By Cosmas Omegoh, Olakunle Olafioye and Henry Okonkwo
Few days ago, the year 2020 finally folded into history.
As a year of double 20s, when it burst off the starting block over 365 days ago, it had this awesome, majestic mien. But as it struggled to wind down, many might argue that many of the expectations it held were not met.
Outgone 2020 was clearly a COVID-19 year. Early in the year, the virus berthed in Nigeria, wreaking humongous harm on the country and its economy. Perhaps many would claim it was a year of lack, with its attendant dwindling revenue accruing to the government. And what is more? It was a year of insecurity. Each and every government’s action and inaction left many Nigerians in quandary, groping for the way out.
Increase in PMS
The impact of the series of hikes in the pump price of Premium Motor Spirit (PMS) popularly known as petrol is one major challenges Nigerians will have to grapple with in the New Year. Since July, 2020, the pump price of PMS has continued on the upward swing with its attendant effect on prices of goods and services.
Some Nigerians who spoke to Sunday Sun expressed their frustrations at the inability of the government to come up with policies that will help to ameliorate the suffering of the masses rather than those which they claim, aggravate the plights of the people. In particular, they deplored the timing of the hikes, describing it as a sign of the insensitivity of the government.
Mrs. Tola Aderoju, a fashion designer, pointed out that no government which has the interest of its people at heart would ever contemplate such harsh decision at a time when the people had been totally pauperised by a number of anti-people policies introduced by the government in recent months.
“Most Nigerian parents can no longer afford to feed their children anymore because of the exorbitant prices of food items in the country. People are losing their jobs. Those who are lucky to still retain theirs are not getting paid. The government must act now to help the people from dying of hunger,” she said.
Reacting, Dr Muda Yusuf, DG, Lagos’ Chamber of Commerce and Industry pointed out that a deregulated pricing regime was typically volatile, oscillating with the global oil price. He added that deregulation without competition would not give desired outcomes.
“We are still immersed in a monopolistic structure even as we claim to have deregulated the petroleum downstream sector. The economy and the citizens cannot get the benefit of deregulation under the current arrangement. The NNPC is still a monopoly in the supply of petrol. Private sector players in the sector have no access to foreign exchange to import petrol and the refineries are still comatose. Government needs to urgently put appropriate structures in place for the deregulation regime to achieve its objectives. There should be a level playing field.
“Otherwise, the deregulation policy faces a major risk of being derailed. If this happens, we would be back to the subsidy regime with all the attendant inefficiencies and corruption,” he posited.
To cushion the effects of petrol price increases on domestic prices, the LCCI boss suggested an urgent need to scale up investment in mass transit transportation systems.
“The power sector recovery programme should also be accelerated to reduce the dependence of MSMEs on petrol-powered electricity generators.
“These two areas of intervention would reduce the adverse impact of the petrol price volatility on small businesses and the welfare of the citizens,” he said.
Value Added Tax
With the increment in the Value Added Tax (VAT) from five per cent to 7.2 per cent resulting in over 1,000 per cent in revenue accruable to the government, Nigerians are calling on the government to give priority attention to the basic needs of the masses in order to ease their burdens in the New Year.
Dr Tayo Bello, a Development Economist and Lecturer in the Department of Private and Commercial Law Babcock University, Ogun State, said that the government could ease the pains of the masses by giving priority attention to the provision of basic needs of the masses.
According to him, “the masses need only a few things from the government. Give them education, give them free or affordable healthcare services, put infrastructural facilities in place in rural areas to encourage people to move to and live in rural areas. With these in place, things will change for the better.
“Again, the government on its part, needs to disseminate information so that people can be better informed about their policies and programmes. They should not allow only the Minister for Petroleum or the Minister for Information to be talking. They should involve people in the academic, the professionals in their information dissemination process. These are neutral people who can help to explain the government’s programmes and policies to the people. If such sensitive information is left to be disseminated by party spokespersons, it will be hijacked by the opposition and the whole issue will become politicised. And this will create more annoyance among the people.”
Over the past months, Naira, the local currency, has been on a free fall, plummeting deep into the plains, with the Central Bank of Nigeria and the Federal Government seemingly helpless.
According to the CBN in its website as of December 30, 2020, the official exchange rate of the naira and the dollar was quoted as N379 to $1. But the value of both currencies in the parallel market on the same day ranged between N470- N471 per.
Most Nigerians are sad that the CBN had gradually devalued the naira over the past months, a move that has not been friendly to business. The development they maintained has forces prices of goods and services shooting through the roof, with ordinary Nigerians getting worse for it.
Prince Dr Akintunde Ayeni, the manufacturer of Yenkem herbal products, Lagos, expressed sadness that the worsening exchange rate had wreaked so much havoc on the economy.
He said: “For those of us who are into herbal medicine practice, yes we source some of the raw materials locally. But what about the rest of the materials? What about technology?
“Once the exchange rate is going high, it affects everything – just everything. It leaves you no room to plan. You cannot be certain that the product you manufacture will sell for so, so price for you to have your investment back. And when you finish selling your products, you cannot be certain that you have as much money to produce again. Everyone is affected by this problem.
“As of today, how many small-scale businesses can sustain themselves? Those that were employing 100 staff hitherto, now, operate with a quarter of the same workforce. Yet, we have not seen the end of this problem.”
Mr Damian Izuka, a community pharmacist, a pharmaceutical product importer, equally expressed concern about the weak Naira.
He said: “The issue of the dwindling fortune of the naira is very, very unfortunate. It is such a dicey terrain. You cannot beat your chest and say this is what the local currency will exchange with the dollar the next day. If you buy your product at so, so price, you are not sure of what price to sell them.
“You cannot stand here and make a correct project that this is what the colour of business will be tomorrow. It is simply frustrating.
“The situation to be honest with you makes existence very, very difficult for the average businessman in the country.
Nobody can give you a correct forecast of what the Naira will exchange tomorrow. It is worrisome.”
Govt imposed stamp duty, other taxes
Equally worrisome are the stamp duty and other taxes various tiers of government have imposed on the people as a means of shoring up their revenue bases.
For various transactions, conducted through the banks, N50 stamp duty is imposed on the account owner. Nigerians say although the money might appear small, it is little drops of water that make an ocean.
“As for stamp duty, the banks take from you when they want to. N50 might appear small, but it means a lot of money in the long run.
“One day, for instance, my bank debited me three times for a card that was not issued. I had to go to them made a very strong case before they could reverse the deductions,” Izuka said.
Reacting to the stamp duty question, Prince Ayeni said: Commercial banks are part of the problems killing businesses in the country while the government is looking the other way. They bring you this charge, that charge. They take away from your account what they want to take, leaving the account holder helpless.
“Sometimes, some of these charges are not approved by the Central Bank of Nigeria. Such charges don’t encourage small scale business to grow.
“In other climes, the interest rate is below one digit, but the government through the CBN has allowed this to go above 25 per cent.
“How would starters get loans to grow their businesses? Even those businesses that have managed to stay alive cannot get capital for expansion.
“Nigerian businesses need to say it loud and clear that the growing number of charges – stamp duty and others – are punishing.
“Often times, you hear about intervention funds being given out, but here and there, but they end up in the pockets of those who don’t need it to do businesses.”
20 per cent increase in cooking gas
In the month of November, it emerged that the price of cooking gas which is also known as Liquefied Petroleum Gas (LPG), went up by about 20 per cent.
This increase which the government allowed in line with the deregulation of the petroleum subsector, keeps affecting everything.
Players in the industry hang the increase on the rising cost of foreign exchange. They contend that the continuous fall of the naira has a telling effect on prices of goods especially imported ones of which gas is one. A sizable proportion of the gas consumed locally is imported, and the value of the naira has a hand in it all.
Confirming the increase, a housewife and mother of three who did not want to be named, told our correspondent that “before November, I bought 6kg gas for N1,600. By the middle of December, it has risen to N1,900. Shortly before Christmas, I refilled the same 6kg cylinder with N2,000.”
Confirming the increase, a gas plant operator in Lagos who did not want to be named, told our reporter that ‘now, filling a 12.5kg cylinder costs N4,000.” This hitherto sold for N3,200 in November.
The President Muhammadu Buhari-led government claimed that in its bid to curb the spate of smuggling taking place at the borders and to ensure food sufficiency for Nigerians, ordered the closure of Nigeria’s land borders on August 19, 2019. This was one policy that generated huge discordance among economic experts because of the consequences it had on Nigerians.
Some people would argue that all through 2020, Nigerians groaned in pain, and writhed in hunger, as the closure triggered a 100 per cent increase in foodstuffs like rice, onions, groundnuts. This was because of the security challenges and rampaging activities of herdsmen, banditry and terrorists in many of Nigeria’s major agrarian states. Aside from that small-scale businesses exporting goods to neighbouring countries like Benin, Togo and Ghana complained bitterly at how the policy affected their businesses.
“Food inflation is a good example of the outcome of the border closure, considering that 2020 saw 22 states in the country experiencing flooding, especially the food-producing areas,” Mr Samuel Segun, an analyst at SMB Intelligence, said.
He also noted that growing insecurity has led to attacks on farmers.
“So, the government choosing to ban the importation of food items under the guise of border closure hasn’t translated into higher production of food by farmers.”
The COVID-19 lockdown was another bitter pill that was forced down the throat of Nigerians.
The government’s effort to curtail the spread of COVID-19 in 2020, and to prevent the rapid spread of the virus had led to even flights cancellations. Virtually every social, official, and religious gatherings were shut down.
According to the Nigeria Bureau of Statistics (NBS), Nigeria’s GDP declined sharply during the country’s lockdown period. The lockdown policies reduced Nigerian GDP by US$11 billion or 23 per cent during the eight-week period. Many experts also predicted the recession Nigeria is facing.
Most Nigerians grappled with the hard times, that came with the presidential order for a lockdown that started on March 30, 2020.
Most private organisations laid-off workers and the few that remained had their staff salaries slashed. The media houses were not left out; many newspaper organisations laid off dozens of their staffers to shed weight.
Hotels and event centres that were forced to close down are still counting their losses, while their staff, most of whom are breadwinners, were laid off.
Mr. Greg Ijeomah, a Lagos-based hotel manager, who has a family of six, lamented that he was laid off unexpectedly after he was paid his March salary.
“I lost my job and since April, it’s been difficult for me and my family, especially now that the prices of goods have skyrocketed.
“I cannot afford essential products. Most food items have had their prices doubled,” he lamented.
The harsh effect of the lockdown was most severe for Nigerians as the much talked about palliatives or financial support from the government did not go round the people that need them. The attendant challenge led to a significant decrease in the purchasing power of Nigerians and ultimately in their capacity to cater for themselves.