Business

Global inflation spikes social tension

Published

2 years ago

July 18, 2022

Members of Sri Lanka’s parliament will, this week, elect a new president after the dramatic toppling of the country’s president, Gotabaya Rajapaksa. Rajapaksa succumbed to a hurricane of political upheaval that saw crowds of protesters take over his presidential palace.

But the campaign for a new Sri Lanka has not stopped at its strongman’s resignation. The battleground has shifted to the roles those who have put forward themselves played in making the country in transition with a special focus on the profiling of the caretaker president and six-term Prime Minister, Ranil Wickremesinghe.

The crisis in the South Asian island is another example of a political conflict triggered by a failed economy. Central to the crisis is galloping inflation that hit 54.6 per cent in June and food inflation galloping to 80 per cent, a frightening example of the global food crisis.

Sri Lanka’s political establishment is only the most recent to fall to failing economies and, more specifically, mass anger. Recent human history is full of revolutions triggered by economic hardship and spearheaded by individuals who had exhausted their threshold of patience.

When Parisians stormed the Bastille in 1789, they were not only searching for arms, but also hunting for more grain – to make bread – a reason the protests that triggered the French Revolution were termed the Flour War.

The crisis was caused by a plethora of social upheavals and grievances more complicated than the price of bread. Yet, the bread shortage played a major role in spreading the crisis and forming its severity.

For about one and half centuries, Spain was brought to its knees by the Price Revolution. The inflation rate was between one and 1.5 per cent, extremely low compared to modern data, but considered unacceptably high because of the monetary policy in place in the 16th century. Those price ‘surges’ were significant enough to trigger a series of economic events to alter the cause of history in Europe.

From Europe across the Pacific to sub-Saharan Africa (SSA), price crises have come with chains of reactions, leaving indelible marks on humanity. But today, the entire globe is on the cusp of a widespread crisis over the unbearable rising cost of living.

Back to back, the Federal Open Market Committee (FOMC) – the interest rate fixing arm of the Federal Reserve System – has raised the benchmark rate three times this year. Yet, the inflation rate remains unperturbed printing new highs every month and surging to a region not seen in the past four decades.

In June, they gained more points again and surpassed nine per cent. There are suppositions that the cure is plateauing but the bullish job market says otherwise. In the same month, the labour market added over 370,000 jobs, surpassing experts’ projections.

The United Kingdom’s socio-economic system is a lot different from the more dynamic U.S. But they currently share a common trait in inflation growth. Both economies are currently battling to stem an inflation rate that has reached 9.1 per cent.

Starting from last year, residents, whose real incomes have badly plummeted, have called on the government to find a creative way to freeze prices to give workers leverage. Boris Johnson’s resignation has not calmed the protests.

Rather, in the race for the Prime Ministerial position, inflation, which is expected to peak at 11 per cent in the year, has become a major talking point. The Bank of England has raised the lending rate from near zero to 1.25 per cent in a fruitless effort to cool rising prices.

While the rest of the globe plays up the role of higher interest rates in combating inflation, the Eurozone is only hoping to exit negative interest rates by the third quarter of the year, according to the European Central Bank (ECB) President, Christine Lagarde. But the area is paying for its lethargy with an extremely volatile Euro. Last week saw the weakest trading value in its history with the U.S closing gap with it as it continues its free fall.

Driven by a usual energy crisis, the inflation rate of the 19-member economic bloc jumped from 8.1 per cent to 8.6 per cent in June. The European Union (EU) is in the midst of an ongoing energy crisis sparked by the war in Ukraine and associated Western sanctions against Russia. Energy prices have soared by about 40 per cent from a year ago as the EU struggles to wean itself off the Russian supply.

Inflation in Asian countries is still far behind that of the U.S. and Europe. For instance, China’s consumer price index (CPI) was 2.5 per cent higher than it was a year earlier. At almost a percentage lower than the global average inflation rate estimated at 3.42 per cent, the price change is considered normal. But for the Chinese, a two-year high inflation growth is not close to normal.

Like China, inflation had not been a concern in Japan historically. Rather, low growth and deflation were major concerns after the end of its economic miracle. From 2010 to 2020, inflation in Japan averaged roughly 0.42 per cent. And like China, the country saw its inflation spike to 2.5 per cent in May, slightly above the two per cent target of the Bank of Japan.

In that region. A more serious concern is brewing in South Korea where the inflation rate has hit a 24-year high at a six per cent year-on-year (YoY) growth. South Koreans are facing broad-based price challenges but energy costs, as in Europe, are the most overwhelming. In response, the Bank of Korea has raised its key interest rate six times since August, pushing it to 2.25 per cent.

African economies are used to elevated inflation but the new trends are raising social tensions with the World Bank and the International Monetary Bank (IMF) considering it a growth setback.

For one, Zimbabwe has had its abnormal inflation growth shot from 66 per cent to 191 per cent since the start of the Russia-Ukraine war. In 2008-2009, its hyperinflation reached 500 billion per cent, according to the International Monetary Fund. Then, 100 trillion Zimbabwean dollar banknotes were not enough to buy basic groceries.

In June, the inflation rate in Ethiopia dropped for the first time in four months. But at 34 per cent, it is no less a worrisome figure trend for the poor citizens of the East African country. Amid talk with the IMF for a bailout, headline inflation in Ghana accelerated to 29.8 per cent in June. The West African citizens have joined their counterparts in Sri Lanka, Albania, Argentina, Panama and Kenya to demand urgent actions from politicians as the cost of living reaches a breaking point across the globe.

Back home, the inflation rate reached 18.6 per cent in June. But experts say the figures do not reflect the market realities and that they are doctored to keep political tension under control. Nigeria’s inflation worry, unlike others, is as old as the economy while the citizens have managed to live with it.

But with inflation-triggered social tension growing across the world, it is difficult to speculate how Nigerians would continue to respond to the challenges and how long it will take before such protests hit home.

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Business

Businesses count losses amid power outage in Bauchi, Gombe, and Jigawa

Published

1 month ago

October 28, 2024

Matthew Eloyi

Business owners in Bauchi, Gombe and Jigawa are recording losses due to week-long blackout ocassioned by vandalism of the power transmission line in parts of northern Nigeria.

The sudden disruption in electricity supply in the past days, also affected essential services such as water, sanitation, street lighting and healthcare delivery as most hospitals have been operating without light.

Some of the affected businesses including shop keepers, millers and artisans, who spoke while reacting to a survey by the News Agency of Nigeria (NAN), described the situation as “pathetic”.

The survey examined the perennial collapse of national grid and the need for alternative power supply in the country.

Rice millers in Gombe had decried the impact of the erratic power supply on their businesses.

A Miller, Musa Arab, at Nassarawo Industrial Layout in Gombe, said the trend was crippling their operations as they relied on electricity supply from the grid to process paddy.

He said the mills were not operational power outage as they could not afford exorbitant pump prices of petrol or diesel to run their machines.

This, he said, reduced the volume of rice supply to the market and posed serious challenge to food security.

“We must invest in power because it is the biggest determining factor for industries to thrive.

“I have over 20 workers in my mill, and we have 100 mini rice mills here, so you can imagine those who have no jobs for the past 10 days.

“Government must go tough on those responsible for the perennial grid collapse because some persons may be benefitting from it,” he said.

Also, Yusuf Ibrahim said the situation might trigger the already fragile inflation, as prices of local varieties would shot up ocassioned by the diminish supply.

He said that some had jerked up their charges to cover the expenses on diesel thereby affecting rice prices.

A check by NAN at the Gombe Main market showed that a 100 kilogramme of rice was sold for between N120,000 and N160,000, as against N110,000 and N150,000, before the blackout.

Mr Usman Sani, a rice dealer, attributed the hike in price to low supply of the produce to the market in spite of the number harvest recorded this cropping season.

He said the prices had decreased slightly at the onset of the harvest, however, it showed sprawling increase due to power outage.

“The price of rice is already dropping as a result of harvest but the trend reverse since the blackout in the past days “ he said.

Ugochukwu Daniel, a bartender in Bauchi, decried the epileptic power supply in the country, adding that lack of durable energy supply would retard Nigeria’s quest to attain social and economic greatness.

Daniel said that she spent much on fuel to run power generator for refrigrator and lightening the beer parlour, to enable her to keep the business running.

He said that businesses could only thrive in an enabling environment with stable electricity supply, to enhance wealth creation and reduce poverty among Nigerians.

“My trade is about chill drinks and it survives on electricity to operate otherwise you will out of bussiness.

“Without electricity there is nothing you can do, and not only business but about everything. We depend on it,” he said.

Similarly, Samuel Adamu, said the persistent power outage had forced him to patronised charcoal for ironing clothes in spite of its high cost and cumbersome processes.

He said that most cleaners in the area had resorted to fabricated iron charcoal in spite of hike in its prices which suddenly jumped from N5,000 to N15,000.

Adamu said the situation also encouraged division of labour in laundry to cut cost and make some gains.

“Presently, I do wash the cloth, and engage someone for ironing. The charge is N300 per set as against N150”.

While advocated development of renewable energies to enhance power supply in the country, Adamu urged security agencies to entensify efforts towards electrical installations in the country.

In the same vein; Mr Muhammad Adamu, Chairman, Jigawa State House Assembly Commitee on Power and Energy, said the Jigawa Electricity Law 2024, made sound provisions to improve power generation and distribution in the state.

This, he said, was an offshoot of the devaluation brought about by the 5th alteration of the constitution, where removed power from the executive legislative list and to the concurrent list.

“It empowered the state houses of assembly to enact laws on power.

“The committee has also carefully pursued the bill and reviewed its structure and the promise it holds for the state power sector, infrastructure and the overall economy of the state.

“The new law will pave way for the establishment of Jigawa Electricity Commission, to regulate the state’s electricity market,” he said.

According to Adamu, the law will protect residents and investors in the energy sector through ensuring prepaid meter installation and possibility of recouping investor’s funds as well as address vandalism.

“The law will lead to provision of reliable, affordable and sustainable power, essential for development of all sectors of the economy, particularly in rural areas,” Adamu said.

“Vandalism will be over because we pay Kano Electricity Distribution Company (KEDCO) money for powered supplies, but whenever there is problem of damages or broken down transformers, it is either the communities or individuals that pay for the repairs”.

Business

Mercedes urges delay of EU tariffs on Chinese electric vehicles

Published

1 month ago

October 21, 2024

Matthew Eloyi

Mercedes urges delay of EU tariffs on Chinese electric vehicles

The head of German luxury carmaker Mercedes-Benz, has called for the European Union to de-escalate the dispute with China over tariffs on electric cars.

“We need more free trade instead of new trade barriers.

“That is why it is important to find a solution that suits both the EU and China,” chief executive Ola Källenius told the Monday edition of Bild newspaper.

“The negotiations for this take time. In order not to jeopardise them, the EU should postpone the enforcement of the planned tariffs,’’ he said.

At the start of the month, a majority of EU countries paved the way for additional tariffs of up to 35.3 per cent on battery-powered electric vehicles imported from China.

Germany, however, voted against the measure amid concerns over retaliatory actions which could hurt the country’s giant car industry.

The European Commission had pressed for extra tariffs after an investigation accused Beijing of subsidising domestic electric car manufacturers, and thus distorting the market in the EU.

But whether the import tariffs would actually come into force at the beginning of November is still up to the commission.

The plans can still be dismissed if Brussels reaches a solution with China at the negotiating table.

Business

ACCI moves to promote business connections, balance work-life

Published

1 month ago

October 16, 2024

Matthew Eloyi

ACCI moves to promote business connections, balance work-life

The Abuja Chamber of Commerce and Industry (ACCI), is taking innovative steps to enhance professional relationships and promote a healthy work-life balance.

The President of ACCI, Dr Emeka Obegolu, said this in a statement on Tuesday in Abuja.

Obegolu said ACCI was committed to creating environments where professionals could connect beyond the confines of traditional boardrooms.

He said the upcoming “Business Meets Golf’’ Tournament epitomises this vision.

“Scheduled for Oct. 18 to Oct 19 at the IBB Golf Club, the tournament will gather industry leaders, top executives, and key decision-makers for a unique networking experience.

“This two-day event aims not only to strengthen business ties but also to foster partnerships that can drive economic growth.

“The ACCI’s initiative reistates the importance of maintaining a balance between professional achievement and personal well-being.

“By encouraging corporate cultures that prioritise relaxation and self-care, the Chamber acknowledges that such balance is vital for productivity and overall success,” he said.

According to Obegolu, the event will feature a range of activities designed to facilitate both business engagement and relaxation.

“Highlights include a Business-to-Business (B2B) cocktail on the first day, followed by the golf tournament and additional networking opportunities on the second day.

“The tournament will culminate in an awards ceremony recognising outstanding golfers among the participants.

“‘Business Meets Golf’ exemplifies our dedication to fostering innovative networking opportunities.

“We aim to create spaces for meaningful discussions that can lead to impactful collaborations,” Obegolu said.

The ACCI boss said in addition to promoting business connectivity, the council aimed to restate the importance of relaxation and a balanced lifestyle.

Obegolu said through events like this, the Chamber continued to play a pivotal role in supporting trade and industry in Nigeria while driving sustainable growth within the private sector.

He said to raise awareness about this landmark event, ACCI was partnering with the News Agency of Nigeria (NAN) and Media Trust Limited, to ensure broad visibility and engagement from leading brands.