Nigeria’s economic hardship is something of grave concern to everyone. Even the rich are worried by the rate at which inflation depletes the purchasing power of the money in everyone’s pocket.
The problem is that many believe that Nigeria’s economic hardship is the worst. They point to Ghana as the symbol of West African paradise.
That perception is fueled by the fact that some years ago, Ghana attracted more foreign investments than Nigeria.
When the former management of Tweeter, a leading American social media firm wanted an office in Africa, it opted to site the office in Ghana, despite the fact that Nigeria accounts for about 60 per cent of its subscribers in the sub-region.
Despite all the wrong perceptions about Ghana as a home of leisure in the West African sub-region, analysts believe that even with the hardship inflicted by headline inflation at 33.1 per cent and food inflation at the danger zone of 40 per cent, cost of living is 35 per cent cheaper in Nigeria than in Ghana.
The government of Ghana has managed to bring inflation rate to 23.2 per cent, down from 32 per cent in 2022. Unfortunately, the cedi, Ghana’s embattled currency, is doing a losing battle in the foreign exchange market due to excessive import bills.
Even with inflation rate at a tolerable 23 per cent, transport cost is something of grave concern to Ghanaians. The journey from Accra, the Ghanaian capital, to Abidjan, the commercial nerve center of Cote D’Ivoire, takes 14 hours just like the journey from Lagos to Uyo in Akwa Ibom state.
The journey to Abidjan from Accra costs the equivalent of N60,000. A similar journey from Lagos to Uyo is just about N30,000 by commercial bus. That defines the difference in cost of living between Nigeria and Ghana.
The monthly cost of renting an apartment in Ghana takes a minimum of 1,500 cedis (141, 000 cedis at current exchange rate of N94 to the cedi) from an average worker’s monthly pay of 4,000 cedis. A similar apartment in Nigeria costs an average of N45,000 per month. Things are simply not as rosy in Ghana as some Nigerians think.
Even the foreign investors that were flocking to Ghana are beginning to take a second look at the economy they were targeting.
They have now noticed that Ghana defaulted in its Eurobond debt and plunged investors into huge losses. GTBank, a leading Nigerian bank lost N35 billion in its investment in Ghanaian Eurobond in 2023 when the impoverished West African country defaulted in its foreign debt service.
Ironically, Nigeria has never defaulted in its Eurobond debts even as Nigeria’s foreign debt is five times that of Ghana.
Foreign investors are beginning to appreciate the resilience of Nigeria’s economy and are returning to Nigeria. Netherlands is poised to invest $280 million in Nigeria. Most of the gains of the naira in the foreign exchange market in the last two months are the result of the improvement in foreign investment inflows.
Nigeria’s inflation is escalating even as the naira makes steady gains in the foreign exchange market. That is because the Central Bank of Nigeria (CBN) has inadvertently worsened inflation through its merciless grip on liquidity and incoherent hikes in the country’s monetary policy rate.
If the CBN had joined other government agencies in tackling infrastructure deficit and the evil influence of mendacious profiteering manufacturers, service providers, wholesalers and retailers, inflation would have receded as the naira appreciates.
The fight against inflation is beginning to take shape as some government agencies have rightly identified the causes of the monstrous price hikes and are directing their fights at the right target.
There was a time when the Federal Competition and Consumer Protection Commission (FCCPC) was something of a paper tiger. Everyone heard the name of the consumer protector but it was not defending the consumer.
The recent surge in inflation has ended all that. It has woken the consumer protector from its slumber. The commission is now on its feet tackling inflation with the right weapons.
It conducted an extensive market survey and traced the causes of inflation to high cost of transport, hoarding and multiple taxations among others.
The commission has declared war on hoarders and the campaign is yielding noticeable results. Warehouses where food items were hoarded to take prices to unimaginable levels before their sellers could sufficiently exploit consumers are being thrown open and prices are coming down as food items flood the market.
The result of FCCPC market survey tallies with that of the National Bureau of Statistics (NBS) as to the causes of inflation in Nigeria.
NBS released its inflation figures for March two weeks ago and just like the FCCPC, it fingered high energy cost as a major cause of inflation.
The pump price of diesel jumped to N1, 500 per liter, consequently hiking the cost of transporting food items from Nigeria’s inaccessible rural farming communities to rural markets.
That is precisely why food inflation has entered the 40 per cent danger zone even as the naira is making an impressive appreciation streak in the foreign exchange market.
The CBN is alone in its perception that excess liquidity is at the root of Nigeria’s surging inflation. Everyone including FCCPC and NBS agrees that Nigeria’s inflation is cost-pushed and not demand-pushed.
CBN must reassess its wrong perception about the causes of inflation and join FCCPC in fighting the real culprits. At the moment, CBN is not merely punching the air, but fueling inflation by fighting the wrong target.
The FCCPC has really impressed consumers with its recent assault on the real causes of inflation. The agency went out of its way to tame the Chinese operator of a racist supermarket in Abuja that thoroughly insulted Nigerians by restricting its services to Chinese.
FCCPC shut down the outfit and knocked senses into the head of its owner. The appropriate Nigerian government agency should impose similar sanctions on the racist Indian school in Ilupeju, Lagos state where admission is restricted to Indians.
