FIVE months after the inauguration of President Bola Ahmed Tinubu, Nigeria’s local currency, the naira, has lost 48 percent value in the parallel market where the majority of economic agents source their foreign exchange. His economic team appears to be losing the magic wand as spiraling inflation and low standard of living continue to buffet the citizens.

Naira closed at N775/$ at the parallel market on May 29 when the former Lagos politician was sworn in as president, but the local currency currently sells at N1,150 -N1,170 at Zone 5 Abuja and Lagos airport parallel markets. This is a 48 percent depreciation in a market marked by speculation and currency hoarding.

The cost of living has also risen, with the inflation rate increasing to nearly 27 percent in September 2023. Inflation rose from 22.79 percent in June to 26.72 percent in September 2023, according to the National Bureau of Statistics (NBS).

The cost of food, as evidenced by food inflation, rose to 30.64 percent in September 2023 from 25.25 percent in June 2023 – one month after Tinubu’s inauguration.

Analysts believe the president of Africa’s most populous nation is failing to rein in issues around insecurity, as well as high logistics and inputs costs that make farming difficult in food basket areas.

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Economic team battle challenges

Tinubu’s economic team led by Coordinating Minister of the Economy, Mr Wale Edun, has sustained some wins in the stock market, but galloping inflation means that returns on some portfolio investments aren’t attractive. Wale Edun, Coordinating Minister of the Economy and Finance Minister

Many of the issues steering inflation are fiscal and supply-driven, and analysts told Economy Post that there was yet no coordination in the economy.

They said insecurity, high production costs, poor road network, haphazard implementation of the Export Expansion Grant (EEG), high energy cost, poor trade facilitation by the Customs and activities of the Nigerian Ports Authority (NPA) were still key issues which Edun must seek ways to tackle.

“I had expected that there would have been a ministerial retreat or meeting of all the units that are critical in economic management to chart a way forward. Take for instance, if you want to have stable macroeconomic fundamentals such as lower inflation and stable currency, you need power at industrial clusters; you need manufacturers to export and repatriate dollars; you need to change your education curricula in order to export talents, and so on. However, what I have seen is a thinking that monetary policies can resolve all our problems, and you can see it is not working,” said a United States-based Assistant Professor of Economics, Dr David Aginam. Yemi Cardoso, CBN Governor

The Central Bank of Nigeria (CBN) ‘s new Governor, Dr Yemi Cardoso, has removed a ban on 43 items placed by his predecessor, embattled Mr Godwin Emefiele, but that seems to have been late in coming.

Tinubu has put a freeze on the price of petrol after announcing that “subsidy is gone” on his inauguration day, but fuel queues have reappeared across Nigeria. The Nigerian National Petroleum Company Limited (NNPCL) is still the sole importer of petrol, showing that the subsidy removal and market liberalisation are failing. Oil marketers are struggling to get dollars and a lack of clear direction on petrol subsidies is not helping the gasoline market.

READ ALSO: Kalu Aja to Tinubu: Give families cash to spend, waive taxes, import food

The official Importers and Exporters Window is failing to keep up with the parallel market, with the gap between the two nearly N400, thus fuelling arbitrage.

Inflation hits families

Inflation has become a major problem for the Tinubu administration, which inherited a badly managed economy from former President Muhammadu Buhari.

In the past two years, inflation has moved from 16.63 percent to 26.72 percent, and it does not seem to be abating soon.

Families are struggling to have three square meals in a day as prices of food and other basic household items skyrocket.

“We now eat twice in a day, no more three times. We eat in the morning and at night due to the cost of food now,” an Abuja-based mother of four, Mrs Favour David, said.

“We are feeling it now because prices of food and other products have risen . I used to buy a carton of small Indomie noodles for N4,600 two months ago. The price is N5,000 now. Prices of some items have risen by as high as N1000 in two weeks,” she said.

A Lagos State-based trader, Mr Samuel Kehinde, said he had begun cutting the portions of food eaten in his home in order to save costs.

“We are desperate for survival. I cut the portions of food eaten by my family and I struggle to pay the school fees of my children owing to the very high cost of living.”

A Kano State-based civil servant, Mr Abubakar Yusuf, said his salary was no longer enough to take him home.

“I always turn into a beggar every month due to high cost of living. My salary used to be okay for me a few months back but things have seriously changed for the worse. My hope is that our policy makers will turn the tables,” Yusuf added.

Curb inflation, seek external help

Experts have asked the Nigerian government to rein in inflation by importing food while seeking an external help.

Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, in an email response sent to Economy Post, said the government must support manufacturers to boost local production.

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“Tackling inflation requires urgent government intervention to address the challenges bedevelling production, productivity and insecurity in the economy,” said Yusuf.

“The real sector of the economy needs to be incentivised to ensure moderation of production costs.  The government could tweak the tariff policies by granting concessionary import duty on intermediate products for industrialists. The same is true of investors in logistics sector,” he further said.

Yusuf noted that the effects of high energy cost was devastating, stressing that the country must now declare state of emergency on the energy and power sectors.  

“It will be very difficult to tame inflation if we do not fix power, logistics and forex. Regrettably,  there are no quick fixes in these areas.  But it is important to prioritise these issues and drive accelerated progress with the right strategies.” 

On the acute dollar shortages, Yusuf advised the Federal Government to leverage the country’s assets, approach the International Monetary Fund (IMF) for balance of payment support, and increase crude oil production.

A financial analyst, Mr Kalu Aja, in an interview with Economy Post, said the Tinubu administration must import food, waive taxes and give households cash to spend.

“The government now needs to waive the value added tax (VAT), waive the income tax, and waive all fees. If possible, waive payment of school fees in primary schools at federal and state levels. Pay for the states, if possible. Take away as much cash that should go to the Federal Government and give it to families. Then, recover the deficit from increases in prices from the subsidy,” Aja noted.