ABUJA (Sundiata Post) – Nigeria’s economy has faced significant challenges over the past two years, leading to a striking 56 per cent decline in the purchasing power of the citizens, a Cowry Research report indicated on Wednesday.
The report titled; Half Year 2024 Nigerian Economic and Financial Market Review and Outlook for H2 2024 which was released and analysed by the Founder, Cowry Asset Management Limited, Johnson Chukwu, revealed that the figure severely affected Nigerians’ ability to afford basic necessities and maintain their standard of living between 2021 to 2023.
The Customer Expectation Survey (CES) for the fourth quarter (Q4) of 2019 from the Central Bank of Nigeria (CBN) revealed that Nigerians will distance themselves from purchasing luxury items, warning that the rising inflation and high cost of goods and services would negatively impact on its citizens’ purchasing power.
However, Chukwu noted that policy somersaults of past governments’ and their decisions not to heed to the warning signals led to the drop.
He also attributed this decline to several factors, including high inflation rates, currency devaluation, and disruptions in global supply chains.
He said, “The rising costs of goods and services have outpaced wage growth, leaving many households struggling to make ends meet.
Inflation rate is currently at 28 year high. Asides from Congo who has an inflation of over 40 per cent, Nigeria ranks second in Africa, the highest rate in the continent. The challenge is that in the last two years, the value of purchasing power stood at 56% and that is because more than half of what some Nigerians could afford then, cannot be affordable any longer especially for those whose income has not changed from 2022 till now.
The major increases in food inflation are coming from staple foods such as yam, cassava, rice, corn, meat, fish amongst others, which has resulted into food inflation standing at 40%”.
He predicted that headline inflation could start to moderate in the second half (H2) of 2024, albeit at a slow rate.
According to him, the upside risks of the moderation for inflation are underpinned by the upcoming harvest season, government’s suspension of taxes on some food items, relatively stable exchange rate and weak consumer demand.
Chukwu, however, maintained that there are still some downside risks on inflation worsening due to possible hike in petrol prices, further devaluation of the naira, increase in electricity tariffs and a possible wage award to public servants.
In light of these developments, he called on the Federal Government (FG) to take immediate action to mitigate the impact of inflation. He noted that one of the primary recommendations is the establishment of robust food production systems.
“Nigeria’s economic performance has dampened by sluggish performance in the agric sector. This is the fact and currently we are not creating food production systems but we are having more mouths to feed, hence, the reason we are struggling.
By enhancing local agricultural production, Nigeria can reduce its reliance on imported food, which is often subject to price volatility and exchange rate fluctuations.
Enhanced food production would not only stabilize food prices but also create job opportunities, boost the agricultural sector, and improve food security”, he said.
The Cowry Asset Management boss thereafter suggested that investments can be made in modern farming techniques, infrastructure development, and support for small-scale farmers which are crucial steps towards achieving this goal.
The call for a strategic approach to food production comes at a critical time, as many Nigerians continue to face economic hardship.
