Nigeria’s surging inflation rate has defied the stampeded monetary policy measures scrambled by the Central Bank of Nigeria (CBN) to tame the monster.
Headline inflation stands menacingly at 31.7per cent. Food inflation at 37.9 per cent is a scant two percentage points from the danger zone of 40 per cent.
The tacticians in CBN inflation war room must be flaunting the cursory gains of the naira in the foreign exchange market as the outcome of their draconian hiking of monetary policy rate (MPR).
However, the perfunctory appreciation of the naira is the direct consequence of the slight improvement in forex supply and the counter measures against speculative biddings.
The massive hiking of MPR is rather escalating the cost of funds and fueling inflation on its own. Manufacturers and service providers are grumbling loudly about the merciless hikes in the cost of funds and they are inauspiciously passing the additional burden of the high cost of funds to consumers.
That probably explains why Nigerian Breweries increased products prices twice in the last one month.
One cannot but sympathise with the tacticians in CBN inflation war room. The fight against inflation is supposed to be a two-handed approach with the federal government effectively executing the fiscal policies necessary to complement CBN’s monetary policy measures in a balanced confrontation that would easily choke inflation out of the economy.
The federal government has inadvertently left the CBN alone in the war against inflation. The reprehensible infrastructure deficit fueling inflation is the fallout of successive government’s inability to execute the fiscal aspect of the war against inflation. That leaves the CBN fighting inflation only with monetary policy instruments that inadvertently fuel inflation.
The truth about the fight against inflation is that since the catastrophic infrastructure deficit fueling inflation cannot be addressed with a flip of the finger, the federal government should confront the intolerable level of profiteering in the economy that fuels inflation more than naira depreciation. That is the option at the moment.
Manufacturers, service providers, whole sellers and retailers are killing Nigeria through merciless profiteering. Cement manufacturers make 300 per cent profit and are still hiking prices.
The cost of binding wire has risen from N12,000 to N30,000 within one month. Naira depreciation is not as catastrophic.
Retailers are the worst. A 20-sachet pack of water derisively tagged “pure water”, sells for N250. That amounts to just above N12 per sachet.
Ironically the retailers sell a sachet for N25. They make N500 from the pack they bought at N250.
Those roasting plantain on roadsides are even more merciless in profiteering. One miserable finger of roasted plantain sells for N250.
I noticed the level of profiteering by plantain roasters the day I made bulk purchase of plantain at Ikorodu, Lagos for processing into plantain flour.
I bought three bags of plantain for N19, 000. Each bag contains close to 200 fingers of plantain.
If I were to roast what I bought and sell at a moderate price of N200 per finger, I would have made a minimum of N60,000.
The federal government is convinced that cement manufacturers were fleecing consumers even before the merciless price hike that took the price of a 50kg bag of cement to N15,000 in some parts of Nigeria.
That is why government insisted on the manufacturers reverting to the previous price of N5,200.
Government must not restrict that regulatory measure to cement manufacturers. It has to be extended to all sectors of the economy.
Government must establish a price monitoring agency to descend heavily on whole sellers and retailers. Manufacturers and service providers must furnish government with verified cost of production. Government would therefore add a profit margin of 25 per cent that would inform the shelve price of the product.
Even as petrol price is deregulated, government can still protect consumers from the merciless grip of retailers. We must return to the days when the industry regulator was the only one to change the pump price on the meter.
There is no reason why some private retail outlets should sell petrol at N650 in Lagos when NNPCL retail outlets in the same community sell for N568. Retailers all obtain petrol from the same NNPCL. No private firm imports petrol in Nigeria so there should be price uniformity in every community.
THE COST OF VEHICLE LICENSE RENEWAL
On December 20, 2023, I went to the Licensing Office in Abattoir in Lagos state to renew the vehicle license of my Peugeot 407 Sedan which the escalating cost of living had kept off the road for almost three years.
The lady I met told me that for the two years that the car had remained off the road I would pay N8,000, (N4,000 per year).
I demanded a point of sales (PoS) equipment to effect payment. Ironically, even at a time when Nigeria is enduring a debilitating cash squeeze, transactions in the licensing office are consummated on cash basis.
I made a quick dash to the ATM in the Abattoir to withdraw money for the transaction. I returned within one hour and handed N8,000 to the lady and she commenced the renewal process.
I waited for two hours and was handed two new vehicle license papers. I took a look at the circumscribed section of the license where the cost of renewal is written and noticed that government charges N2,500 for the renewal. There was an additional cost of N500 for radio license which took the total cost to N3,000.
I asked the government official why she collected N8,000 and receipted for N6,000. She quietly pulled her drawer and gave me the balance for the transaction.
Ironically, the upward of 100 people who renewed their vehicle license that day paid additional N1,500 for the transaction without raising a finger in protest. That is something close to N200,000 to be shared by the three officials in the office for that day. Such daylight robbery could be avoided if one raises questions when he feels cheated.
