed, succeeds in reducing inflation from 34.6% to 15%, as touted. Economists doubt this could be achieved, but if he does manage to pull it off, this alone will have far-reaching impact on households who would be afforded more disposable income to expend on organic and industrial goods, with many businesses invigorated.
Actually, Tinubu was merely reiterating the proposed 2025 budget, which was based on the quite ambitious projections that inflation will decline from the current rate of 34.6% to 15% this year; that the exchange rate will improve from approximately N1.700/$ to N1,500/$ and crude oil assumption of 2.06 million barrels per day.
However, if the administration means business in its projection to so drastically reduce inflation, the president has to change his bullheaded stance on price control. He has consistently maintained a rigid stance not to embrace price control since the beginning of his administration. He had to even overrule his vice, Ibrahim Shettima, who had announced shortly after they mounted the saddle of power, that the administration would consider price control to address the rising prices of food items and other essential commodities. Tinubu vehemently reiterated his opposition to adopting price control at the maiden presidential media chat he hosted in Lagos penultimate Monday.
Yet, under his watch, prices of essential goods, including food items, continued to soar, even when disposable income remains abysmal, thus increasingly worsening poverty. In our view, government needs to consider a form of price control, especially to check the average Nigerian’s predilection for profiteering at the expense of hapless consumers.
Indeed, we need to revisit the Price Control Act, 1977 and rejig it to suit the present realities. The Act, enacted during the military regime of Gen. Olusegun Obasanjo, served as a fundamental tool for governmental price regulation, particularly during periods of economic turmoil such as wartime or high inflation, like we are currently experiencing. Besides, it is a common practice in advanced countries of the world.
According to an incisive analysis done by United Kingdom-based, Nigeria-born legal expert, O.M. Atoyebi (Esq.), this legislation “empowers the government to establish both maximum and minimum price limits for designated goods and services. Minimum prices, known as price floors, ensure fair compensation for labour, while maximum prices, or price ceilings, prevent the exploitation of consumers by capping prices”.
This law, we believe, is certainly relevant to the efforts at ameliorating the current costs-of-living crisis.
According to Barrister Atoyebi, in 2004, during the tenure of the Obasanjo administration, the Price Control Act was reaffirmed, leading to the creation of the Price Control Board. The Act mandates the creation of Price Control Committees in each state to enforce price controls locally, while also providing supplementary provisions regarding the functioning of the Board and Committees.
The Act empowers the Board to impose prices according to the Act and outlines procedures for fixing controlled prices and defining basic prices and permitted variation. It also prohibits the sale of goods above controlled prices, with corresponding penalties for violations, while addressing hoarding practices and penalties.
“Sections 8 to 17 of the Price Control Act”, he implies, “delineate various enforcement measures, penalties, and legal procedures. These provisions cover aspects such as resale price maintenance, the role of enforcement staff, duties to furnish information to the Board, seizure of goods, requisition and sealing of premises, court orders for habitual offenders, offences by corporate bodies, trial procedures, personal liability exemptions, and regulatory authority.”
We need to revisit this law now without future delay and overhaul its provisions to confront the present challenges. We strongly warn that President Tinubu’s projection to reduce the costs of foodstuffs, medicals and other items as well as bring down inflation from 34.6% to 15% will amount to wishful thinking if he continues to reject price control.
This administration also needs to carry through the current efforts to ensure complete stoppage of fuel imports by working to get other refineries—the second Port Harcourt and Kaduna refineries—also working. The old Port Harcourt Refinery and that of Warri are already working, even if skeletally, which is commendable.
Government should also drastically increase non-oil exports, like solid minerals and agro-exports as well as revive and invigorate the comatose manufacturing sector. This will enhance industrial production, foster exports and increase foreign exchange inflow, which will also firm up the value of the Naira. The combination of the above will consequently reduce inflation, bring down food and other prices and foster economic prosperity.
Another crucial task before the government is to frontally confront insecurity maelstrom by intensifying the battle against insurgents and bandits towards totally incapacitating them. The government is already doing much in this area. The authorities should do more by further strengthening our gallant military with the acquisition of more modern and sophisticated war weapons capable of leveling the terrorists’ arsenal and totally defeating them once and for all.
This will open up access to farms that have long been deserted by farmers in the nation’s food belts in the North due to the murderous activities of terrorists and restore local food production.
Achieving this is highly significant to reducing food inflation, which drives headline inflation. This will in turn reduce food imports, bring down food prices and reduce hunger by making staple food items much more affordable to the vulnerable population.
The president is also enjoined to stop or at least reduce the exodus of multinationals by deliberately removing infrastructure bottlenecks such as bad roads, high cost of diesel-cum-poor power supply, heavy tax burdens etc. that are driving them (multinationals) away from the country. Not only will this significantly increase production hub, it is likely to, on the long run, bring back some of the multinationals that have relocated, into the country because Nigeria is a magnetic market any day. It will also increase youth employment and reduce youth restiveness.
However, one area Mr President has to watch is his increasing predilection for excessive borrowing. This administration is already rivaling Buhari government’s record on this. In fact, a sizable proportion of the 2025 budget estimates is to be funded by borrowing.
Whereas when Tinubu came in, in 2023, he impressively reduced the debt servicing burden he inherited from the Buhari administration, which secured many questionable foreign loans, some of which were unknown to the National Assembly, from 96% to 68% of the national revenue, giving the impression that he would likely be frugal and avoid piling up loan burden like his predecessor. But today, according to the figures touted by the Coalition of United Political Parties(CUPP), the nation’s debt figure has allegedly ballooned from N87trillion to N130trillion.
The president has to watch it in this area. Some economic development experts have been advising the government on the strategies for reviving the economy this year and how to fund the 2025 budget without necessarily borrowing. Dr. Chijioke Ekechukwu, former Director-General of the Abuja Chamber of Commerce and Industry (ACCI) and CEO of Dignity Finance, in a chat with a weekend publication, advised Mr President to focus on harnessing the country’s abundant resources to generate revenue to fund the current budget, reduce reliance on imports and sustain the economy.
“Nigeria,” the expert enthused, “is a country that is blessed with a lot of resources, human, material, and others. So, if we do not have enough revenue to fund our budget, what we need to do is to identify what resources we have that will actually give us revenue to fund our budget and to sustain our economy. We need to harness our excess gas deposits; we have enough of them. Let’s utilize and export them.
“The foreign reserves of this country can actually triple if we utilise the gas reserves that we have, harness and then export them. A lot of revenue can be generated from that area in foreign currencies. The solid mineral sector is also one sector that has not been harnessed at all. We are still scratching it and so we need to build some traction in the solid mineral sector and have enough revenue coming from that area.”
Like we opined earlier, the economist also stressed the importance of revitalising Nigeria’s manufacturing sector, which he described as critical to the nation’s economic prosperity. He said the challenges posed by energy shortages, particularly power supply issues, are major hindrances to industrial growth, noting that these too must be addressed.
“The manufacturing sector must get back to its position. It is a very paramount position, because every country that has done well must have a very thriving manufacturing sector. That sector of this country has been affected by a lot of things, one of which, in most cases, will be the power problems. Many companies that have shut down in this country and returned to their countries went back just because they did not have enough power to do business.
“And even when they generated their own power, they incurred so much cost in the process. So, we need to deal with the energy and power sector, which has been the major bane in the development of our country. We also have to ensure that the exchange rate of the country goes down.”
According to Ekechukwu, the nation needs to ensure that our fuel and petroleum products are refined in this country so that we stop the importation of petroleum products, conserve foreign exchange and crash fuel prices.”
Another economist and development expert, Aliyu Ilias, also highlighted key sectors that require urgent attention to improve Nigeria’s economic resilience. He emphasised the need for a greater focus on energy, food security, and infrastructure development.
“There should be more efforts to improve food security. In July 2023, the president declared a state of emergency on food, but we are yet to see anything on that. Over 60 per cent of our income is spent on food. So, there is need to put more efforts on ensuring food availability and affordability of food”, he admonished. We cannot agree more!
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