By Niyi Jacobs
Despite a limited income that exposed individuals to poverty, devaluation of the Nigerian local currency in addition to steep headline inflation and unemployment has worsened Nigerians living conditions.NIYI JACOBS writes
Key macroeconomic metrics have been unfavourably
positioned Nigerians fortune, resulting in automatic downward income shift as prices increased along with naira depreciation.
Naira has dropped from N197 to a dollar at the official window between 2015 to as high as N410 in the Nigerian Autonomous Foreign Exchange rate in 2021 with joblessness peaked at 33.3%, the latest data reported by the National Bureau of Statistics in the third quarter of 2020.
While the local currency has become less valuable, in what appears like multiple out of control issues for holders of the currency, the inflation rate worsens the purchasing power.
Though, slowdown for the fifth consecutive months, headline inflation had jumped for 19 months straight while food prices become unbearable for the citizen despite poor job creation record.
With the rising misery index, Nigeria unceremoniously became the poverty centre of the world despite her resource capability endangered by a core focus on oil and gas extractions.
Accounting for the largest chunk of government earnings, there is bleak future for Nigerian oil revenue as the United States, a major crude oil consumer, plan to replace electric-powered automobile by 2025. International politics and competitive advantages seeking countries, China, would likely follow suit, sources told journalists
In the black market, Naira tested N585 on Monday after the previous week depreciation, though a moderate recovery was seen at the Investors and Exporter Window last week.
With rising production costs amidst dollar shortages, private sector investments remained below the pre-pandemic period. Though, Purchasing Manager Index shows the economy is in recovery mode.
In the second quarter, Nigeria’s gross domestic product expanded more than 5% after a tepid growth reported in the first quarter of the year. The fresh growth recorded in the second quarter of the year, according to some investment banking firms’ macroeconomic notes, was flattered by the low base period in 2020.
“It is like when you are coming from zero level, anything positive would put you on a higher footing and makes you look like an outperformer’,
Despite increasing spending by Nigeria’s monetary authority to drive the food sector towards self-sufficiency, prices have been on the high side while the government’s wage remains inflation exposed.
The value of the local currency has made many Nigerians in both informal and civil service spaces poorer as cash income cannot buy as much after devaluation that is further peppered by inflation.
Unfortunately, the outlook does not seem any better, analysts believe that Ak-47 threatened economy cannot attract as much as foreign investment desire to propel much-needed growth.
It would be noted that foreign inflow into the economy has worsened key performance indicators amidst dollar shortage and rising demand for the greenback. With foreign receipts from exports underperforming importation bills per period, Nigeria has remained on the deficit side of an international trade transaction.
Even with stable prices of crude in the global market, technical issues and Shell’ force majeure among other supply chain trouble keep volume production under the Organisation of Petroleum Exporting Countries (OPEC) quota.
The way forward for Nigeria to maintain price stability is to devalue the local currency to a level where it would be difficult to speculate at the black market, analysts agreed at a forum in Lagos .
But devaluation would put additional pressure on Nigerians as prices of foods and housing have increased. In major cities, housing spending has increased at least by 25% in some areas including Lagos, Abuja, and Port-Harcourt as an example.
However, some private companies polled by journalists..For they have not raised their wages and salaries since 2020 as the pandemic effects still remain on their productive activities.
Uninspiringly, Nigeria is at the end of the innovative curve, creating a bleak future for its growing youth populace