By Jerry Uwah
The standard of living of the average Ghanaian is obviously lower than that of the average Nigerian. However, Nigeria, Africa’s largest economy, has a lot to learn from the Republic of Ghana. By gross domestic product (GDP) rating, the economy of Ghana is a distant 71 in the global list of 190 countries where Nigeria towers above as the world’s 27th largest economy.
The analogy seemingly begins and ends there as Nigeria pales into insignificance in other key economic and social fundamentals. Nigeria is 131 in the World Bank list of 190 nations in the ease of doing business where Ghana is rated 118.
The naira, Nigeria’s currency, is several notches below the Ghanaian cedi. I attended a Commonwealth seminar in Accra in Ghana in 2000 and we were handed 700, 000 cedis as honorarium for the one-week event. The cedi at that time was 9,000 to the dollar when the naira was trading comfortably at N80 to the dollar.
The money was dispensed in two bundles of 5, 000 and 2, 000 cedi notes. The wads of notes the Ghanaians handed us amounted to a scant $77.7. At the end of the seminar I changed the Ghanaian currency for naira at the prevailing rate of 15 cedis to the naira.
The two bundles of notes yielded a scant N46, 666.67. Today that money amounts to N45.5 million.
The scene has changed drastically since then. The naira now cowers where the cedi stands. It now trades shamelessly at N67 to the cedi. The cedi has a commanding lead in the foreign exchange market where the naira is permanently in a disorderly retreat. The cedi trades at 5.7 to the dollar where the naira manages a humiliating exchange rate of N412 to the dollar at the new official window.
The parallel market rate is sailing perilously close to N500 to the dollar and Nigeria’s trade partners believe that the parallel market rate paints a clearer picture of the purchasing power of the naira.
The Central Bank of Nigeria (CBN) argues stridently against that perception. Even when it is clear that its multiple exchange rates policy is the bane of the naira, the apex bank has defiantly sustained the corrupt policy that has seen the naira depreciate from N197 in 2015 to N412 to the dollar in 2021.
In fact, if it was possible to reverse time, Nigerians would want a return to 2015 when things were clearly easier. In 2015, Nigeria’s poverty rate was a scant 13.5 percent. Today, it has surged above 61 percent as 122 million Nigerians languish in abject poverty.
When Nigeria replaced India in 2018 as the country with the world’s highest number of poor people, everyone thought that Africa’s largest economy would only wear that inglorious crown for a few months and hand it over to one of the world’s 10 poorest countries.
It is now clear that that perception was preposterous. Nigeria is digging in as the world’s headquarters of poverty. There are no plans to hand the inglorious crown to any other country. The World Bank believes that Nigeria pushes six more people below the poverty line every second. No country has that record. It would therefore be extremely difficult to snatch that infamous crown from Nigeria.
In 2015 Nigeria’s unemployment rate was a comfortable 4.3 percent. That is the unemployment rate even in some developed economies of North America and the European Union (EU).
Today, unemployment stands menacingly at 33.3 percent. What that means in numerical terms is that in a workforce of about 70 million people, some 23, 187, 389 eligible workers are jobless.
That explains the surge in crime in every part of the federation. The idle hands now find that kidnappings, armed robberies, banditry and downright terrorism are more lucrative than searching endlessly for jobs that are no longer there.
The rate of crime has obviously over-stretched the security agencies. With well over 320 million small arms in circulation, the millions of jobless youth inadvertently turned into street urchins are better armed than the security agencies. They now take the battle to the comfort zone of the police and are really winning.
The police with just about 300, 000 staff strength are mercilessly out-numbered and out-gunned by the bandits. The case of the police is worsened by the fact that a third of the force is deployed to humiliating household chores in the homes of Nigeria’s selfish elites. Police have no option than to retreat when the bandits strike.
Corruption and gross mismanagement of the exchange rate of the naira are probably at the root of the worsening poverty and consequent insecurity in the land.
The naira is probably the only currency in the world that is permanently on a disorderly retreat in the foreign exchange market. It depreciates even when oil price, the mainstay of the one-handed economy, is in the upswing.
The Kenyan shilling traded at 110 to the dollar in 2012. Nine years down the line, the shilling has maintained its ground. At times it appreciates to 109 to the dollar before retreating to the main base of 110. The twin evils of mismanaged exchange rate and corruption are responsible for the brewing crisis which makes some western observers conclude that Nigeria is already in a civil war.
The tumbling value of the naira fuels the supply side inflation in Nigeria’s import dependent economy. Nigeria cannot even refine the crude oil that multinational companies drill from its soil.
The rulers of the land sell the crude oil without adding any value. They import refined petroleum products at four times the value of the crude oil they export. The nation’s four refineries with combined capacity of 450, 000 barrels per day are dormant. They gulp down close to N300 billion annually in overhead cost and produce less than three per cent of the nation’s refined petroleum needs at the best of times. In the last one year they have not refined even one barrel of crude oil.
That partially explains Nigeria’s unemployment ticking time-bomb. Nigeria exports jobs with its crude oil. That renders the petrochemical industry dormant, compelling Nigeria to spend billions of dollars in plastic resins imports from the countries importing its crude oil. Thousands of jobs in the petrochemical industry have been depleted while foreigners thrive on the exported jobs.
Nigeria had a single digit inflation rate in 2015. It stood at 9.01 per cent. It is twice that figure today. In 2015, a 50kg bag of Lake Rice produced by Lagos state government in collaboration with Kebbi state, sold for N12, 000. Today the cheapest Nigerian rice sells for N22, 000 per bag.
The price of beans has become unreachable. The precious grain which provides cheap protein for Nigeria’s 122 million people toiling in abject poverty is no longer the poor man’s food it used to be. The price of a bag of beans has shot from N18, 000 in June 2020 to N56, 000.
Nigeria’s inflation tragedy is sailing perilously close to spiraling proportions. Prices now change on a minutes’ basis. Two weeks ago, a building contractor went to the market to purchase iron rods for the decking of a building.
He entered the shop of his regular customer and was told that a ton of iron rod was N356, 000 (It was less than N200, 000 in 2015). The contractor angrily left his friend’s shop to sample the price elsewhere.
The trader from two shops from his friend gave him the same price for the item and he decided to return and patronize his friend. He got back to his friend’s shop within 10 minutes and was shocked to hear that the new price was N360, 000. The price jumped by N4, 000 within 10 minutes.
That is the same thing in the cement market. A man who collected N3, 400 from his client in the morning for a bag of cement, entered the market in the afternoon and met a new price of N3, 800 per bag. Two days later the price shot to N4, 100.
Nigeria has a housing deficit of 17 million units. With cement prices sailing perilously close to N5, 000 per bag, no one knows how to accommodate the millions dwelling under over-head bridges.
The simple truth is that when an analogy is drawn, 2015 looks like paradise lost. Everyone wants it back. The irony of the deteriorating situation is that we have not reached the bottom yet. Things would definitely get worse.