Nigeria’s surging inflation rate is something of grave concern to everyone. Food inflation has crossed the 30 per cent mark and there are fears that it may sail perilously close to 40 per cent. No one knows how to stem the invisible hand of inflation as it eats up the value of the money in everyone’s pocket.
The saddening aspect of the surging inflation is that everyone may be looking at a familiar factor while the stealthy contributory factor freely devastates the economy.
The World Bank, International Monetary Fund (IMF) and even the federal government of Nigeria unanimously blame the seemingly irreversible depreciation of the naira and Nigeria’s primitive method of farming for the surging inflation rates.
Ironically, a clandestine contributory factor has sneaked into the system and inflicted catastrophic damages while everyone blames the depreciation of the naira for inflation’s journey to the stars.
Profiteering is the clandestine factor fueling inflation and no one appears to notice the damage it has surreptitiously inflicted. Profiteering is perpetrated by everyone from the giant manufacturer to the road side retailer. The federal government believes in the power of the invisible hand of market forces of demand and supply for the determination of prices.
But manufacturers and retailers have all obstructed the invisible hand’s unbiased fixing of prices. They dictate the prices and blame the invisible hand for the calamities they imposed on consumers.
Cement Manufacturers Association of Nigeria blew the trumpet last week on why cement price adamantly remained above N5, 000 per 50kg bag even as manufacturer of BUA Cement crashed the price to N3, 500.
Dangote Cement controls well over 70 per cent of Nigeria’s cement market with a catastrophic monopoly that prevents BUA Cement from entering the south-west market. Aliko Dangote, president of Dangote Group, who vowed to crash cement price from N2, 500 to N1, 000 has inauspiciously pushed it above N5, 000.
Cement manufacturers contend that Dangote makes 300 per cent profit by selling cement at N5, 200 per bag.
BUA Cement has proved without an iota of doubt that the production cost of a 50kg bag of cement is in the range of N2, 500. Dangote is just keeping the price artificially at N5, 200 because he is operating something of a monopoly which no one is willing to challenge.
Dangote’s main interest is to retain his position as the richest man in Africa and he is doing that at the expense of the homelessness of Nigeria’s 133 million people toiling below poverty line.
He has priced cement beyond their reach and made it impossible for them to have roofs over their heads. Dangote takes a chunk of the blame for Nigeria’s 20 million housing deficit.
With his selfish monopoly now defying any official control, there are fears that the housing deficit would just worsen as cement price escalates.
The surge in inflation in Nigeria is primarily fueled by the selfish manipulation of prices by manufacturers like Dangote and the retailers who follow their dictates.
The food crisis in Nigeria has not reached the proportion where millions are priced out of the food market as food inflation surge to 30 per cent. It is profiteering that makes food items unaffordable.
One plastic measure of maize which contains 16 big Derica cups sells for N1, 600. Those who make pap (ogi) from it grind the corn at N400. That takes the total cost of production to N1, 900.
They cut the milled corn into 100 chunks and sell each at N100. That amounts to N10, 000 and a profit margin of almost 1,000 per cent.
Those roasting plantain at roadsides make similar margins smacking off profiteering. They buy a bunch of plantain with 40 fingers at N3, 000. They sell each roasted plantain at N300 raking in N12, 000 and a profit margin of N9, 000. Those frying beans cake (akara) incur even greater margin of profit than their counterparts in pap and plantain roasting.
A medium size tuber of tasteless new yam leaves the farm in Gboko, Benue state at N400. It sells in Lagos at N3, 500. The retailers make more profit than the farmers who cleared the land with cutlasses, till the soil with back-breaking hoes, planted the yam and weeded the farm three times a year for the yam to thrive.
Last week, frozen fish retailers went on strike to protest against importers’ merciless profiteering which tripled the price of the product.
Transporters double fares at the slightest provocation and no one lift a finger in protest. The situation in the transport sector is so irrepressible that touts derisively tagged “agbero” (passenger callers) dictate the fares arbitrarily.
A Ghanaian told me that the government of Ghana regulates transport fares in such a way that even as the pump price of petrol in Ghana is higher than in Nigeria, transport fares are more moderate than in Nigeria. Ghanaian transporters cannot hike fares arbitrarily.
Nigerian banks exploit customers and churn out 12-digit returns from merciless profiteering. Guaranty Trust Bank announced profit before tax (PBT) of N433.2 billion for the third quarter of a turbulent year as 2023. The PBT for 2022 was N169.7 billion. UBA and Fidelity banks announced similar indecent profiteering returns from ruthless levies.
The federal government should ensure that price hikes are justified by sufficient increases in production cost. Manufacturers should prove the increase in production cost to a supervising ministry before price hike is allowed. In fact, with the senseless profiteering exhibited by Nigerian manufacturers and retailers, the easiest way to curb inflation is to set profit margins for manufacturers.
Cement manufacturers contend that in China and Switzerland the highest profit margin a cement manufacturer can attain is 17 per cent. Dangote renders millions of Nigerians homeless by recording 300 per cent profit margin in cement production. He and his cohorts in other industries must be called to order. Manufacturers must be compelled to obtain government approval for any price hike. That does not amount to price control.