The removal of subsidies from petrol, electricity, and foreign exchange has led to hikes in tariffs on items like data, cable networks, Netflix, and prices of practically every purchase in Nigeria. This makes Nigerians wonder when the round-robin will end.
Businessmen, corporate organisations, and even the government find it difficult to make realistic budgets that will not run out of cash before completing long-term projects, acquiring inventories, and meeting operational obligations.
The best accountants are now finding it difficult to predict credible financial outlays to intelligently guide their principals as the unpredictable galloping inflation horse continues to canter and drop its hoofs without control.
More importantly, Nigerians are asking if there will be a respite, by way of a review of incomes, so they can cope with the new tariffs and price regimes. The token N70, 000 minimum monthly salaries is clearly unrealistic and inadequate.
Nigerians expect ground-shaking reviews that will match incomes in Nigeria to the global scale, as tariffs and prices have risen astronomically.
Any seasoned accountant will tell you that, to every debit, there is a matching credit, or vice versa.
This matching is even more critical after Dangote refineries increased the price of its petrol from N899 to N955 per litre in response to a 15 per cent increase in the international price of crude oil that someone in Nigeria’s petroleum eco-system describes as an “international citizen.”
It is encouraging that from the faraway World Economic Forum in Davos, Switzerland, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, acknowledges that Nigeria’s economic realities should reflect in the cost of running businesses. It should also be reflected in workers’ remuneration.
The argument is that if services and products that Nigerians pay for can reflect the realities of the removal of subsidies, market forces, and global trends, the remuneration of Nigerian workers should reflect the same realities.
The CEO of the Centre for Promotion of Private Enterprise, Dr. Muda Yusuf, predicts that America’s President Donald Trump’s intention to increase investment in petroleum and gas will have a two-fold impact on Nigeria: reduce Nigeria’s oil revenue but lower the prices of petroleum products.
As these two developments may not cancel each other out in the pockets of Nigerians, the impact of the removal of subsidies from petrol, electricity and foreign exchange on sundry consumer goods and services may not also abate.
And, as immigrant workers, hounded by President Trump, leave America’s farms for their countries, the resulting food shortage and higher prices may cascade to Nigeria, a net importer of America’s agricultural produce.
But if President Trump can end the Ukrainian-Russian War swiftly, the prices of wheat, its products and food inflation should drop. You may have to cross your fingers though and not go knocking on wood because denizens of International Monopoly Capital can come up with a new thing.
Increased tariffs that President Trump is threatening to impose on international commodities may degenerate into a global tariff war, according to the Director General of the World Trade Organisation, Dr. Ngozi Okonjo-Iweala.
“As long as petroleum, the main cash cow of the Nigerian economy, and Nigeria’s imported staples are traded in the American dollar, imported inflation shall not cease because the Nigerian economy remains an appendage of the metropolitan economies.”
If the government pays attention to corporate cost systems only and disregards the remuneration of citizens who buy things and keep the economy going, the economy may collapse and poverty will be as widespread as an epidemic or as if the nation were at war.
The shortage of cash, caused by the incompetent attempt at changing, or, more appropriately, “recolouring” of the naira by former Governor of the Central Bank of Nigeria, Godwin Emefiele, is a rough idea of what a war economy looks like.
Edun, who has a master’s degree in economics, must understand the import of these submissions. If you destroy the middle class, which always has to spend to keep up with the Joneses, you just run down your country’s economy.
PricewaterhouseCoopers warns: “Macroeconomic pressure points (caused by government policies) such as rising inflation, a high interest rate and naira depreciation may drive an additional 13 million (Nigerians) below the poverty line.”
Government policymakers, who remind Nigerians that the pump price of petrol in America, their favourite benchmark, is $0.897 or roughly N1,390, should also tell Nigerians that the minimum wage in America is $7.25 per hour or roughly N11,237.
For a 40-hour work week or 120 hours per month, other things being equal, the minimum monthly wage in America should be $1,160 or roughly N1, 798,000. Thus, the lowest-wage earner in America gets a higher pay than most Nigerian CEOs.
That is not even talking about the state of Alaska, whose minimum wage of $11.91 per hour, or $1,905.60 per month, is a truckload of approximately N2, 954,632.80 per month if the lowest-paid Alaskan were to receive his remuneration in naira.
These astronomical figures are neither equal nor equivalent to the meagre N70, 000 that some Nigerian state governments and corporate organisations that have already adjusted their tariffs, rates and prices upward seem not to fully understand or acknowledge but act as if they are unwilling to pay.
Nigeria’s economic policymakers must remember that the world is “flat” and the economies of most countries of the world are practically integrated.
Indeed, most strategic consumer goods that Nigerians consume are imported.
And Nigerians are stuck buying imported consumer goods because successive governments have failed to implement economic policies that can reverse the trend and provide homegrown goods, even if there won’t be excess for export.
As long as petroleum, the main cash cow of the Nigerian economy, and Nigeria’s imported staples are traded in the American dollar, imported inflation shall not cease because the Nigerian economy remains an appendage of the metropolitan economies.
That being so, it should make economic sense if Nigeria’s economic policymakers acknowledge that the Nigerian economy is no more than a trading outpost of the metropolitan economies and, therefore, introduce supply, demand and pricing structures to match the realities of the “flat” world that is led by Euro-American economic powers.
To put the argument in another way: If Nigeria’s primary cash flow is derived from the export of a commodity that is traded in the US dollar and Nigeria continues to import staples, also traded in the US dollar, then the pricing of Nigerian labour should reflect these realities.
This should provide a more realistic remuneration reward system for Nigerians who now seem to be asked to labour and sweat for hours, only to receive pittance as remuneration at the end of the day. The “japa” economic migration syndrome is caused by talent seeking an appropriate reward environment.
But those who run Nigeria continue to insult Nigerians by offering them the relatively weaker naira rate in remuneration but expect them to buy even staple goods at rates equivalent to the stronger dollar. This is shown in the suggestion that Global South workers earn less than 87 to 95 per cent for the same job as their Global North counterparts.
If Nigeria’s economic policymakers sit back and take a hard look at the remuneration system of Nigeria, they will realise that Nigerians, resident in Nigeria, but with remunerations tied to the international economy, live a more opulent life in Nigeria.
Check out the lifestyles of workers in the oil and banking sectors (and their bureau de change appendages) that trade in foreign exchange, importers (or exporters), and public servants who have anything to do with the use of Nigeria’s foreign exchange.
