Emmanuel OchayiNigeria grapples with a daunting economic challenge as inflation hits a 28.92% in December 2023, marking the highest in 21 years, according to data from the National Bureau of Statistics.
Blaming factors such as naira depreciation, fuel subsidy removal, and insecurity, the Organised Private Sector (OPS) sheds light on the critical contributors to the persistent rise in inflation.
According to the NBS report, the headline inflation rate surged by 7.58% compared to December 2022. The OPS emphasizes the impact of naira depreciation, fuel subsidy removal, and insecurity, among other factors, on the escalating inflation crisis.
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In a statement, they stated, “The removal of fuel subsidy and a foreign exchange rate unification policy, which has led to the steep depreciation in the value of the naira, have been blamed for the surge in the country’s inflation.”
Food and non-alcoholic beverages, housing, water, electricity, gas, and other fuel emerge as major contributors to inflation, with food inflation outpacing general inflation at 33.93% in December 2023. The regional disparities also highlight the severity, with Kogi, Lagos, and Rivers being the most expensive states to reside in.
In the face of this crisis, Nigeria’s economic growth is expected to decline, with the International Monetary Fund projecting a drop from 3.3% in 2022 to 2.9% in 2023.
The World Bank predicts a moderation in inflation to 21.7% in 2024, but concerns about social unrest loom large.
The OPS President, Gabriel Idahosa, calls for a target inflation range of 6 to 9 percent, emphasizing the adverse impact of high inflation on businesses.
He said, “All the figures we are seeing this year are many years high in Nigeria. Any inflation above 9 per cent in Nigeria is not good. We should be targeting inflation of six to nine per cent.”
Meanwhile, Dr. Alias Aliyu, a seasoned economist, expresses concern about the negative impact on foreign direct investments and stresses the need for addressing core issues such as naira floating and fuel subsidy removal.
“For inflation to have grown to almost 29 per cent, it is not good for our economy. It is a negative figure for Nigeria and the economy, even for foreign direct investment. The more it goes up, the more it becomes a problem for Nigeria.
“In the budget for 2024, the benchmark was 21 per cent inflation, so this cast a negative outlook for the economy. The main issue that has not been addressed is the floating of the naira and the removal of fuel subsidy. If you also look at the production level, it is also a big problem.”
As the Central Bank of Nigeria’s Governor, Olayemi Cardoso, advocates for an inflation targeting framework, experts predict the inflation rate may range between 27.59% to 31.85% in 2024. The call for immediate action on dollar illiquidity and a focus on long-term solutions underscores the urgency of addressing the multifaceted challenges contributing to Nigeria’s inflationary woes.
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