By Christy Anyanwu, Omoniyi Salaudeen, Olakunle Olafioye and Agatha Emeadi
This is by no means cheering news for Nigerians either as organised labour, private sector, or business owners. Tough days are beckoning. And the future is full of dark foreboding. With the lineup of radical policy enunciations already unveiled by the Federal Government, it will take an extraordinary resilience of the citizenry to wade through the vicissitude of hard times that lie ahead in the coming year. 
In addition to the rising cost of food items, which are already at the rooftop, the government has also told those who care to listen to brace up for higher tariff for electricity, the full weight of subsidy removal on petroleum products, while at the same time grappling with aggressive tax drive for sustainable infrastructure financing. There are realities staring everyone in the face.
In his moment of soul-searching vis-à-vis his electoral promises, President Muhammadu Buhari had told the nation of his plan to lift 10 million Nigerians out of poverty. But beyond the rhetoric, nothing significant has changed in terms of the quality of life of the people. While waiting for the realization of that objective, the World Bank gave a clincher in its latest report on the state of the nation’s economy, warning that six million more Nigerians would be dragged into poverty if nothing is done to address the spiral inflation as well as the rising cost of food items.
Following the World Bank’s bleak prognosis, Sunday Sun team went to town for a market survey of the current food prices.
The report showed a warning signal of hard times lying ahead in the New Year with a progressive rise in the cost of basic necessities.
At Mile 12 market, Lagos, during the week, the survey revealed that prices go up every time sellers get new stock. For instance, long-grain rice which was hitherto sold for N18, 000 now hoovers between N26,000 to N32,000 depending on which type you want.
The list of other sampled items includes gari (N23,000 per bag), vegetable oil (28,000 for 25 litres), palm oil (N22,000 for 25 litres ), Onions (N80,000 per bag), Titus fish (N26,000 for 20kg), tomatoes (N5,500 per box), pepper (N7,000 per tin), yam floor (N7,000 per tin).
Similarly, at Ijora market, also in Lagos, prices of chicken, turkey, and fish have skyrocketed compared to what it was a month or two ago. For instance, a carton of turkey now goes for N24, 000; chicken (N17, 000), croaker fish (N30,000 for 20kg), tilapia fish (N17,000 for 10kg), chicken gizzard (N18,000 per carton).
Some market women, who volunteered to speak with Sunday Sun, lamented the negative effects of the uncertainty arising from arbitrary price fluctuations ahead of Christmas and New Year festivities.
Mrs Ekpenyong, who sells groundnut oil at Mushin Market, said: “This is not a time to send a child on an errand to buy food items because one can prepare a list at home only to meet unexpected high prices in the market.
“Last week, we bought 25 litres of groundnut oil at a wholesale price of N27, 500, but today, the same quantity is being sold at N32,000 exclusive of transportation and the marginal profit.”
According to Simon Agbapuonwu, another foodstuff dealer at Daleko Market, a bag of beans goes for N78, 000, while a tin (popular derica) hovers between N600 and N900 depending on the species. Fuming, he said, “one wonders how long this hard time would last.”
Amidst the rage of anger, the Group Managing Director of the Nigerian National Petroleum Company (NNPC), Malam Mele Kyari, threw a bombshell, saying that a litre of fuel may sell between N320 and N340 in 2022.
He dropped the hint at the presentation of the World Bank Nigeria Development Update, November 2021 edition entitled: “Time for Business Unusual” in Abuja, declaring that fuel subsidy removal would definitely be achieved in 2022 since it already had the full backing of the law.
His words: “There will be no provision for it legally in our system, but I am also sure you will appreciate that government has a bigger social responsibility to cater for the ordinary and, therefore, engage in a process that will ensure that we exit in the most subtle and easy manner.”
On the hike in prices of cooking gas, he said that it was a demand and supply issue as there was a global crunch on supply of gas, and many countries were now threatened by lack of supply in December.
He added that the product was not under any subsidy regime and, therefore, irrespective of where it was produced, would follow the global trend.
Kyari, however, assured that the company was working on increasing local production to meet the needs of consumers.
As a follow-up to the conversation, the Minister of Finance, Budget, and National Planning, Zainab Ahmed, disclosed the planned initiative by the Federal Government to substitute the subsidy with N5,000 per month for 40 million poorest Nigerians to serve as a safety net.
She explained: “The subsidies regime in the oil sector remains unsustainable and economically disingenuous.
“Ahead of the target date of mid-2022 for the complete elimination of fuel subsidies, we are working with our partners on measures to cushion the potential negative impact of the removal of the subsidies on the most vulnerable at the bottom 40 per cent of the population.
“One of such measures would be to institute a monthly transport subsidy in the form of cash transfer of N5,000 to between 30 – 40 million deserving Nigerians.”
A renowned economist with the Babcock University Illisan, Ogun State, and former President of the Nigerian Institute of Bankers (NIB), Prof Segun Ajibola, putting the discourse in a proper perspective, pointed out the challenge of poverty facing the country and urged the government to frontally address the situation to meet the United Nations’ SDG goal target on poverty reduction.
He said: “The outlook of next year’s economy is to pray for the best while working towards that best. But the truth of the matter is that when there is an economic challenge either globally or domestically, it affects every facet, including the government as well as the cost of doing business both for the private sector and the public sector. The problem we have here is that the government is complaining of the rising cost of importing fuel because of the depreciation in the value of the naira, which is a major challenge for an economy like ours. Other ancillary costs are also on the rise. In view of that, the argument has been on for long that continued subsidy cannot be sustained.
“The good news is that government is rehabilitating Port Harcourt refinery, rehabilitating Kaduna refinery and Dangote refinery is also coming on. It is a big hope on the part of the masses that at the end of the day, the cost of production per litre will come down domestically compared with what is being imported. In other words, in the medium and long term, we may see a reduction in per litre price of fuel.”
On the issue of electricity tariff, Ajibola decried the poor quality of service rendered by the distribution companies relative to the cost.
“It is the same problem that is bouncing on other sources of power like electricity. But the only problem is that we are seeing rising cost which is not commensurate with the quality of service provided by the DisCos. If the service is good, the cost will still be beneficial to the masses compared to other sources of energy,” he said.
He also expressed reservation on the figure being bandied by the World Bank on its poverty prediction.
“We keep hearing of figures; so it is difficult for me to speak on those figures. In the absence of data, I cannot specifically speak on figures. But the only thing that is clear to everybody is that there is the challenge of poverty in the land. Even under the Sustainable Development Goals (SDGs) by the United Nations, effort must be made to reduce the level of poverty in the land in all ramifications,” he advised.
Another financial export, Johnson Chukwu, MD, Cowries Limited, while noting the hardship the ordinary people might face in the short-run with the removal of subsidy, expressed optimism that it would lead to economic recovery.
“The subsidy removal and electricity tariff will lead to higher inflation and reduction in the purchasing powers of income earners. But if the government has the political will to implement some of these reforms, it will go a long way to improve the state of the economy. If it is not properly implemented, it will lead to the worsening of the standard of living of ordinary Nigerians.
“Subsidy removal may be a necessary pain Nigeria will have to bear in order to transform the economy. We need to build infrastructure, we need to improve security and we need financial resources to do that. We really can’t place hands on how subsidy has benefitted us a people. So, it might be necessary to remove subsidy. It is going to be a difficult thing for Nigerians, but if we get the policy right, it will lead us to recovery and growth,” he posited.
Also, the Chief Executive Officer, Centre for the Promotion of Private Enterprise and Immediate past Director-General of Lagos Chamber of Commerce and Industry, LCCI, Dr Muda Yusuf, in his reaction, called for tactical management of the issue which he described as tricky.
He noted that although most Nigerians were not favourably disposed to petroleum subsidy removal, but he maintained that the subsidy regime was no longer sustainable.
He argued: “I believe that there is a need to creatively manage the transition from the current pricing regime to a fully deregulated arrangement. It is a tricky issue that could pose a serious challenge to the government if not tactically managed. The reality is that the sentiments among the citizenry are not favourable to the deregulation of petroleum product pricing or petroleum subsidy removal. Even some elite are curiously not persuaded on the justification for the subsidy removal.
“If the policy transition is not properly managed, the risk of a social and political backlash could be quite high. No doubt there is a sound economic and business case in favour of fuel subsidy removal. But the social and political contexts are equally critical. Certainly, the subsidy is not sustainable, which is why there is a need to accelerate engagement with the relevant stakeholders to come up with a policy transition strategy that is sustainable, realistic, and pragmatic. The conversation should not only be economic, but also social and political.
Yusuf further opined that with the level of progress so far recorded in the sector, the government still needs to strategically manage the transition process for political and social considerations.
“The argument on electricity is slightly different. Already some progress has been made towards a market-driven electricity framework. We already have the willing buyer, willing seller policy. There is also a market segmentation model that has been adopted by the DISCOs. Different pricing applies to different segments. This is also a move towards a purely market-driven electricity market. It is true that to sustain private investment in the electricity sector, the subsidy should be discontinued. But the transition needs to be strategically managed because of the political and social contexts,” he added.
Meanwhile, the Nigeria Labour Congress (NLC) has vowed to resist any attempt by the Federal Government to implement the policy. NLC President, Ayuba Wabba, described the move as the perfect recipe for an aggravated pile of hyper-inflation and an astronomical increase in the price of goods and services.
The NLC president in a statement entitled: ”Nigerian workers refused to take the bait”, said that the conversation between the government and the people of Nigeria, especially workers under the auspices of the trade union movement on the matter of fuel subsidy was adjourned sine die so many months ago.
According to the statement, “given the nationwide panic that has trailed the disclosure of the monologue within the corridors of government and foreign interests, the NLC wishes to maintain its rejection of deregulation based on import-driven model.
“We wish to reiterate our persuasion that the only benefit of deregulation based on import driven model is that Nigerian consumers will infinitely continue to pay high prices for refined petroleum products.
“This situation will definitely be compounded by the astronomical devaluation of the naira which currently goes for N560 to one US dollar in the parallel market.’’
The NLC president said that any attempt to compare the price of petrol in Nigeria to other countries would be set on a faulty premise as it would be akin to comparing apples and mangoes.
“The contemplation by the government to increase the price of petrol by more than 200 per cent was a perfect recipe for an aggravated pile of hyper-inflation and astronomical increase in the price of goods and services,” he stated.