The Nation Newspaper

Tag: prices

  • Economy: Experts predict mid-year drop in prices

    Economy: Experts predict mid-year drop in prices

    • Blame insecurity, interest rates, middlemen sabotage for prevailing high prices
    • Lagos threatens to fine, shut supermarkets without products’ price tags
    • Naira appreciation: We’re posting heavy losses, BDCs cry out

    Economic experts are hopeful that the current high costs of goods and food will begin to drop by the end of the first half of this year.

    But that is on the condition that the current momentum to energise the economy does not suffer any reversal.

    A major player in the foreign exchange sector, the Association of Bureaux De Change Operators of Nigeria (ABCON), has appealed to the Central Bank of Nigeria (CBN) to lower the dollar selling rate to its members in view of the massive appreciation of the naira against the dollar and other international currencies while the Lagos State Consumer Protection Agency directed supermarkets and grocery stores in the state to display prices on their products or risk being fined or shut down.

    A combination of factors including fuel subsidy removal, insecurity in parts of the country that has forced many farmers off the land and shortage of foreign exchange are said to be largely responsible for the high cost of living.

    The naira, which exchanged for between N1,150 and  N1,180 to the dollar as of December 31, 2023, crashed  to N1,400 in January and further depreciated at the black market to N1,950 in mid-February with many speculating that it could get worse. But the naira experienced a good fortune by the middle of March following a raft of policy initiatives by the apex bank to improve the transparency and inflows of the FX market.

    However, the appreciation of the naira is yet to reflect on the prices of commodities as the market has not fully adjusted to the current realities in the FX crash.

    Investigation by our correspondent across major markets, chain stores and retail outlets in parts of Lagos and other parts of the country, revealed that the prices of major commodities are yet to reflect the gains of the dollar crash.

    The prices of perishable agricultural produce such as vegetable crops, grains, maize, wheat, bread, beverages, and fizzy drinks have shot up astronomically.

    A market survey conducted by our correspondent showed that some brands of soft drinks packaged in pet bottles, which hitherto sold for N300 per unit from January till late February are now being sold at N350, while some of the branded malt drinks sell at N450, up from N400.

    Some of the chain stores in Lagos and parts of Ogun State are not helping matters in the pricing of goods.

    Some of them were found to change prices indiscriminately. There were instances when they altered prices of goods already displayed on their shelves within 24 hours.

    Speaking to The Nation, Kabir Ibrahim, National President of the All Farmers Association of Nigeria (AFAN), said it was rather scandalous that the prices of commodities were not yet reflective of the gains recorded with the naira against the greenback.

    “Ideally, if the Naira is firming up, the prices of all goods should come down and should show the increase in the strength and purchasing power of the Naira,” he said.

    He added: “If prices are not coming down, it’s either that the whole thing is artificial or there is lack of education on the whole matter or there is fraud in it because that’s why we kept saying that some of these items should not be dollarised.”

    Ibrahim, who is the Managing Director/Chief Executive Officer of Kebram Agritrade Limited, cited the price trajectory with some of the locally-sourced goods.

    His words: “I recall talking about the price of cement the other day during a guest appearance in one of the national televisions, and I said that the price was unreasonably high because 80 per cent of the components are not bought with dollars.

    “Today, cement in Abuja is sold everywhere at N7,500. That price is reflecting on the increasing strength of the Naira. Now again, if you go to the price of reinforcement steel, it is also coming down.

    “So if the prices of rice and other food items are not coming down, it only means one thing: an act of sabotage. It is not the fault of the farmers that don’t have any of those commodities to sell now; it’s the middlemen and businessmen.”

    The AFAN boss is however optimistic that once the farmers are able to farm during this season and reap bountiful harvests, this may have a positive impact on the supply of food for the rest of the year.

    “You know the farmers have sold off all they had. In fact, the harvest season is off, we are now getting into the raining season. So, we have really got nothing to sell as such.

    “Therefore, the government should now concentrate on the middlemen, the people who buy and hoard these items and bring them out in order to cause artificial scarcity. So, that is what we should concentrate on; not farmers.”

    Echoing similar sentiments, Peter Sunday Adebola, the Managing Director Edgefield Capital Management Limited, an investment-driven company, said several factors may be at play and could possibly be fueling the soaring cost of commodities thus far.

    Read Also: Ndume condemns electricity tariff hike

    Adebola, who also tied the high cost of goods to the nefarious activities of unscrupulous businessmen and middlemen deliberately sabotaging government efforts, said they are escalating the lingering food crisis.

    “When we look at the components or the factors that are affecting the prices of commodities in the market, I want to believe that it is not only the exchange rate. Exchange is just one of the factors affecting the prices of commodities in the market,” he said.

    The technocrat who heaved a sigh of relief that the planting season is here, said it was rather heartwarming to note that the government is making good efforts to end banditry in food producing areas.

    “Hopefully, as we are getting to the middle of the year, we are supposed to see critical changes in the prices of commodities in the markets. By then, the prices would become moderate, even the imported food items would also come down since the exchange rate is going down.”

    He was however quick to admit that there should be cautious optimism with the gains of the naira, noting that those managing the economy should not relent in their current efforts.

    In the view of Prof. Abel Ogunwale, a professor of Agricultural Extension and Rural Development at the Ladoke Akintola University of Technology (LAUTECH), Ogbomosho, Oyo State, insecurity is at the heart of the matter of the food crisis in the country today.

    “Whether it is  Oyo, Ekiti, Ondo, Osun, Edo, Kogi, Delta, Benue, Kaduna, Taraba, Borno, Nasarawa, Zamfara, Sokoto, Anambra, Enugu, Imo, or any other  part of the federation,  farmers have not only become an  endangered species but have abandoned their farms, no thanks to the lingering problem of insecurity they confront on a daily basis.

    “We have major problems hindering our food security from four perspectives. One is the issue of security threats vis-à-vis the situation in the Benue, Zamfara, Jigawa, Borno, Adamawa axis and even the borderline between Nigeria and Cameroon, and the other aspect is the Nigeria and Niger Republic issue,” he said.

    The insecurity, he maintained, is as a result of the Boko Haram insurgency in parts of the north. “We have a lot of insurgency activities affecting those areas,” he said.

    For Benedict Uwajue, a public affairs analyst, a combination of factors may be responsible for soaring food prices.

    He said: “Unlike unscrupulous business elements in the society, if the woman selling vegetables she got at her backyard for N400, with the rate of transportation, if she still sells at N400, how would she take care of herself? Buy food, buy firewood or gas. Kerosene is more expensive than gas now.”

    The cost of fuel, Uwajue argued, has major effects on businesses.

    “Until energy becomes affordable and readily available, exchange rates won’t significantly affect the cost of goods in the market,” he maintained.

    Lagos orders stores to display prices of goods

    The Lagos State Consumer Protection Agency yesterday directed supermarkets and grocery stores in the state to display prices on their products or risk being fined or shut down.

    The agency, in a public notice posted on the website of the Lagos State Government, warned supermarkets and grocery stores in the state against  non-disclosure of price tags on products.

    It said its warning was meant to “ensure transparency and protect consumers from potential price exploitation as non-disclosure of price tags can lead to misunderstandings and inconvenience at the point of sale.”

    It said absence of price tags is a violation of consumer rights and the Lagos State Consumer Protection Agency Law, stressing that without clear price tags, shoppers could not compare prices or make informed choices about their groceries.

    ABCON to CBN: Reduce expensive dollar rate for BDCs

    The Association of Bureaux De Change Operators of Nigeria (ABCON) in a letter to the apex bank said N1,251/$ rate sold to BDCs has become too expensive for operators following the massive appreciation of the naira against the dollar and other world currencies.

    National President of ABCON, Dr. Aminu Gwadabe who signed the letter addressed to the CBN Director, Trade & Exchange Department claimed that naira’s speedy recovery, which was faster than expected, had made CBN’s selling rate to BDCs very expensive and difficult to offload to retail end buyers that are trooping to the undocumented forex operators for cheaper rates and avoiding the BDCs services

    It expressed concerns that many BDCs which funded their accounts for dollar allocations were yet to receive their allocation of dollars to meet up the legitimate critical demand of their clients due to scrutinization of the BDCs documents for collections at the various designated centres  which  invariably made the BDCs vulnerable to exchange rate risk and significant loses.

    The group insisted that with naira appreciating across markets, many BDCs which bought dollar at N1,251/$ would  lose significant income and capital should they sell at the current open  market rate of N1,235/$ and therefore the  need for the call for a further review downward of the applicable exchange rate for the period and subsequently to continue to enhance naira sovereignty.

    “We discovered a worrisome development where many of our members who paid for dollar allocations at N1,251/$ with a margin of 1.5% are yet to receive their disbursement. This is happening in the face of prevailing open market rate of N1,235/$ which is lower than the authorised applicable exchange rate by the CBN to the BDCs,” ABCON  said.

    The request is coming in the midst of the epoch history making achieved by the apex bank for the first time in the last 15 years for the unofficial market rates at N1,235/$ to be lower than the official BDCs applicable buying exchange rate of  N1,251/$ (plus 1.5 per cent margin) set for the BDCs by the CBN in its latest tranche of intervention.

    Despite this development, ABCON lauded the CBN leadership for the recall of BDCs into the official FX window and steps taken by the apex bank to strengthen the naira against the dollar and other global currencies.

    ABCON said the positive fallout of the CBN’s efforts to restore naira’s glory came faster than expected, reiterating its commitment to working with the apex bank to realise the objectives of government towards exchange rate stability and economic growth.

    ABCON said its  forecasts in the ongoing market development indicated a willingness of the market to correct itself with a realistic price discovery as naira is forecast to continue to appreciate further across market with the increasing sources of foreign exchange inflows aided by the CBN policies

    “It is in view of the above market developments that we write to appeal to your good selves for a readjustments and review downwards  of our funding rate of the last tranche (2nd bidding) from N1,251/$  further down to reflect current market rate discovery. This became imperative as it is only the consideration of the readjustment downward that will enable our members to upload their holding positions,” it said.

    ABCON also requested that process of payments at the various disbursements centers be reviewed in the immediate time to a medium time automation to achieve enhanced timely payments while also observing the spot nature of our transactions.

    The group further requested that based on the offer and acceptance rule, the approval of refunds to those that are yet to collect disbursement having funded their accounts as it is the market that determines the rate presently be considered going forward.

    ABCON also requested that the apex bank introduce cut-off time for payments and collection of bids, adding that the current open ended system for payments and collection of bids does not make for effective administration and control of the process.

    “Consequently, many of our members are jittery to bid/collect their bid for fear of losing money as the current market reality has the potential to force us to sell below cost price and antithetical to recent market price discovery,” the group said.

  • When will prices of commodities fall?

    When will prices of commodities fall?

    Nigerians are groaning amidst rising food inflation with most essential commodities priced out of the reach of the common man. In this report, Ibrahim Apekhade Yusuf examines the issues

    The received wisdom out there is that in Nigeria, whenever the prices of commodities rise, they hardly ever fall. This scenario is playing out even now as prices of commodities continue to hit the rooftop as Nigerians groan. A biting credit crunch has rendered the economy almost prostrate.

    Crux of the matter

    Most analysts agree that  the spike in the foreign exchange rate is largely responsible for the chain of reactions including the free fall of the naira which further exacerbated the cost of goods and services.

    The naira, which exchanged for between N1,150 and  N1,180 to the dollar as of December 31, 2023, crashed  to N1,400 in January and further depreciated at the black market to N1,950 in mid-February with many speculating that things could worsen. It was a total run on the market as economic pundits observed at the time.

    How naira staged a comeback

    Interestingly, the volatility of the naira was halted by the middle of March following a raft of policy initiatives by the apex bank to improve the transparency and inflows of the FX market.

    Giving fresh insights on the good fortune of the naira against the dollar, President of Association of Bureaux de Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, said aside monetary policy tightening that led to interest rate hike and more investment in government instruments and the clearance of $7 billion forex backlog, the recall of the BDCs significantly boosted dollar liquidity at the retail end of the forex market.

    According to the ABCON boss, the stability in the exchange rate has already started to have a positive impact on the prices of certain goods and services, mostly dollarised.

    For instance, he said  international school fees have  dropped by 15 per cent just as the cost of medical tourism has reduced by 20 per cent while  prices of air fares for local and international trips dipped by 25 per cent.

    Up, up go food prices

    However, an investigation by our correspondent across major markets, chain stores and retail outlets in parts of Lagos and other parts of the country, revealed that the prices of major commodities are yet to reflect the gains of the dollar crash.

    The prices of locally sourced materials remain high if not over the rooftops.

    The Consumer Price Index (CPI) in Nigeria, according to the National Bureau of Statistics (NBS) increased to 681.40 points in February from 660.80 points in January of 2024. Consumer Price Index CPI in Nigeria averaged 151.95 points from 1995 until 2024, reaching an all-time high of 681.40 points in February of 2024 and a record low of 14.36 points in January of 1995. The CPI measures the changes in the cost of a basket of goods and services consumed by the average urban household.

    Independent checks on NBS website further showed that food inflation rate in February 2024 stood at 37.92% on a year-on-year basis, which was 13.57% points higher compared to the rate recorded in February 2023 (24.35%). The rise in food inflation on a year-on-year basis was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, fish, oil and fat, meat, fruit, coffee, tea, and cocoa.

    On a month-on-month basis, the food inflation rate in February 2024 was 3.79% or an increase of  0.58% over  the rate recorded in January 2024 (3.21%). The rise in the food inflation on a Month-on-Month basis was caused by increase in the average prices of bread and cereals, potatoes, yam and other tubers, fish, coffee, tea and cocoa.

    The average annual rate of food inflation for the twelve months ending February 2024 over the previous twelve-month average was 30.07%, which was a 7.95% points increase from the average annual rate of change recorded in February 2023(22.12%).

    Besides, the “All items less farm produces and energy” or Core inflation, which excludes the prices of volatile agricultural produces and energy stood at 25.13% in February 2024 on a year-on-year basis; up by 6.76% when compared to the 18.37% recorded in February 2023. The highest increases were recorded in prices of passenger transport by road, actual and imputed rentals for housing, medical services, pharmaceutical products, etc.

    On a month-on-month basis, the Core Inflation rate was 2.17% in February 2024. It stood at 2.24% in January 2024, a decline of 0.07%. 16.75% recorded in February 2023.

    The prices of perishable agricultural produce such as vegetable crops, grains, maize, wheat, bread, beverages, and fizzy drinks have shot up astronomically.

    Hajia Bimpe Adebayo, a caterer, who also runs a makeshift cafeteria at Iyana-Ipaja in Lagos, said that as at last December, a bag of Big Bull rice sold for between N80k-to N85k and in some areas N90k. “Despite the gains in the value of the naira, things have not changed significantly,” she said.

    A market survey conducted by our correspondent showed that some brands of soft drinks packaged in pet bottles which hitherto sold for N300 per unit, from January till late February are now being sold at N350, while some of the branded malt drinks sell at N450, up from N400.

    Some of the chain stores in Lagos and parts of Ogun State are not helping matters in the pricing of goods.

    Some of them were found to change prices indiscriminately. There were instances when they altered prices of goods already displayed on their shelves under 24 hours.

    It was observed at a retail outlet at Egbeda, Lagos that some of the beverages, sweeteners, detergents, confectioneries that had particular price tags in the morning had new prices in the afternoon of the same day.

    Asked about the price variation, a salesman at the retail outlet said it was because they had taken delivery of new stocks.

    The sales rep who asked not to be named because he was not authorised to speak to the press, informed that the supplies from their merchants bore new prices reflective of the current realities.

    Naira gains not reflected on major commodities still

    Speaking in an interview with The Nation, Kabir Ibrahim, National President of the All Farmers Association of Nigeria (AFAN), said he was appalled that the prices of commodities were not yet reflective of the gains recorded with the naira against the greenback.

    “Ideally, if the Naira is firming up, the prices of all goods should come down and should show the increase in the strength and purchasing power of the Naira,” he said.

    He added: “If prices are not coming down, it’s either that the whole thing is artificial or there is lack of education on the whole matter or there is fraud in it because that’s why we kept saying that some of these items should not be dollarised.”

    Ibrahim, who is the Managing Director/Chief Executive Officer of Kebram Agritrade Limited, cited the price trajectory with some of the locally-sourced goods.

    His words: “I recall talking about the price of cement the other day during a guest appearance in one of the national televisions, and I said that the price was unreasonably high because 80 percent of the components are not bought with dollars.

    “Of course, we can see now that the price of cement has come down. At the time I had that interview, cement was like N8,500, and at least I bought at that price while it was selling at over N9,000 in Abuja.

    “Today, cement in Abuja is sold everywhere at N7500. That price is reflecting on the increasing strength of the Naira. Now again, if you go to the price of reinforcement steel, it is also coming down. So if the prices of rice and other food items are not coming down, it only means one thing: an act of sabotage. It is not the fault of the farmers that don’t have any of those commodities to sell now; it’s the middlemen and businessmen.

    “You know the farmers have sold off all they had. In fact, the harvest season is off, we are now getting into the raining season. So, we have really got nothing to sell as such.

    “Therefore, the government should now concentrate on the middlemen, the people who buy and hoard these items and bring them out in order to cause artificial scarcity. So, that’ what we should concentrate on, not farmers.

    “The farmers also buy many of these things from the market like everybody else because there is no one farmer that produces everything that he or she needs. So, if the price of rice anywhere is X, regardless of who you’re, whether you’re a farmer, engineer or whoever, you’re going to pay the same price as others. As a maize farmer for instance, I have to buy rice, as such I cannot necessarily cause prices to be high because it will affect me invariably. That’s logical.”

    Echoing similar sentiments, Peter Sunday Adebola, the Managing Director Edgefield Capital Management Limited, an investment-driven company said several factors may be at play and could possibly be fueling the soaring cost of commodities thus far.

     “When we look at the components or the factors that are affecting the prices of commodities in the market, I want to believe that it’s not only the exchange rate. Exchange is just one of the factors affecting the prices of commodities in the market,” he said.

    “Another major factor is the activities of bandits that are affecting farmers. It’s one of the contributory factors. Don’t forget that most of the food stuff that are in the basket of calculating consumer pricing index, in determining our inflation rates, actually some of them are produced locally; not all of them are imported.

    “Food crops, most especially vegetables such as tomatoes, pepper, and all the rest are coming from the north. We know that we have security challenges in the north, so because of that many farmers cannot actually go to their farms and as a result of that we have insufficient production that can match the demand on the market and that is causing the price of commodities to still be at the rooftop.”

    The technocrat who heaved a sigh of relief that the planting season is here, said it was rather heartwarming to note that the government is making good efforts to end banditry in food producing areas.

    “If they succeed, and we pray that they succeed, what will happen is that during the next harvest season, we are going to have the prices of goods coming down. I see it coming down because if the farmers are going to the farms at the beginning of the planting season and are able to plant maize, yam, cassava, tomatoes and even those that are doing irrigation this is the period are planting.If God gives us plenty of rain; we are going to have a good harvest that is going to bring down the prices of goods, especially food crops. Yes, the exchange rate has come down but it will only affect those food items that we are being imported.”

    But he said the fuel subsidy removal still impacts transport cost.

    “So, all these costs would normally be put together to arrive at a final price of commodities by traders.”

    The economist also tied the high cost of goods to the nefarious activities of unscrupulous businessmen and middlemen, who are deliberately sabotaging government efforts in terms of price stability, as they hoard these items thereby escalating the food crisis that need to be checked.

    For Benedict Uwajue, a public affairs analyst, a combination of factors may be responsible for the soaring food prices.

    He said: “Unlike unscrupulous business elements in the society, if the woman selling vegetables she got at her backyard for N400, with the rate of transportation, if she still sells at N400, how would she take care of herself? Buy food, buy firewood or gas. Kerosene is more expensive than gas now.”

    The cost of fuel, Uwajue argued, has major effects on businesses.

    “Until energy becomes affordable and readily available, exchange rates won’t significantly affect the cost of goods in the market,” he maintained.

    Great expectations from Dangote Refinery

    One area Adebola sees Nigerians getting some breather is when the Dangote Refinery fully becomes operational.

    “We heard he is already selling diesel directly to the marketers, that’s how things will be changing gradually. It’s not something that is going to adjust like the dollar. No. there will be a timeline before the prices of commodities will come down to an appreciable and reasonable level expected or moderate downward due to the drastic reduction of  transport cost, insecurity taken care of so that farmers can go to the farms without fear of being mauled down by the bandits, and then increase food production.

    “Hopefully, as we are getting to the middle of the year we are supposed to see critical changes in the prices of commodities in the markets. By then, the prices would become moderate, even the imported food items would also come down since the exchange rate is going down.”

    He was however quick to admit that there should be cautious optimism with the gains of the naira, noting that those managing the economy should not relent in their current efforts.

    Noting, there is a sense in which official complacency on the part of those who hold the levers of the economy not to abandon the ship lest it derails.

    “I just pray that the CBN will be able to sustain that so that the thing will not spiral out of hand again. This is because my fear is that we are celebrating the exchange coming down now. But we have to make sure that we do something that will make it sustainable.

    “What can make it sustainable is to increase our export capacity. If the export capacity is not increased, there is no way things will not reverse. But as the CBN is trying to manage the exchange rate the way they are doing it now, and then we now increase our export capacity, we are in the right direction to have a better economy.”

    While making a case for investors, Adebola noted that so long as the CBN is doing its own good work on exchange rate management, people are also conscious of the fact that as investors, how can they get their money out without let or hindrance?

    Such assurances, he noted, would galvanise potential investors to invest in any economy.

    Huge import bill worrisome

    Nigeria currently spends billions of dollars annually on food imports mainly wheat, rice, fish, yams, livestock, dairy products, and other food crops the country has the capacity to produce even on a sustainable basis.

    Many Nigerians are not comfortable with the situation.

    The Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf described the food import bill as extremely worrisome, especially for a country so richly blessed with arable land and other natural resources.

    He said: “The basic problem is governance. Over the years, especially since the seventies, we have not instituted effective policies and programmes to promote investment in agriculture.

    “There was practically no subsidy for agriculture for several years, whereas even in the advanced countries, billions of dollars are committed to subsidising agriculture.

    Read Also: Nigeria has what it takes to end insecurity – Kwankwaso

    “We need active government intervention with regards to agricultural inputs, technology adaptation, financing, processing, marketing, logistics, access to land and storage.

    “There is a need to improve the efficiency in the entire agricultural value chain – production, processing, transportation, preservation, packaging, etc.

    “It is impossible for the private sector to provide these support systems. These support systems existed in Nigeria before the incursion of the military into political governance in 1966.

    “An improvement in the security situation would surely boost performance of the sector. This would impact job creation and food security in the country.”

    Farms no longer safe

    For many people, insecurity is at the heart of the matter of the food crisis in the country today. Whether it is  Oyo, Ekiti, Ondo, Osun, Edo, Kogi, Delta, Benue, Kaduna, Taraba, Borno, Nasarawa, Zamfara, Sokoto, Anambra, Enugu, Imo, or any other  part of the federation,  farmers have not only become an  endangered species but have abandoned their farms, no thanks to the lingering problem of insecurity they confront on a daily basis.

    According to Prof. Abel Ogunwale, a professor of Agricultural Extension and Rural Development at the Ladoke Akintola University of Technology (LAUTECH), Ogbomosho, Oyo State, it is rather unthinkable that Nigeria, with over 70 million hectares of arable land cannot feed itself adequately and has to rely on food imports from otherwise landlocked countries.

    While attempting a prognosis of the food crisis, Prof Ogunwale said the problem is multifaceted and as such is not a one size fits all approach.

    “We have major problems hindering our food security from four perspectives. One is the issue of security threats vis-à-vis the situation in the Benue, Zamfara, Jigawa, Borno, Adamawa axis and even the borderline between Nigeria and Cameroon and the other aspect is the Nigeria and Niger Republic issue,” he said.

    The insecurity, he maintained, is as a result of the Boko Haram insurgency in parts of the north. “We have a lot of insurgency activities affecting those areas.”

    “The second challenge, of course, is the issue of climate change. Climate change has resulted in flooding, and some devastation on the farming system,” he observed, adding that the issue of inconsistencies of government policies have seriously and negatively impacted farming activities generally.

    “If the government can look into each of them, and take proactive measures against next year, we may avert serious food insecurity in Nigeria.”

    Way forward

    On the way out of the price hike, Adebola said pushing for price control would only lead to market failure.

    “Once market failure happens you are going to weaken the resolve of the producers completely. What the government needs to do is not price control but must put some surveillance in the market to ensure that all these hoardings are put in check. Normally, you allow market forces to determine the prices of goods and services and that would encourage producers. I give you an example: our petroleum industry before, it was scaring investors away because for sometime the government pegged the price, and that didn’t encourage old and prospective investors to venture into the sector. That is one of the effects of price control.”

    Invariably, he said the government needs to intensify efforts to check insecurity so that people will feel secure to go to their farms in order to produce.

     “Government should create an enabling environment so that we can increase our productive capacity locally. When we do this, then most of the products we are even importing we may not need to import them again when we produce our own locally. Government should also be able to engage manufacturers of those imported goods to come and have their presence in the country. There is a market in Nigeria. I remember when the president first assumed office, he was going around the globe across different countries asking them to come and invest in Nigeria. To create an enabling environment, security is the number one thing that the government should put in place.

    “Besides, it should provide infrastructure such as good roads, electricity, good healthcare system, and all the rest. These are parts of the enabling environment that would make people come and invest in the country.”

  • Soaring prices stifling consumer spending—Investigation

    Soaring prices stifling consumer spending—Investigation

    The rising inflation fueled by a combination of factors has led to high cost of goods and services with most Nigerians groaning under the weight of soaring prices across every sector of the economy, reports Ibrahim Apekhade Yusuf

    When Milton Friedman, the world renowned economist once remarked at a time that inflation is taxation without legislation, what he actually meant as a matter of fact is that circumstances rather than constituted authorities may be responsible for hardships being faced by the majority of the people.

    Friedman’s wisecrack, practical as it sounds, has fueled the growing level of disaffection by citizens who are hard pressed to accept the fact that the economy is in pretty bad shape and the government, unbelievably, does not have a hand in it!

    It’s the economy stupid!

    Wale Alabi (not real name) is a teacher in one of the private secondary schools in Lagos. Though ‘happily unmarried’ as he playfully describes himself, Alabi manages to scrape by every other month on his meagre salary of N60K. This was last July. Fast-forward to three months after, his take home can barely last two weeks now hence he has to rely on IOUs to survive for the rest of the month, this is even as he has to skip his breakfast of tea and bread these days.

    Just like Alabi, the duo of Pius Okey and Femi Amoo, who are both factory hands in one of the fast moving consumer goods company in Isolo axis of Lagos, married with two kids, wife and other dependents, breakfast has suddenly become a luxury can’t afford in the last one and half months so as to save money to cover their transportation cost to and fro their workplace and on top of that their family’s regular essential needs like three square meals have also reduced to two square meals daily except on very rare occasions.

    The above short anecdotes easily describe the parlous state of affairs of the country in doldrums as a result of biting inflation which has not only reduced the economic power of most Nigerians but have left many in dire financial straits.

    What possibly led to this situation, analysts have argued, is a combination of factors from the complex to the superficial, with the major contending force attributed to a raft of policies by President Bola Tinubu, including currency refloating, fuel subsidy removal.

    ABC of CPI

    Inflation measured by consumer price index (CPI) is defined as the change in the prices of a basket of goods and services that are typically purchased by specific groups of households. Inflation is measured in terms of the annual growth rate and in the index, 2015 base year with a breakdown for food, energy and total excluding food and energy. Inflation measures the erosion of living standards. A consumer price index is estimated as a series of summary measures of the period-to-period proportional change in the prices of a fixed set of consumer goods and services of constant quantity and characteristics, acquired, used or paid for by the reference population. Each summary measure is constructed as a weighted average of a large number of elementary aggregate indices. Each of the elementary aggregate indices is estimated using a sample of prices for a defined set of goods and services obtained in, or by residents of, a specific region from a given set of outlets or other sources of consumption goods and services.

    Read Also:PDP chieftain decries soaring prices, demands people-friendly policies

    Cause of worry

    Vice President, Treasury Sales & Dealing, at Zedcrest Group, Ajibola Tobi-Osho, who made a guest appearance on Arise TV programme monitored by our correspondent last Wednesday said the rising inflation is at the heart of the present economic crisis.

    Nigeria’s inflation rate rose to 26.72% as food prices soared considerably with many households unable to meet most essential needs as a result.

    Noting that the inflation rate rose for the ninth straight month on a weaker naira, she said, “If you’re battling inflation, certainly, monetary policy will be an area to look at in order to put more money in the hands of the people.”

    While describing as heartening the FX backlog that was cleared, she was however quick to add that it should be supported by proper fiscal policy in terms of regulations, increasing in revenue and boost in infrastructure for the economy to feel the sustained positive impact.

    Damning stats by NBS

    A cursory review of the September 2023 Consumer Price Index (CPI) and Inflation Report released by the National Bureau of Statistics recently showed startling figures reflecting the current economic crunch.

    The CPI measures the changes in the prices of goods and services. Nigeria’s annual inflation rose in September to its highest level in about two decades at 26.72%, amid a worsening cost-of-living crisis exacerbated by a combination of factors. The selected Food Price Watch for September 2023 shows that the average price of 1kg of beef boneless stood at N2,816.91. This indicates a 28.08% rise in price. In September 2023, Food inflation on a year-on-year basis was highest in Kogi (39.37%), Rivers (35.95%), and Lagos (35.66%), while Borno (21.05%),” the report stated.

    When compared to the 25.80% figures posted in August 2023 it had an increase of 0.92% points.

    “In September 2023, the headline inflation rate increased to 26.72% relative to the August 2023 headline inflation rate which was 25.80%,” the report partly read.

    “Looking at the movement, the September 2023 headline inflation rate showed an increase of 0.92% points when compared to the August 2023 headline inflation rate.

    “On a year-on-year basis, the headline inflation rate was 5.94% points higher compared to the rate recorded in September 2022, which was 20.77%.”

    Furthermore, the report said the food inflation rate in September 2023 was 30.64% on a year-on-year basis, which was 7.30% points higher compared to the rate recorded in September 2022 (23.34%).

    “The rise in food inflation on a year-on-year basis was caused by increases in prices of oil and fat, bread and cereals, potatoes, yam and other tubers, fish, fruit, meat, vegetables and milk, cheese, and eggs.

    On a month-on-month basis, the Food inflation rate in September 2023 was 2.45%, this was 1.41% lower compared to the rate recorded in August 2023 (3.87%). The decline in food inflation on a month-on-month basis was caused by a fall in the rate of increase in the average prices of potatoes, yam and other tubers, bread and cereals, fruits, and fish,” the report added.

    Angst over troubling inflation

    Worried by the way the inflation rate for the country keeps increasing month-on-month, the Lagos Chamber of Commerce and Industry urged economic policymakers to give priority to inflation as well as businesses in the short term to implement a variety of cost reduction strategies, including downsizing and local sourcing of input factors as they bid to lower operating expenses.

    LCCI recommends that the government focus its efforts on boosting supply rather than a decline in demand. We implore the government to address the challenges inhibiting domestic production and ease the bottlenecks to the distribution of goods within the country. Further, we urge the government to continue to address the problems of insecurity and other factors affecting agriculture productivity in the country to improve food supply. Finally, LCCI urges the Central Bank of Nigeria (CBN) to improve the flow of credit to the real economy.

    Investigation by our correspondent revealed every subsector of the economy is feeling the pang of the current economic crisis exacerbated by the rising cost, especially inflation.

    From telecoms, beverages, transportation, rent, school fees, medical bills, utility bills, sewage disposal, building materials, service industry including pay TV, cable network, every player in these sectors have marked up prices in reaction to the current realities.

    When The Nation visited some of the super chain stores in Lagos metropolis and environs, the managers confided in our correspondent that they have since reflected new prices as fallout of the new cost components issued by vendors.

    Tosin Adesinle, a lecturer in one of the state-owned polytechnic who spoke with our correspondent on his coping mechanism said for the most part he has had to cut down on some luxuries in the last couple of months in order to maintain a certain level of stability.

    Apart from going out sparingly, Adesinle said he has also cut down on subscription on his cable TV to a lower bouquet in response to the rising cost-push inflation.

    Independent check by The Nation revealed that this year alone, the two major direct to home (DTH) pay TV platforms in the country namely MultiChoice, the parent company of DStv/GOtv and Startimes have had to adjust their subscription rates twice, citing a plethora of reasons among which includes the rise in operating cost as well as high inflationary rate.


    While MultiChoice reviewed prices in May and November this year across all packages, Startimes announced a new price regime first in April and also in September this year, respectively.

    In view of the President of the Association of Telecommunication Companies of Nigeria (ATCON), Mr Tony Emekpe, he said the rising cost of data was a result of multiple regulations and taxation.

    Emekpe, who said this when he led the executive members of the association on a courtesy visit to the House of Representatives Committee on Telecommunication at the weekend, said these taxes impact negatively on their business and money earmarked for network expansion.

    “As technology advances, you need to continuously expand and upgrade your network, hence the complex needs of the telecom industry are never ceasing. We keep on investing and investing.

    “When you invest a certain amount of funds in the sector, even within that community, there is an increase in business and more IGR is generated.

    “But if you stifle our ability to invest our end profits by taxation, you are actually impeding our ability to even increase IGR in this situation,” he said.

    Emekpe urged the committee to drive a strategic agreement with the Central Bank of Nigeria CBN, on behalf of the sector, to bridge the infrastructure funding gap by providing accessible low-cost intervention funds for rapid development of mobile infrastructure nationwide.

    He said there is a need to have a marginal increase in tariffs, as telecom operators in the country are operating on old tariffs.

    The Chairman of the House Committee on Telecommunication, Hon Peter Akpatason, said they would set-up a sub-committee to work together with the executives of the association to identify the challenges facing the sector, especially the local content issue. Akpatason added that a colloquium would come up before the end of this year to bring on experts and brainstorm on issues affecting the telecom sector.

    Nigeria not alone

    According to the International Monetary Fund, persistent inflation, soaring interest rates, and escalating debt are complicating the job of reviving global growth as most countries are in the throes of economic doldrums. In Egypt inflation soared so high amidst rising cost of goods and services with fears rife in some quarters that the Arab Spring of the past could rise as a fresh affliction in the country.

    Also, a report from the OEDC indicates that CPI compared with selected G7 and EU annual inflation rates, September 2013 to September 2023, showed that UK inflation remains above that of France and Germany.

    Food, energy and core price inflation in the UK, and insights as to why UK inflation might be higher than in other advanced economies.

    The largest upward contributions to the annual CPIH inflation rate in September 2023 came from housing and household services, and food and non-alcoholic beverages. The contribution from the former group was 1.77 percentage points, the same as in August, and down from a recent high of 3.70 percentage points in January this year. The contribution from the latter group eased for a sixth successive month, from a high of 1.76 percentage points in March to 1.15 percentage points in September.

    Way forward

    The Centre for the Promotion of Private Enterprise says the federal government must fix power, foreign exchange crisis and transportation to tame nine months rising inflation in Nigeria.

    Muda Yusuf, the Director of CPPE, disclosed this in a statement on Monday while reacting to the September inflation figure, which rose to 26.72 per cent.

    Yusuf said the rising inflation rate in Nigeria calls for serious concern, especially as poverty continues to accelerate.

    “Major cause for concern is the acceleration effect on poverty. Purchasing power had continued to slump over the past few months,” he noted.

    The CEO of CPPE blamed factors such as the depreciating exchange rate, surging transportation costs, logistics challenges, forex market illiquidity, astronomical hike in diesel cost, and climate change for the rising Nigeria’s inflation.

    According to him, inflation will not be tamed without fixing power, forex and transportation sectors.

    The economic think-tank group called for an emergency in the power and energy sectors to halt rising inflation.

    “We need a state of emergency declaration in the energy and power sectors. It will be difficult to tame inflation if we do not fix power, logistics and forex.

    “Regrettably, there are no quick fixes in these areas. However, it is essential to prioritise these issues and drive accelerated progress with the right strategies,” he stated.

  • Prices, others threaten cashew

    Falling international prices and reduced demand for Nigerian cashew are threatening government’s projected foreign exchange (forex) earnings from the produce, it was learnt yesterday.

    Speaking  in Lagos, the National President,  Federation of  Agricultural Commodity  Association of Nigeria, Dr  Victor Iyama  said the country was aiming to exceed  its $402 million  from cashew  exports this year.

    According to him, international prices for cashew have dipped since March following massive production from Tanzania, India Vietnam and other major producers.

    Raw cashew prices in the global market fall between $ 1500 and   $2,100 per ton. The rates had come down to between $1,800 and $2,000 per ton by May, and declined further to between $1,600 and $1,800 by end-June.

    As a result, international buyers have objected to high prices. In the declining market, he said exporters have also been buying limited volumes.

    He said cashew nut exporters are seeing a slump decline in sales as exporters try to get out of contracts following a drop in world prices.

     

     

     

     

     

  • Prices of tomatoes, pepper drop by 45% in Lagos

    Prices of tomatoes, pepper drop by 45% in Lagos

    Ahead of Christmas,  prices of tomatoes, pepper and onions have reduced by about 45 per cent in Lagos, the News Agency of Nigeria (NAN) reports.

    NAN price checks at Mile 12, Whitesand, Iddo and Oko Oba markets in Lagos yesterday revealed that the drop in prices was due to bumper harvest of agricultural produce.

    NAN reports that a basket of tomatoes, which previously sold for N15, 000 now goes for N8, 000; red pepper (tatashe) now costs N8000 compared to its previous price of N14, 000 a basket.

    A basket of chilli pepper (rodo) fell from N18, 000 to N10, 000 and a jute bag of onions, which previously cost N30, 000, now goes for N20, 000.

    A 25-litre of vegetable oil, which previously sold for N11, 500, now costs N10, 700, palm oil decreased from N11, 000 to N10, 300,  a measure of garri is now N400.

    However, the price of a 50- kilogramme bag of rice ranges between N13, 500 and N17, 000, depending on the brand; a measure of beans costs N1,500.

    Mr Femi Odusanya, spokesman for Mile 12 Market Traders Association, attributed the price drop to the ongoing harvest season for most of the produce.

    “Over 20 per cent of the annual four million metric tonnes of tomatoes produced in the country is supplied to Mile 12 Market annually and redistributed to over 400 markets in Lagos and Ogun States and six  Economic Community of West African States (ECOWAS) member-countries.”

    “That is why we have been advocating for increased investment in tomato processing plant to mop up the excess and reduce waste, create jobs and increase contribution to Gross Domestic Product (GDP),” Odusanya said.

    He urged the three tiers of government to create an enabling environment toward attracting more investors to tomato processing in the country.

  • Manufacturers disagree with LCCI over imported vehicles’ prices

    Manufacturers disagree with LCCI over imported vehicles’ prices

    The Nigerian Automotive Industry Development Plan (NAIDP) also known as automotive policy) has been described as the best thing to happen to the vehicle manufacturing sector since the early auto assembly plants were set up decades ago.

    Nigerian Automotive Manufacturers Association (NAMA) said this while reacting to the claim by Lagos Chamber of Commerce and Industry (LCCI) Director General Mr. Muda Yusuf, that the increase in prices of imported vehicles should be blamed on the auto policy.

    A statement by NAMA Executive Director Remi Olaofe, explained that NAIDP was introduced to reawaken the moribund assembly plants that were once operating at high capacity.

    This, he said, is to encourage major vehicle importers to attract their (foreign) Original Equipment Manufacturers (OEMs) to produce same in Nigeria.

    Olaofe argued that a simple market survey would confirm that as a direct consequence of the NAIDP, the prices of locally assembled vehicles are far lower than claimed by the LCCI DG.

    He said: “We were taken aback that a macro issue of the magnitude of prices of imported vehicles could be so narrowed to a single parameter like the National Auto Policy by a respected LCCI.

    “In coming up with the National Auto Policy, a number of issues were put into consideration with the pivot being to redirect the Nigerian economy from an over import dependent economy to a producing economy.

    “One of the greatest challenges facing the Nigerian economy has always been narrowed down to its overdependence on foreign goods with the attendant pressure on its foreign reserve and the exchange rate”.

    Olaofe said the initiatives are backed with incentives and disincentives to the local assemblers and Importers, respectively, which can come in form of variation of duties, tax holidays, and access to funds at cheaper interest rates, in favour of the former.

    Such incentives, he said, are not new, citing precedent with the textiles, furniture and food, sub-sectors, among many others, where policy makers went to the extent of placing some items of import on the “Not-Valid-for Foreign-Exchange-List”, in order to protect the local manufacturers.

  • Consumers face expensive yam as sellers raise prices

    Consumers face expensive yam as sellers raise prices

    Consumers  of yam across the country are battling expensive price of the commodity after sellers have increased the prices in response to a shortage, hurting family budgets already squeezed by high food prices.

    According to analysts, the rising prices of food commodities have a direct bearing on inflation, exerting  additional pressure on the cost of living.

    The National Bureau of Statistics (NBS)  said  the constant increase in food prices was largely responsible for the upsurge in inflation figures.

    In some areas in Lagos, such as Ikeja, a big tuber of yam sells for between N1,500 and N2,000. While on the Mainland, it goes for N700 to N1000.

    In August last year, a  sizeable tuber of yam sold for  between N300 and N350. It shot up to  N550 to N600.

    Speaking with The Nation, a food stuff seller in Shomolu area of Lagos, Abia Onyeka explained that the increase in yam price was expected with only old yam in the market.

    He explained that  since the new yam  was not yet out, the old yam  in the market is now expensive.

    New yam  was supposed to be out since March, but has starting coming out.. Old yam is finishing so the few left will be very expensive.

    With new yams coming into the market, Onyeka maintained that the price would soon drop from N900 to N600.

    He believes the market forces of demand and supply are playing out at the moment, noting that high demand for yam has sparked an increase in price.

    The situation in Enugu State is however, different, as high cost of yam in the state is not due to scarcity, but cost of transporting the commodity from the north to the state.

  • Oil prices dip on rising output

    Oil prices dip on rising output

    Oil prices fell to a three-week low yesterday on news that Libyan output was recovering from an oilfield technical issue. This fuelled concerns that the Organisation of Petroleum Exporting Countries (OPEC)-led output cuts to reduce global inventories were being undermined by producers outside the deal.

    Benchmark Brent oil was down $1.63, or 3.1 per cent, at $50.21 a barrel after earlier touching $50.12 a barrel, the weakest since May 10. U.S. light crude traded at $48.31, down $1.35, or 2.7 per cent.

    Both contracts were on track for their third straight monthly loss.

    “Unless some bullish news stops this, prices will fall further in particular now with Brent trading below the post-OPEC low and approaching $50 a barrel,” said Carsten Fritsch, commodity analyst at Commerzbank.

    OPEC and other producers, including Russia, agreed last week to extend a deal to cut production by about 1.8 million barrels per day (bpd) until the end of March 2018.

    “Traders covered short positions ahead of OPEC and some of these have now been re-established,” said Ole Hansen, head of commodities strategy at Saxo Bank.

    OPEC members Libya and Nigeria are exempt from the cuts, while U.S. shale oil producers are not part of the agreement and have been ramping up production.

    Libya’s oil production has risen to 827,000 bpd, climbing above a three-year peak of 800,000 bpd reached earlier in May, the National Oil Corporation said, after a technical issue that hitSharara oilfield was resolved.

  • Inflation declines but prices remain high

    Inflation declines but prices remain high

    Inflation has been declining in the last few months, indicating a fall in food prices. But some traders lament that the situation is at variance with reality, FECHUKWU ANYANWU reports.

    Things are technically looking up for the economy.

    Data released by the National Bureau of Statistics (NBS)showed that inflation rate has been declining in the last few months, indicating a fall in price. But in realities, it is not so and traders are complaining.

    According to the NBS, the Consumer Price Index (CPI), which measures inflation, dropped from 17.26 per cent in March to 17.24 per cent in last month. It said the 0.02 per cent drop in inflation rate makes it the third consecutive month of decline in the CPI.

    “The CPI, which measures inflation, increased by 17.24 per cent (year-on-year) though at a slower pace in April 2017, 0.02 per cent points lower from the rate recorded in March (17.26) per cent. “This is the third consecutive month of a decline in the headline CPI rate, exhibiting effects of some easing in the already high food and non-food prices, as favourable base effects over 2016 prices,” the NBS report said.

    However, the report though heart-warming, appears to be at variance with reality. Some traders and consumers, who spoke with The Nation, lamented that the drop in inflation has yet to translate into any significant decrease in prices of most food items.

    For instance, at Ikotun Market, Lagos, traders lamented the low patronage caused by high cost of food items. They cited huge transport costs, high shop rents and various market development levies as responsible for the hike in food prices, urging government to come to their aid.

    One of the traders, who identified himself as John, sells rice, beans and other grains. He  said he travels from Lagos to Abakiliki in Ebonyi State to buy goods and that each time he did, he discovered that prices of foodstuffs remained high. He said he had no choice than to transfer the burden to his customers.

    “I have to add a token on each (derica) or ‘paint bucket’ that I sell to customers to cover my expenses,”  John said, adding that traders in Ikotun Market were merely transferring the extra cost of bringing the food items in to buyers.

    John, however, explained that the price of rice and other grains are not constant because they are seasonal. “There are various types of rice and different time of harvest,” John said, noting that a bag of rice, which sold at more than N20, 000 early this year, now sells at about N17, 800.

    He lamented the low customer patronage that had hit him and other traders in the market. According to him, any slight increase in the price of items is usually resisted by customers most of who end up not buying anything after complaining of not having enough money to buy due to the economic downturn.

    “I didn’t make enough sales early this year because of the recession. After paying shop rent and meeting other expenses, what is left as my profit is never enough to enable me go back to the market and re-stock. I hope the economy gets better soon,”John said.

    He is not alone in his frustration. Mrs. Francesca, who sells provision and toiletries, also lamented that profit had been dwindling as a result of low patronage caused by high prices. She said she was considering switching to another line of business in the hope of breaking even.

    Similarly, Mama Chidera, a food item seller, said she is on the verge of quitting the business because of the fluctuating cost of food stuff coupled with the stress of waking up early to go to Liverpool Market in Apapa area of Lagos to get food items for sale.

    She regretted that despite the reported drop in inflation, cost of food items remained high. For instance, a bag of Egusi sells for N65,000, while a bag of Ogbono, which formerly cost about N95,000, now goes for as high as N100, 000.

    She also said a bag of crayfish, which was N26, 000, now costs N32, 000, while a bag of pepper is now 55,000.

    Mama Chidera also lamented that prices of toiletries and beverages, such as Dano Milk, Peak Milk and assorted brands of soap have remained high, despite the drop in inflation.

  • Pastors, imams begin campaign to reduce food prices

    As the month of Ramadan approaches, 20 Muslim and Christian clerics have begun a campaign in markets across the northern states to appeal to traders to reduce food prices.

    The clergymen, working under the aegis of Peace Revival and Reconciliation Foundation, said they would visit markets, interact with traders and their leaders to halt the sharp rise in the prices, especially during Ramadan.

    “We have organised 10 pastors and 10 imams for the campaign and we will visit markets, interact with trader associations and individual traders in parts of the North.

    “It is to open talks with the traders, appeal to them and discuss the roles they will play toward reducing prices of goods and services during Ramadan,” Yohanna Buru, coordinator of the foundation, said in Kaduna.

    He said: “It was observed that every year, marketers take advantage of the holy month to extort the public.

    “This is not really good. God is angry with such traders, and as such there won’t be any God blessing from the money they make from such dirty gains.”

    NAN reports the foundation conducted a similar campaign in Kaduna State last year.

    Buru said the 20 clerics would pursue the assignment with zeal, to reach every part of the region.

    “The sharp increase in prices affects every citizen, whether Muslim, Christian or believers in traditional religion.

    “So, we must team up as Christians and Muslims to kick against extortion by traders.”

    He advised the government to come up with measures to halt increase in food prices.

    Buru urged philantropists to set up parallel markets to help the poor and force price reduction in local markets.

    Another clergyman, Malam Gambo Abdullahi, reminded traders the need to seek God’s blessings by being considerate in fixing prices, avoiding hoarding and racketeering.