By Sunny Chuba Nwachukwu
Inflation is the decline in the purchasing power of the local currency (the naira) over time in Nigeria’s economy. But there is a peculiarity about Nigeria’s inflation. And this is because its contributory factors are partly the aftermath of unpatriotic, through bad politics, appointments that are made (not based on merit) to benefit and favour political friends, at the expense of the state. The services rendered by these appointed officers are carried out in a manner that appears or mainly seems to be pursued for personal interest (without a clear positive impact on the economy). And they are done and carried out under the protective corporate shield of institutional policies and rules of engagement among government agencies and the regulatory authorities.
A good example is the devastating impact on the naira’s continuous weakening exchange rate value (from 80kobo/$ in 1980, N158/$ in 2014, N198.79/$ on 10/2/2015, N470/$ in Q1 2021, to around N525/$ after the Central Bank of Nigeria announced stoppage of sale of dollars to BDCs). The simple reason lies in the mounting demand pressure on the very scarce dollar currency for imports; without adequate policy and institutional support for exports that ensures transnational trade in return, to augment the import spending or outflows, through such inflows of foreign exchange earnings.
In the first quarter of 2021 for instance, the National Bureau of Statistics recorded the top 10 imported products, of which refined petroleum was highest, with a very alarming figure of $687.7 billion (on mere fossil energy consumption). Imagine the obvious impact of this expenditure if it spreads across the remaining three quarters (Q2, Q3 & Q4) in 2021; compared to the 2021 national budget estimate of more than $13.8 billion? This has indicated that the petroleum subsidy policy where the controversial figure of $300 million under-recovery expenditure by the NNPC is burned off monthly makes no economic sense. Importation worsens unemployment rate in the economy. The present youths unemployment figure stands at 47 percent, according to the NBS.
This singular issue, as identified in the unproductive downstream oil sector, has remained the major source of poverty and pain that bedevils Nigeria’s ‘consumer economy’. To fight inflation, therefore, demands that those at the helm of affairs in the governmental agencies, responsible for the regulation of activities in the oil sector ought to be sensitive at all times, to proactively change operational strategy by taking critical decisions that would sustain and keep improving challenging economic situations, based on the trending market forces within its environment.
Importation, seen and known as a negative factor against GDP growth should be fought to finish in this failing Nigerian economy, by constantly improving on volumes of exports and increased productivity; especially on goods and services consumed within the economy (petrol and diesel, for instance).
Surprisingly, these government organs responsible for the affairs of the state to protect the interests of the state, are rather run with private motives without prioritizing the interests of the state (as foremost), that ought to protect the policy of ‘overriding public interest’ for citizens’ wellbeing within the economy. These unpatriotic and self-centred public servants in the midst of the good spirited ones (knowingly or unknowingly) are directly responsible for such recorded poor performances of all the unsustainable financial earnings or the falling national income; are the ones guilty of sabotaging the economy.
They selfishly operate and carry out their official assignments at the expense of the state (for personal gains), by functioning in such a manner that they care little or less about the adverse effects of their actions and decisions taken against the economy. The governance structure or its framework is not the cause of Nigeria’s economic failure. It should, therefore, not be blamed, but those put in responsible positions to man it. The obvious implications of their actions and decisions taken against the state are intentional and, of course, well calculated (without caution to the effect of running the economy down)!
This view about the root causes of the economic failure, backwardness and stagnancy experienced by Nigeria, indicates that the fight against inflation in the economy must be directed at those perpetrating economic sabotage. Otherwise, the poverty nightmare being experienced will endlessly remain a vicious cycle; without a shift in strategy for economic improvement. This is because those who put them in such positions seem to be adamant about exercising the political will to fire them for better replacement!
This economic challenge in governance has a simple formula for the right solution, from the analysis made. Recognizing this economy as an oil rich nation, that records over 80 percent of her financial accruals and forex earnings from the oil sector alone, over a reasonable period (since independence), the national income being realized should leverage optimized comparative advantage of the capital stock in the oil sector of the economy.
The resources ought to have value added to them, for the purpose of actualizing a maximized output, since it is on record that it is the imports that pin economic growth down. It significantly indicates the heavy impact imported refined products have against the nation’s economy that does not produce more than 10 percent of what it consumes. This demands urgency and aggressive strategy to alter its tide and trend through in-country production and provision. This can only happen when those responsible for manning the economic affairs are patriotically dedicated citizens; otherwise the nation’s productivity or the gross domestic product (GDP) level will remain a child’s play.
Sunny Nwachukwu,PhD, a pure and applied chemist with an MBA in management, is an Onitsha based industrialist, a fellow of ICCON, and vice president, finance, Onitsha Chamber of Commerce. He can be reached on +234 803 318 2105 (text only) or firstname.lastname@example.org