Earlier in the month, Nairalytics, a data tracker in the country, revealed that Nigeria’s inflation rate surged to 20.52% in August 2022. The latest figure is the highest rate in 17years.
State of play
Although, there is a global inflation crisis in the world majorly because of Russia’s invasion of Ukraine, many analysts believe that with the way the country is being run economically, if there was no inflation in any part of the world, Nigeria would still suffer inflation rate. Due to the pandemic of 2020, every country experienced an economic crisis from which some have barely recovered from.
- However, Nigeria’s economic crisis didn’t start from neither Russia’s invasion of Ukraine nor the Covid-19 pandemic of 2020, as the country has consistently suffered double-figure inflation since 2016. These two major events worsened the already existing issues.
The Big Picture
Nigeria’s economic crisis is ironic because the two major drivers of the country’s inflation (Agriculture and oil) are abundant in the country. For context, Nigeria is one of Africa’s top producers of oil and the seventh largest agriculture hub on the continent, according to the World Bank. The irony is that Nigeria has three non-functioning oil refineries and the agricultural sector records over 50% of post-harvest losses according to the federal government.
- Corruption by petroleum stakeholders and oil theft has rigged the country benefiting from its oil production. The Minister of State for Petroleum Resources, Dr Timipre Sylva, once said that Nigeria loses as much as 400,000 barrels of oil per day to oil thieves.
- Food storage is the biggest menace the agricultural sector is facing. A report by SBM Intel disclosed that 47 percent of farmers have no storage facilities to keep their produce after harvest.
- The aforementioned stats prove that Nigeria is suffering from a situation of high production and little products.
What you should know
Ending Nigeria’s inflation is no easy task. And so far, it appears that it is only the Central Bank of Nigeria (CBN) that is taking active steps to soften it. That is why we have seen the CBN increase interest rates three times in 2022 alone. However, it is unrealistic to expect the apex bank to control inflation on its own. At this time, it is hard to tell if Nigeria would ever stop having inflation.