Nigeria's government calls for urgent discussions on the rising cost of living
Nigeria's cabinet ministers have convened emergency sessions to address economic concerns and soaring food prices, prompted by the repercussions of President Bola Ahmed Tinubu's reforms. Protests erupted in northern Niger state on Monday, with demonstrators, primarily women and youths, blocking a major road in Minna, the state capital, seeking assistance with the rising cost of living.
Since assuming office in May, Tinubu has abolished a fuel subsidy and currency controls, resulting in a threefold increase in petrol prices and a surge in living expenses as the naira sharply depreciates against the dollar.
The meetings, which commenced on Tuesday, involved key ministers, including those responsible for finance, information, budget and national planning, agriculture, as well as the national security advisor, central bank director, and other senior aides.
"After the conclusion of these meetings, we will issue a definitive statement on the government's stance in this matter," stated Information Minister Mohammed Idris to reporters.
"All I can confirm is that discussions are actively underway, and a solution for Nigerians is imminent."
The ministerial meetings, slated for Wednesday and Thursday, coincided with Tinubu's return to Nigeria following a short private visit to France.
Government officials have consistently urged Nigerians to exercise patience regarding the reforms, emphasizing Tinubu's belief that these measures will attract more foreign investment to Africa's largest economy.
However, the immediate repercussions are severely impacting Nigerians: In December, inflation reached 28.92 percent, with food costs soaring to 33.93 percent, as reported by the National Bureau of Statistics.
The naira's value has rapidly declined against the US dollar since the government eliminated a multi-tier exchange rate system and allowed the local currency to float.
Prior to the reforms, the naira traded at approximately 450 to the dollar, but on Monday, it plummeted to 1,400 against the greenback, according to the central bank.
This closely aligns with the rate on the parallel black market.
A depreciated naira amplifies the cost of imported goods, as businesses incur higher expenses for the dollars required to import goods into the country.
In a research analysis, the Economist Intelligence Unit (EIU) indicated that the central bank effectively devalued the naira last week, potentially encouraging investment. However, the EIU expressed the belief that the country's foreign reserves would continue to face challenges.
As Africa's largest oil producer, Nigeria has grappled with foreign currency liquidity issues due to its lagging petroleum output and cautious foreign investors.
The EIU note suggested that despite the improvement, Nigeria might still require an IMF program for sustained progress. It highlighted that the naira's current proximity to the parallel market rate alone may not attract significant hard currency inflows without comprehensive oil industry reforms and other policy measures.
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