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Why falling inflation rate has no effect on Nigerians — Economists

By Victor ‘Tunde Oso

Some notable economists in the country have given reasons why the recent consumer price inflation fall has failed to have positive impact on the living standards of Nigerians.

In various chats with Sunday Vanguard, they listed adverse double-digit inflationary range; worsening unemployment situation for the working age population of 15-64 years; weak macro-economic performance; insecurity, manifested in herdsmen and bandits taking over farmlands, thus causing insufficient local food production; lack of adequate welfare government programmes that have proper trickle-down effect on the economy, among other reasons for the crushing poverty in the country.

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The National Bureau of Statistics had, in its latest assessment of the economy, said Nigeria’s consumer price inflation fell to 11.22 percent year-on-year in June 2019 from 11.40 percent in the previous month, adding that this was the lowest inflation rate since July 2018.

However, a former Deputy Governor, Central Bank of Nigeria, Dr. Obadiah Mailafia, said we are still not within the desirable single-digit range.

According to Mailafia, there is also evidence of a worsening unemployment situation for the working age population of 15-64 years. According to the NBS, unemployment has risen to 23.1% as contrasted to an earlier figure of 19.01 percent. During the course of 2018 Nigeria overtook India as the world capital of poverty. The number of poor as internationally defined has risen from 77 million in 2018 to 80 million in 2019.

He emphatically said Nigerians have become poorer with the worsening crisis of unemployment where more and more of our children falling outside the school system.

Basil Enwegbara, development economist and international finance specialist, said Nigerian food supply cannot be in its worst situation. “There is no worse resultant effect of the herdsmen and bandits taking over farmlands than farmers, now afraid of becoming either killed or kidnapped and thus have abandoned their farmlands, which are now lying fallow unharvested.”

Dr. Aliyu Abubakar Audu, a member of the Nigerian Economic Association, said even when the president signed the 2019 budget in June, delaying the budget implementation because there’s no federal executive council in place, has put a squeeze on the economy because government is the highest spender, which the private sector is dependent.

According to Audu declining inflation rate has no impact because “The Federal Government has a history of not implementing more than 60% of her budget, which has not been good for the economy leaving deficit in infrastructure, with the threat of another recession looming.

Lead Director of Centre for Social Justice Limited by Guarantee (CSJ), Eze Onyekpere, disputed the NBS’ claims, maintaining that the economy has rather been stagnant in the first half of 2019. “This is due to the fact that it has not been properly directed by the political and economic leadership.”

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Onyekpere said the economy grew by about 2.1% only, at a time the human population is growing by 2.7%, which means the population is outgrowing economic development. “And there is no clear agenda from government to reverse this trend. Thus, we are still in negative territory. You will recall that our economy was growing at about 6% per annum some years ago and was one of the fastest growing economies in African but now, we are one of the worst performers. We still have double digit inflation even though it has come down from its high 18% to less than 12%. But this is still not acceptable inflation rate for an economy in search of growth and development.”

He added that we have an unemployment rate in excess of 23% and majority of our unemployed are the youths, who we acknowledge as our major resource and the leaders of tomorrow. “We are not putting their energies and skills to productive use. The practical implication of this is that we are not seeking to rebuild our economy with all the available resources for progressive improvements to the standard of living.”

They unanimously punctured the NBS data, repudiating its favourable, but academic declining inflationary rate and insisted that Nigerians still experience deplorable living standard.

Vanguard

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