.jpeg "Over 90% of Nigerians are denied a healthy diet at N1000 per dollar and 30% inflation.")
Nigeria could experience stagflation, the CPPE predicts. Deal with oil thieves to increase revenue. Give diasporans incentives to bring in money, Uba advises the government. Experts maintain that inflation is still too high. Oil output reaches a 20-month high of 1.57 million barrels per day.
Nigerians are still concerned about rising food prices because the inflationary trend is growing both the number of people who cannot afford a healthy diet and poverty rates.
The incidence of flooding in food-producing states, the effects of a below-average planting season on primary harvests, lingering security issues in the country's northern region, rising energy costs (diesel for transportation), and an unstable foreign exchange rate are all contributing factors that are pushing food produce prices up above historical average.
According to data released by the National Bureau of Statistics (NBS) yesterday, overall inflation increased to 26.7% in September from 25.8% in August, while food prices continued to increase, climbing to 30.64% in September.
Analysts are afraid that the strain on the parallel market may persist despite the Central Bank of Nigeria's (CBN) lifting of the ban on 43 products gaining access to foreign cash at the official window to ease the pressure.
Due to the double-digit food inflation in Nigeria as a result of these supply chain interruptions, more individuals would likely not be able to afford nutritious diets.
More than three billion people, or 112 million more people than in 2019, might not afford a healthy food in 2020, according to the UN Food and Agriculture Organization (FAO). The average cost of a healthy diet increased by 3.3% from 2019 levels, which contributed to the increase in part due of rising food prices.
The FAO food price index had risen 40.6% from typical 2020 levels as of August 2022. The healthy eating dilemma probably became worse until income levels rose by a comparable amount, especially in low-income nations where food inflation is out of control. More Nigerians developed multidimensional poverty during this time.
The FAO defines a healthy diet as one that satisfies requirements within the nation's food and dietary recommendations as well as daily energy demands.
The (un)affordability is assessed by contrasting the price of a balanced diet with national income levels. The cuisine is termed unaffordable if the price is greater than 52% of the median household income. There are doubts about the viability of government plans due to the growing food prices without an equal increase in income before a pushback.
Dr. Chiwuike Uba, a professor of development economics, Pat Utomi, and Kelvin Emmanuel, the chief executive officer of Dairy Hills Limited, all stated that they were not surprised by the alarming numbers produced by the NBS.
"I'm not shocked by the most recent numbers. The primary factors driving inflation are food and energy. According to Dr. Uba, the government stopped providing subsidies for Premium Motor Spirit (PMS), which increased the price of diesel and gasoline.
He further emphasized that the situation will not improve by removing 43 goods from the forex prohibition list, stating that "we are having supply issues with our forex and not naira." I believe we should have looked at how our remittances may save us. Remittances contribute significantly to the economy. The pressure on our currency will be reduced if the Federal Government offers Nigerians living abroad a guarantee through the official window to repatriate their money. The issue of the forex challenge is related to the excessive inflation we currently face.
Dr. Muda Yusuf, Director/CEO of the Centre for the Promotion of Private Enterprise (CPPE), has issued a warning that if ongoing inflationary pressures in the Nigerian economy are not addressed, stagflation may occur.
Yusuf remarked this in response to the most recent inflation statistics, noting that the acceleration of poverty is a serious reason for concern as a result of the rising inflation. Over the previous three months, buying power had been declining.
"As the possibility of stagflation rises, economic growth may remain muted. The main causes of inflation are not diminishing; on the contrary, they have intensified. These include the weakening exchange rate, rising transportation costs, logistical difficulties, lack of liquidity on the forex market, skyrocketing diesel prices, climate change, community insecurity among farmers, and structural production constraints. These are primarily supply-side problems, he said.
Dr. Muda continued by saying that high inflationary pressures worsen the strain on manufacturing costs, reduce profitability, depreciate shareholder value, and undermine investor confidence.
The implications are that manufacturers and other investors are suffering greatly, he said, adding that few producers or service providers can pass cost hikes on to their customers.
Products with strong demand elasticity are more prone, he declared. In order to combat inflation, quick government action is needed to address the issues affecting the economy's production, productivity, and security. To ensure that production costs are kept in check, the real sector of the economy needs to be given incentives.
He pointed out that the government may modify its import regulations to give industrialists and financiers in the logistics industry preferential import duties on intermediate goods.
He concurred that excessive energy prices have disastrous repercussions and said, "We need to declare a state of emergency in the energy and electricity sectors. If we don't address electricity, logistics, and FX issues, it will be exceedingly difficult to control inflation. Unfortunately, there are no easy solutions for these problems. But it's crucial to give these problems high priority and use effective tactics to advance quickly.
Additionally, according to some experts, the economy is not yet ready to slow down. They emphasized that any anticipation of a recovery is premature at this time.
A 26.72 percent inflation rate, according to Professor Godwin Oyedokun of Lead City University in Ibadan, is still too high and the government should consider it a crisis.
He asserts that the inflation rate is still high and that it is irrelevant if it is slowing.
"Yes, the new government has implemented some policy changes, but they are not yet sufficient to have an impact on the inflation rate. To determine if it will be constant, we must wait and observe what happens in the coming months. Only then can we affirm that the new policies are to blame for what is occurring.
According to Eze Onyekpere, Lead Director of the Centre for Social Justice (CSJ), Nigeria has not yet reached the stage where inflation will begin to decline.
According to him, we have not yet reached the point where inflation will begin to decline because we lack any support from the fiscal and monetary authorities to make sure that the inflation begins to decline. Keep in mind that we are still borrowing and dealing with the exchange rate component of inflation. We have not boosted our dollar supply or done anything else to help stabilize the value of the naira.
"Nothing has changed; either the CBN is printing money through other means or they are reinvesting the money they received from the Cash Reserve Ratio (CRR) of banks in the economy, because I haven't noticed anything else new."
He continued by saying that there is no way inflation can decrease while the value of the naira is falling daily and the nation's agricultural output has not increased due to insecurity.
According to the most recent data from the NBS, Kelvin Emmanuel stated that even though he anticipates the inflation to peak in December 2023, the fiscal side of the government must pay attention to the supply chain for food and energy.
The lack of infrastructure for the distribution of methane gas for power generation, along with energy poverty from the importation of liquefied petroleum gas (cooking gas), gasoline, and diesel, all contributed significantly to price inflation, according to his argument.
In order to protect workers, particularly in the unorganized labor of the private sector, he emphasized the urgent need for the government to review the minimum wage, institute an employee casualization bill, and review the HR outsourcing limit. This would give them a tool to help them weather the shocks from the ongoing rise in inflation.
He argued that while the Central Bank must reduce its reliance on direct intervention through expansionary monetary policy to concentrate on its core mandate, it is crucial to also address the issue of the supply of foreign exchange needed to settle outstanding forwards in order to return the exchange rate to a fair value within the real effective exchange rate band. Shocks from a high black unofficial premium, he argued, have significantly contributed to rising inflation.
The removal of the ban, he continued, is a positive development because it takes away the incentive for those businesses to source their supplies from illegal markets. Make sure the government lowers the black-market premium if it wants to feel the effects.
Pat Utomi expressed disappointment over the persistent decline of the naira, which is to blame for the weak activity in the manufacturing sector. According to Utomi, the current situation might not improve until the government takes decisive action to boost production of goods and services.
He asserts that Nigeria still has plenty of opportunities to access foreign exchange, so long as the administration is prepared to take decisive action against thieves of crude oil.
He said, "The oil cabals are stealing the crude by every means with their cronies, which is why our oil production has slowed down. I have to let you know that the police are aware of them. If the government is willing to expose and demonize the thieves whose only goal is to privatize the sector for their own gain, our economy will quickly get back on track. I'm advocating that these individuals be publicly shamed and disgraced.
On the immediate solution to curb the rising inflation, Utomi urged the government to fix the refineries, tackle insecurity and ensure farmers are back on the farm.
He added that the government needs to encourage modern farming techniques that will bring value addition and high quality that can compete globally.
On a positive note, cheery news comes from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) that Nigeria’s average oil production has hit a 20-month high of 1.57 million barrels per day.
The report indicated that crude oil output (including condensate) rose by 11.1 per cent from 1.43 million in August and surged by 25.6 per cent from the year-low of 1.23 million barrels in April 2023.
Cumulatively, these indicate that Nigeria produced 47.2 million barrels of crude oil and condensates in September, which is the highest since January 2022 and stood at 51.9 million barrels.