•We’re dying, MSMEs groan
…Save us from extinction, estate developers beg Tinubu
Economy in ICU, experts warn
By Adewale Sanyaolu, Chinyere Anyanwu, Steve Agbota, Merit Ibe, Charity Nwakaudu and Adanna Nnamani, Abuja
Nationwide outcry over the sky-high prices of foodstuffs, transportation, medicines, building materials and other goods reached a crescendo at the weekend, with households and small-scale businesses describing the prevailing economic austerity as a yoke designed for the extermination of Nigerians.
The hardship propelled the youths in some states to storm the streets last week with placards to protest the ugly development, even as they lampooned the government for unleashing scathing economic policies on them with nothing to cushion the attendant pains.
The stranglehold has been accentuated by the multiple hike of the exchange rate used in computing Customs duties, which has set off a chain of disruptions that have not only vandalised a heavily import-dependent economy, but strangled many enterprises and pushed millions into multi-dimensional poverty.
Within this year alone, the government has increased the tariff thrice in an economy where unemployment rate has ballooned to 33.3%, minimum wage pegged at N30,000 (and unpaid by many states) and a weakened local currency that is constantly on a free fall.
The import clearance tariff, benchmarked against the US dollar, was reviewed from N1,413.62/$ to N1,417.635/$ at the weekend. This represents an increase of N4.015 and a percentage increase of 0.28 per cent, which is below the official CBN exchange rate of N1,481.982/$ as of the morning of Saturday, February 10, 2024.
Since President Bola Tinubu assumed office, the exchange rate has been adjusted several times.
On June 24, 2023, Customs (as approved by the CBN) adjusted the exchange rate from N422.30/$ to N589/$, and on July 6, 2023, it was went up to N770.88/$. On November 14, 2023, it was adjusted to N783.174/$, in December it was adjusted to N951.941/$.
Still not done, on February 2 it was moved to N1, 356.883/$ and on February 3, it was raised to N1, 413.62/$ and now it has been raised to N1,417.635/$.
More so, in December 2023, Nigeria’s inflation rate rose to a 27-year high as food prices surged, exacerbating a cost-of-living crisis and piling more pressure on the Central Bank to raise interest rates.
According to the National Bureau of Statistics, consumer inflation rose for the 12th straight month in December to 28.92 per cent year on year from November’s 28.20 per cent.
The food inflation rate, which accounts for the bulk of Nigeria’s inflation basket, rose to 33.93 per cent in December from 32.84 per cent a month earlier.
The statistics office said prices rose for a broad range of food items including bread and cereals, oil, fish, meat, fruit and eggs.
Analysts say higher fuel prices which are nearing N700 per liter of petrol, depending on the location of purchase and a weaker local currency have also stoked price pressures.
Regrettably, the assurances from the International Monetary Fund and the Central Bank of Nigeria (CBN) that inflation rate will drop to 23 per cent and 21 per cent respectively in 2024 may be a ruse going by latest market trends.
A food market survey by Daily Sun in Lagos and Abuja reveals that food inflation, rather than drop according to projections by International Monetary Fund (IMF) and CBN, are on the upswing with the prices of many goods rising by over 25 per cent.
In Lagos, checks at some major markets reveal that food prices are no longer within the reach of the average Nigerian.
For instance, a 50 kilogramme bag of long grain foreign rice which hitherto sold for N65,000 last December now sells for N72,000, while the locally produced brand which sold for N55,000 now sells for N65,000.
A 50kg bag of Oloyin beans which sold for N45,000 is selling now for N55,000 while a 100kg bag of Olo2 beans which sold for N85,000 in early December is now selling for N140,000. A bag of maize which was going for N35,000 in December is now selling for N65,000.
A 100kg bag of melon (egusi) which sold for N230,000 in early December is still selling for N230,000; 20kg bag of yellow garri which was going for N20,000 is selling for N35,000; a 20kg bag of white garri which was hitherto N19,000 now goes for N35,000, while a paint bucket of both yellow and white garri goes for N2,000 and N2,200 respectively.
A 20-litre gallon of vegetable oil formerly N37,000 during the period in review now goes for N42,000 while the 5-litre gallon is selling for N11,000. A 20-litre gallon of red oil which sold for N30,000 is now selling for N27,000 while the 5-litre gallon of red oil goes for N8,000.
A carton of frozen chicken of laps (Orobo) which went for N31,000 a few weeks ago, is currently selling for N33,000 while a carton of frozen turkey wings which sold for N50,000 is now selling for N51,000. One live chicken (broiler) which sold for N15,000 in December currently sells for N18,000.
A medium sized basket of tomatoes which sold for N28,000 is now selling for N32,000 while a bag of pepper (rodo) which sold for N70,000 is now selling for N55,000.
A loaf of bread which cost N1,200 in early December is now selling for N1,400.
The prices of all the listed food items have risen by over 25 per cent over the last few weeks, raising fears that an average household will need more than double its previous upkeep allowance to survive the present harsh realities.
Abuja
The situation in Abuja and its suburban areas is equally as pathetic as what obtains in Lagos.
Food prices witnessed an astronomical rise of 25 per cent in the last two weeks.
In separate interviews with Daily Sun, traders in Abuja expressed their deep displeasure with the nation’s skyrocketing cost of living, claiming it has negatively impacted their means of livelihood.
According to Sani Garba, a fish vendor in Karonmajigi, Abuja, since the removal of fuel subsidy, the cost of fish has doubled.
Garba said a bucket of 25 medium-sized catfish, which once cost N34,000, is now being sold for N56,000.
“Only people that are rich can now afford to eat catfish. First, they increased the price from N34,000 to N45,000 in January 2024 and just last week Sunday, they increased it again to N56,000. As we speak now, our suppliers are on strike because of this issue.
“You know they bring the fish from Ibadan and Ogun states. They are complaining of high cost of transportation. I also heard that the cost of feeds have gone up as well. The ones you see here are those that I had to run around and get from the fish farms around Abuja”.
Ifunanya Egbijie, a fashion designer, also bemoaned how her business has been adversely affected by the exorbitant cost of clothing materials and accessories.
“Everyday we go to the market the price of materials keeps changing. Most times when I charge my customers and I go to the market to get the accessories I need to make their dress, I discover that the prices have increased significantly. And you cannot start calling your customers to tell them to add to the fee you had agreed on . They will not even listen to you because they are also angry because they feel you are ripping them off not knowing that we are also going through difficult times.
“Another problem is that fuel price has increased and power supply is not frequent. I spend thousands of Naira on petrol everyday to power my sewing machines so that I do not disappoint my customers and sometimes when they get their dresses, to get your balance becomes an issue.”
Port clearance
Daily Sun learnt that before now, the cost of clearing a 40ft container of food item and medicine, hovered between N6 million and N7 million, but today, the cost has swelled to N18 million.
In an interview with Daily Sun, a clearing agent and the National Coordinator, Save Nigeria Freight Forwarders Importers Exporters Coalition, Chief Osita Chukwu Patrick, lamented that the cost of clearing goods at the ports now is very high, which he said, is affecting both importers and agents.
“Importers pay N14 million as import duty through clearing agents and an additional N4 million for clearing of 40 feet container. In total, everything sums up to N18 million. The cost is on the high side. Something needs to be done urgently before things gets out of hands completely,” he said.
Meanwhile, the price of pre-owned vehicles used for intra and inter-state transportation has tripled due to the slump in naira value. Concomitantly, there has also been an astronomical rise in the cost of transportation coupled with the increase in fuel and diesel pump price across the country.
According to a car dealer, Mr Godfrey Ojemba, the average price of a mini bus (popularly called Korope) used for intra-city and inter-city transportation, which previously sold for N900,000 and N1.2 million before the currency fall and the removal of subsidy is now N3 million to N3.5 million.
He said a Toyota Sienna that hitherto sold for N7 million had moved up to N10 million, while the price of a 2012 Honda Accord increased from N6.5 million to N8.5 million and N10 million, respectively.
“For weeks, we will be here and won’t be able to sell a car. Even when people come, they cannot afford the price because it is out of their budget. We are just here not to stay idle. If nothing is done to make car importation more affordable, very soon, there will no nation called Nigeria,” he warned.
Real estate
Operators in the real estate sector have protested against the recent hike in cement price.
The price of the vital commodity rose from N3,500/bag last year to N8,500/bag today.
The frightening surge in price is also seen in other materials used in the building industry.
Flexible binding wire now sells for N9,000 from N5,000.
A truckload of 20ft sharp sand has ballooned from N90,000 to N140,000. One pan of nails has risen from N500 to N1,550.
Reacting, the President of Real Estate Developer’s Association of Nigeria (REDAN), Dr. Aliyu Wamakko contended that the increase in the prices of building materials would widen the housing deficit gap.
Wamakko, in a recent statement, called on President Bola Tinubu to summon cement manufacturers for discussion to forestall further hardship.
“The price of ready-mix concrete will also be increased while the cost of production of concrete will rise significantly. Such an increment, if allowed to take place, will worsen the economic situation of the nation.
“When there is construction, there is a multiple employment and it helps to reduce the poverty index of the country.
“But remember that because of no employment, the resultant effect is banditry, kidnapping, armed robbery.
“The federal government should also remember that we have 28 million housing deficit in Nigeria”, he said.
Experts react
The Chief Executive Officer of the Centre for the Promotion for Private Enterprise, CPPE, Dr. Muda Yusuf, described the increase as devastating, adding that the drastic upward review of the exchange rate for the computation of import duty from N952 to N1,413.62 which is a 42.5 per cent increase would have a negative effect on businesses across all sectors.
‘‘Businesses are yet to recover from the shocks of the new round of currency devaluation resulting from the sudden unification of the exchange rate which has driven the official exchange rate to about N1400.
“It is double jeopardy for the investors across all sectors especially those in the real sector. This action will further fuel inflation as production and operating costs get escalated. The vulnerable segments of the population will be further impoverished as cost push inflation gets exacerbated.
“CPPE appeals to the CBN to reverse this rate hike in the interest of the already impoverished segments of our society and the numerous businesses that are already on the verge of collapse,’’
Yusuf said the shocks, disruptions and dislocations are of immense proportions, adding that it is even worse that the rate takes immediate effect.
Former chairman, Manufacturers Association of Nigeria (MAN), Mr. Frank Onyebu, argued that the rate hike at this time was not right.
‘‘The Nigerian economy is in a very bad shape right now. Cost of living is soaring. Inflation is at its all-time high. There’s suffering everywhere. Individuals and households are groaning. Government should ease up a little on this almost insane revenue drive and concentrate more on improving the investment climate.
“The government should balance its need for increased revenue with the more urgent need for increased investment. I do sincerely believe that what the government should be doing is to attempt to encourage investment in the real sector and not to make the situation worse by imposing more taxes and duties.
It looks like the only concern of this administration is to increase revenue generation. But you cannot generate revenue by killing the companies that are supposed to pay the taxes. It’s like killing the goose that lays the golden eggs.
“We need to all realize that these are very difficult times. People are suffering. companies, manufacturing firms are folding up. Wouldn’t it be better to nurture businesses rather than tax them out of existence? Many businesses are struggling, many are just barely alive. It has never been this bad.
“The advice I would like to give to the government is to rescind this new policy decision. It’s time to concentrate more on improving our investment climate. If we make the environment attractive, more businesses will spring up; and if this happens the tax net will increase, which will automatically lead to more revenue for government.
If, on the other hand, we succeed in driving away businesses, we will not only lose the revenue we are vigorously pursuing, we would also succeed in worsening our current unemployment crisis. This would, in turn, lead to increased insecurity, and ultimately a further slowdown in the economy,’’.
Chairman SMEs Group, Lagos Chamber of Commerce and Industry (LCCI), Mr. Daniel Dickson-Okezie, said the rate hike might lead to the collapse of the import business considering the fact that Nigeria is import dependent.
He explained that the decision to hike import rate has affected the cost of importation which would be transferred to the already struggling consumers, whose purchasing power is low due to inflation.
‘‘The effect is that many businesses will close shop if they can’t meet up, which will invariably cause the economy to continue to contrast.
“There will be low productivity. Already, households are finding it very difficult to survive, as the real incomes of households are fast disappearing. The SMEs are the worst hit. They don’t have the capacity to access funds like other players. A lot of SME’s are being forced to downsize or pack up after running out of survival ideas and strategies”.
According to the Nigeria Employees Consultative Association (NECA), about 22 multinational firms left Nigeria between 2021 and 2023, accounting for about 20,000 job losses.