Business & Economy
How Buhari’s failed economic promises is making Nigerians poorer
The holiday period has presented a temporary relief for parents with children in school as they will not have to deal with school runs and the attendant cost of prices of goods and services with students on holiday.
However, this relief may be short lived in a couple of weeks as parents will have to begin shopping for school supplies ahead of resumption, a prospect many dread because of the running inflation.
“In the past, I buy Caprisone and other snacks in cartons, sometimes on monthly basis, but the rise in prices of these items means I now buy like N2,000 worth to last maybe a week,” Sarah Poli, a single mother in Apo Area of Abuja said.
While the Nigeria Bureau of Statistics put the official inflation rate at 19.86% for the month of June, for parents like Sarah, most commodities have not increased by 19% or more, it has doubled in price.
Poli said, “School fees was dropped by 10%, the last PTA we had, they tried to see how we can get substitute for school books. School items have gone up if you want to buy her a shirt, just a normal white shirt, it will cost you N3,000, that is a lot of money for a 3years old. Before, to sew the same shirt, it would cost you N1,500. The tailors will tell you the cost of material has gone up. Even though they exaggerate, I live in the same economy,” she said.
Spaghetti and eggs are now too luxurious for common folks. In 2015, 500g of Spaghetti cost N120, an egg goes for N30 and one sachet of tomato paste goes for N30. With N500, an average family could eat this popular cuisine. Seven years after, 500 g of spaghetti costs N450, a sachet of tomato paste and egg cost N100 and N80 respectively.
1kg of cooking gas that Nigerians were paying N230-280 to buy in the past, today costs N900 per kilogram in today’s economy.
A bag of sachet water which used to cost N90 in 2015, currently, is sold at N250 per litre. 75cl of bottled vegetable oil cost N500 in pre-Buhari era, currently, it is sold for N1,350.
“What makes this inflation thing to be challenging for shop owners is that you don’t know what prices are going to be in the market the next day. For instance, you bought item X for N10, perhaps sold for N12 to make a profit of N2. There is the possibility that by the time you go to market again, that same commodity may go for N14, which means you have to add extra money to buy the same item,” Kate Micheal, a shop owner at Yaba in Lagos said.
The Minister of Labour and Employment, Festus Keyamo, who is the spokesperson of the APC Presidential Campaign campaign, has made efforts to dismiss the concerns of Nigerians on the inflation of commodities, with the argument that Nigeria’s economic situation should be studied in the context of the global economic situation.
He argued that Nigeria has managed inflation better than the US, UK, Canada and other advanced countries, because Nigeria’s inflation increased by 6 points—According to Keyamo, Nigeria’s inflation increased from 13%-19% between, 2020-2022, whereas, the US inflation moved from 2% to 10% within the same period.
While global inflation has been linked to COVID19 and Russia-Ukraine war, Nigeria has been grappling with inflation since 2015.
When President Muhammadu Buhari was sworn in in May 2015, the inflation rate was 9.8% and the GDP growth rate stood at 2.14%. During his campaigns, Mr Buhari promised a 10% annual GDP growth rate that will make Nigeria the fastest growing emerging economy in the world.
In the past 7years, the country has experienced two crunching recessions which are tied to the volatility in the price of crude oil on the international market.
It’s worth noting that Buhari as a candidate had promised to diversify the economy, however, the vulnerability of the economy to external factors like the Ukraine-Russia war shows that Nigeria is yet to diversify the economy from oil.
After billions of interventions in Agriculture, prices remain high
One of the achievements branded by Buhari’s administration is the investment in Agriculture, including the intervention by the Central Bank of Nigeria. Government investment has helped to increase the production of rice locally, however, prices of rice remain very high.
A 50kg bag goes for N36,000, when compared to N9,000 it was being sold in 2015 under the previous administration.
However, Economist, Tunde Yusuf, said the concern of the current administration is not about the price of a bag of rice but about controlling demand for FX.
“The Central Bank Governor, Godwin Emefiele discovered that using monetary tools like Interest rate and others will not address the problem with Naira, hence the need to reduce the import bill. So he decided to do direct intervention by investing in the farmers directly, picking an item he believes that Nigeria has a comparative advantage in.
“However, Thailand, Vietnam and others have been farming rice for years. They enjoy what we call economic scale. If you examine productivity there using the production possibility curve, you will understand the gulf in productivity between Nigeria and all these rice-producing countries. However, in the long run, there are more advantages of producing it here, even though it has affected price, but you cannot dismiss job creation and saving Foreign exchange,” Mr Yusuf said.
To further protect the investment in the agricultural sector, the government shut down land borders in the bid to stop smuggling, this protectionism policy was backed by the CBN Governor, who argued that the shutdown of borders protected the billions invested.
Cars too expensive, spare parts too daring
Oyedele Samuel, a car dealer in Ilorin told DAILY POST that prices of cars have increased by more than 200% percent in the last seven years under the current administration.
“You are talking about 2015, why not even start from 2020, in the past two years, we have experienced such a surge that makes owning a car an uphill battle. Before Buhari, everything was very low. For instance, Toyota has the largest share in Nigeria’s market, especially Corolla and Camry. During Jonathan’s period, with duties, it was N1.3 million, during the closure of the land border, there was a hike in price. Everyone had to be going to Lagos to get cars. During that period, the price of Corolla moved to N1.6 million, some were selling N1.8 million.
“in the aftermath of COVID19, we started to buy Corolla at N2.4 million. As I am speaking to you, to clear a 2006 model Corolla at the Customs post, you must have about N1.6 million, just to clear the car. That is the same amount we use to spend on buying it before. Hence, a 2006 Corolla model cost N3.6 million in the market,”
This spike has equally affected small cars used for Taxis. Mr Oyedele said cars for commercial use are the most affected.
“In the past, with N700,000, you can get a Golf 3 car but currently, you will need N1.6 million to buy the same car now.
