Causative factors in Nigeria’s spiralling inflationary trends

The macroeconomic overview of the state of the Nigerian nation as presently observed, directly manifests in the general poor productive performance or the low gross domestic product (GDP) rate, market disruptions based on fiscal and monetary policies that have since dealt adverse blows on the local currency (the naira) over a very long period. Nigeria’s hyper inflation is not just the case of higher consumer demand; neither is it scarcity of raw materials, nor cost of labour but, an increased production cost of locally manufactured goods that is the result of heavy cost of energy. This identified factor of inflation appears to be the most critical among a number of other national conducts that are linked to poor management structure of the economy and unpopular decision-making in governance pattern and behaviour (which lacks meritocracy). In combination they have been counterproductive to the nation’s economic wellbeing, growth and development. The government ought to have long involved the organised private sector (OPS) or business promoters/entrepreneurs of note in industry to extensively contribute their entrepreneurial ideas and experience in the running of the economy. This crop of investors appreciates to the minutest terms what economic failure means in running business concerns, and the consequence of unwanted results in business. The reason for this strategic input, required of the government is because governance is a serious business that should not in any way be handled with levity to avoid recording any form of failure.

Issues of energy security, energy crisis, energy poverty, energy efficiency and energy consumption are critical. They require professionalism and expertise in handling them, as they have been overwhelmingly determined to be very important and essential in the life of every economy. A clear reference point is the rate at which top companies are divesting from Nigeria and relocating to neighbouring West African countries like Ghana. Apart from the challenges of insecurity, the energy requirements to power/energise and drive the economy come top on the list of numerous macroeconomic problems the nation is currently grappling with. Energy poverty is today the nightmare that has bedevilled the economy to the extent that the entire economic system has totally lost control over the high cost of goods and commodities in the market, especially the scarcity of affordable food items. These have become out of reach to the poor and vulnerable, and low income earners in the country. The hunger, hardship and the hyperinflation in the land instantly started on that fateful day that the President and Commander in Chief of the Federal Republic of Nigeria was sworn in (29th of May 2023). His four-word pronouncement, “fuel subsidy is gone!”, instantly changed everything in the land. That spontaneous policy statement is a clear example of the numerous powers the government commands over business in any given economy.

It might sound like a simple statement. It might as well not be taken seriously by many, seen as mere words, but there are much more underlying issues, factors, and serious consequences in its impact that changed its entire narrative, by turning the economy upside down (in terms of high costs of anything referred to as a mercantile item), which has since inflicted everyone with economic pains. Its impact, indeed, demands urgent mitigation strategies in line with the president’s “renewed hope” agenda”. Such mitigation strategies should come in value chain measures to include energy self-sufficiency to power and energise the economy through natural gas supplies as a dependable alternative for industrial operations. It is a well known fact that energy efficiency is at the centre of expected energy demands and supplies strategic plans towards economic emancipation and recovery. Powering and energising the economy for growth and development is a primary responsibility of the government. The present situation is properly classed under “energy insecurity” with its attendant “energy crisis”, part of the factors presently troubling the nation’s economy. Hence, the inflation in the land.

A way out of this aspect of the government’s state assignments, involves the government genuinely ending the claimed subsidy removal by making sure that the policy of backward integration works in the land. The currently implemented policy to sell crude oil to all local refineries in our local currency (the naira) is a step in the right direction that shall end the economic mess. It is also the only tool available to mitigate the ongoing inflationary trend that is currently suffocating the economy. This effective strategy towards reversing the market trend should be fully supported and aggressively pursued with the import substitution policy on refined products; especially in the current situation where activities in the downstream oil subsector has clearly and completely proved a valid point – to satisfactorily reposition the energy subsector on the path of a self sufficient economy, by adequately providing the daily domestic energy needs of the economy.

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