
This ever-rising inflation rate in Nigeria
According to the National Bureau of Statistics (NBS), Nigeria’s inflation rate has once again risen, from 33.60% in November to 34.8% in December 2024. This continual increase in inflation is a growing concern for the nation, particularly since the current administration took office on 29th May 2023. The inflation rate escalated sharply following President Bola Ahmed Tinubu’s announcement of the removal of the fuel subsidy, exacerbating the already challenging economic situation.
Why is Nigeria so vulnerable to inflation? The answer is not far to seek. Our heavy reliance on imports to meet the needs of its citizens places a strain on its economic stability. Moreover, excessive borrowing weakens the economy, particularly when there is poor economic planning and fiscal mismanagement. The central role of institutions such as the Central Bank of Nigeria (CBN) and the Ministry of Finance is critical in managing the nation’s finances, and failures here often contribute to the persistent economic difficulties.
In addition to financial mismanagement, insecurity remains a major issue, particularly in the agricultural sector. The rising wave of attacks on farmers has led to a sharp decline in food production, further aggravating inflation and heightening the cost of living.
The consequences of inflation in Nigeria are dire. A decrease in the standard of living, wage increases that fail to match inflationary pressures, and the rise of abject poverty are among the most immediate outcomes. The question then becomes: what can be done to curb inflation in the country?
The key to addressing inflation lies in sound economic policies. This is where the Central Bank of Nigeria (CBN) plays a vital role. The economic health of a nation is often determined by the effectiveness of its apex bank and the Ministry of Finance. These two institutions are responsible for implementing fiscal policies, and the success or failure of these policies will significantly impact the nation’s development and growth.
At this juncture, one might reasonably question the competence of the current leaders of the CBN and the Ministry of Finance. If they are indeed competent, why then does the naira continue to exchange at over N1,500 to the dollar in a country that is richly endowed with human and material resources? Nigerians have excelled across the globe in various fields, yet the economic environment within the country does not reflect this potential.
Something is fundamentally wrong, and it is crucial to recognise that a lack of political will on the part of the leadership may be the root cause. It is worth remembering that during the tenure of former President Olusegun Obasanjo, he brought in economic experts like Ngozi Okonjo-Iweala and Dora Akunyili from the World Bank to tackle Nigeria’s economic challenges. This collaboration proved successful, with the country managing to clear its external debts and even accumulate wealth.
This success is not beyond reach today, and there is no reason why it cannot be replicated. The truth is, no Nigerian is comfortable with the current inflation rate or the harsh economic environment. Despite the restart of the Port Harcourt and Warri refineries, the cost of living remains at an all-time high, and fuel prices have refused to fall to a level where they would ease the pressure on other goods and services.
Our financial managers must step up and justify the confidence placed in them by their appointments. Anything short of reducing the current inflation rate in Nigeria is simply not acceptable. The people of Nigeria deserve better, and it is high time the government takes the necessary steps to restore economic stability and alleviate the suffering caused by inflation.