Rising Prices of Food and Other Essential Commodities: The Way Forward

My candid suggestion and advice to the federal government will be that the CBN should adopt flexible, pegged and adjustable exchange rate.

For several months, the Nigerian population have been faced with the painful purchase of rising prices of food and other essential commodities.

The announcement of the removal of petroleum products subsidy last year precisely on 29th May 2023 by the new civilian administration at the inauguration of office led to a geometric increase in the prices of petroleum products, other essential commodities and services.

Daily, people pay exorbitant amounts to purchase goods and services which has led to economic hardship in the country.

In the short term, to arrest the rising prices of essential commodities the Federal Government must open our borders for the importation of goods so that commodities will be abundant, particularly food to feed the vast population.

With the opening of our borders to allow the importation of essential commodities in the Nigerian market economy, the interplay of the forces of demand and supply shall lead to a reduction in the prices of goods and services.

In the long run, by the time the interplay of the market forces of demand and supply has led to falling prices of goods and services in the market economy, the country can begin the massive production of quality local food to boost the importation of food, thereby making food and other essential commodities to be in abundance in the country.

We can talk about the exportation of commodities to other countries if we have sufficient local content production of food and other essential commodities which will strengthen our national currency about other countries currencies.

Foreign companies or firms operating in Nigeria have relocated to Ghana and other African countries as a result of unstable and interrupted electricity supply.

The high cost of doing business, high lending(interest)rate by the financial institutions of commercial banks, development banks, agricultural banks and Industrial banks and huge taxes imposed on industrial and commercial sectors have necessitated the industries relocating to a more friendly atmosphere in some African countries where there's stable electricity supply for continuation of their business operations.

It is imperative for the government to drastically cut or reduce the high costs of governance in all government agencies, commissions, departments, boards, ministries, and parastatals both at the federal and state levels and the elected political office holders respectively.

The Presidential system of government is too expensive to run, it is seriously draining our 'lean' funds.

Also, it is important to apply due processes in the award of contracts by the government to all stakeholders concerned.

Presently, Nigeria’s debt profile is on the increase with the attendant effect devaluation of our national currency with other countries which has weakened our currency coupled with the stringent condition of high interest of loan lending rate and debt servicing which have been drastically draining our national budget on an annual basis and constant loan borrowing from the International Monetary Fund, the World Bank and other international financial institutions and countries must stop.

The more the federal government borrow loans from the International Monetary Fund, the World Bank and other international financial institutions, the more our annual budget is depleted in debt servicing.

The federal government must take the necessary urgent steps to force down prices of food and other essential commodities firstly before taking other steps to address our already depressed economy by reducing the lending rate to a single-digit figure, drastic action of uninterrupted electricity supply must be put in place for the growth of small, and medium enterprises to flourish.

Political leadership must be on a part-time basis with drastic cuts in elected political leadership allowances.

Diversification of the national economy should be a matter of urgency to further boost our national revenue for more infrastructural development.

The prices of petroleum products should also be reduced to a reasonable and affordable price after taking into consideration the reduction of the marginal cost, variable cost, landing cost, transportation cost, tariff and refining cost of petroleum products.

The federal government should ensure more local content production and refining of our petroleum products to reduce the huge costs incurred in refining petroleum products.

There should be proper monitoring of the supply and distribution of petroleum products in the country by the appropriate stakeholders in partnership with the federal government representatives’ committee.

The federal government must ensure that billions of naira should be channelled into revamping moribund industries and establishing more viable industries for more local production of commodities and the creation of job opportunities.

The Central Bank of Nigeria must put in place appropriate monetary policies that will ensure that our national currency is strengthened in the international foreign exchange rate market, the availability of funds to critical sectors must be provided to encourage the setting up of new small, medium enterprises for unemployed Nigerians; our people must be encouraged to go into farming business, and there should be stable electricity supply to boost business growth and expansion.

I read online of the recent Central Bank of Nigeria increase in interest rate to 22.75%.

This recent increase in interest rate is most unfortunate at this point of a depressing economy.

The federal government must tackle headlong the issue of constant Fulani herdsmen invasion of people's farmlands in the rural areas which is one of the reasons for the surge in prices of food in the country.

A daily visitation to market across the country clearly shows a geometric incessant increase in the prices of food and other essential commodities. This is a painful and agonizing situation.

The recent announcement of intending merger of some government agencies, commissions, departments, boards, and commissions by the federal government is a welcome development, for it will reduce the costs of expenditures in such agencies, commissions, departments, boards, and commissions.

There must be zero tolerance for corruption.

There must be proper auditing of the financial statements of boards, ministries, parastatals, agencies, and commissions belonging to the government.

The recent introduction and announcement of some intending palliatives by some state governments is a welcome development which must be followed to the letter with proper monitoring.

Food and other essential commodities must be made available to Nigerians at reduced prices.

Also, my candid suggestion and advice to the federal government will be that the CBN should adopt flexible, pegged and adjustable exchange rate to ensure the purchase and sale of petroleum products at an affordable price to enable independent petroleum products marketers to import petroleum products.

The flexible, adjustable and pegged exchange rate regime will further stop the depreciation or devaluation of our currency and will also ensure the availability of petroleum products, decrease in landing, and other costs of production of petroleum products, food and other essential commodities.

This calls for a matter of national urgency to avoid further starvation in the country.

Mr Simeon Okoro is an Economist, Writer, Author and Columnist.

okorosimeon1990@gmail.com.