Agriculture
Growing Inflation Eroding Purchasing Power of Nigerians
By Derrick Bangura
Most Nigerians are no longer able to afford major expenditures on discretionary or non-essential goods and services as inflation has continued to take its toll on their purchasing power, a new report by Fitch Solutions has shown.
Tagged: “Nigeria 2022 Consumer Outlook: Elevated Inflation Will Weigh On Consumer Spending,” the leading global market and credit intelligence firm made a forecast that real household spending will grow by 3.6 percent in 2022, a deceleration from the estimated 3.7 percent growth in 2021.
Discretionary spending refers to items such as recreation and entertainment, that consumers purchase when they have enough income left after paying the necessary expenses such as rent and utilities.
A THISDAY review indicated that last month, the consumer price index, which measures the rate of increase in the price of goods and services, jumped amid increases recorded in food and energy prices.
Last Monday, the National Bureau of Statistics (NBS) pegged the country’s urban inflation rate for April 2022 at 17.35 percent (year-on-year) while the rural inflation rate was 16.32 percent.
Nigerians have continued to complain as the value of the naira continues to depreciate and the cost of essential goods and services keeps skyrocketing.
“We note that Nigeria’s elevated inflation is a risk to our outlook for consumer spending in 2022 as it will negatively impact consumer purchasing power, limiting spending to essentials,” it stated.
However, it noted that despite the erosion of the value of the currency and associated inflation, total household spending in nominal terms will reach N150.9 billion in 2022, increasing from N128.5 billion in 2021.
In addition, it said that private final consumption is forecast to grow by 3.5 percent (in real terms) in 2022, consistent with the estimated growth of 3.5 percent in 2021, aided by rising oil production.
But the report noted that continued forex shortages and slow productivity growth in the agricultural sector, which it said employs almost 35 percent of the workforce, will prevent a sharper acceleration.
“Since the start of 2021, inflationary pressures have been rising in many countries globally, as base effects, higher commodity prices, and supply-chain challenges create localized shortages.
“The Ukraine-Russia conflict has also significantly impacted the global supply prices of key commodities, such as oil and gas, fertilizer, wheat, corn, and barley.
“The commodity price increases are already feeding through into higher consumer prices and will continue to do so over the year.
“We believe that rising consumer price inflation is a key risk to consumer spending over 2022, as it has the potential to erode purchasing power and shift spending away from discretionary spending,” it pointed out.
Nigeria’s consumer price inflation had been trending lower in recent months before elevating in April to 16.82 percent, worsened by rising commodity prices and the weakening naira which has increased the cost of imported consumer goods.
“In March 2022, Nigeria’s food inflation was 17.2 percent y-o-y due to increases in the price of bread and cereals, potatoes, yam, and other tubers, fish, meat and oils, and fats.
“Our country risk team forecasts Nigeria’s consumer price inflation to average 17.2 percent in 2022, slightly higher than the 2021 average of 17.0 percent y-o-y. The persistently high inflation will continue to negatively impact consumer spending power over 2022,” Fitch noted.
On the back of the Russia-Ukraine war, it stated that supply chain issues and bottlenecks resulted in consumer goods shortages, feeding through into supply-side inflation.
“ Fitch Solutions believes the global semiconductor shortage will continue…, putting pressure on the supply of several consumer goods,” it stressed.
According to the firm, the Ukraine-Russia conflict is placing significant supply pressures on key commodities, pushing up final market prices across a spectrum of consumer categories.
Earlier in the year, the World Bank predicted that Nigeria may have one of the highest inflation rates globally in 2022, with increasing prices diminishing the welfare of Nigerian households.
“In 2022, Nigeria is expected to have one of the highest inflation rates in the world and the seventh highest in Sub-Saharan Africa,” it said in its Nigeria Development Update.
According to the global financial institution, high inflation hampers the country’s attempt to achieve economic recovery and erodes the purchasing power of the most vulnerable households.
“High inflation is frustrating Nigeria’s economic recovery and eroding the purchasing power of the most vulnerable households. In the absence of measures to contain inflation, rising prices will continue to diminish the welfare of Nigerian households,” it said.
It projected that this could push 8 million Nigerians into poverty, with the possible disruption of consumption, investment, and saving decisions, among other consequences.
The Kwara State University (KWASU) Microfinance Bank has provided loan facilities to farmer groups in and around Malete, Moro Local Government Area.
The Vice-Chancellor and Chairman of the Board of Trustees, KWASU Microfinance Bank, Prof. Jimoh Shaykh-Luqman, announced this while presenting offer letters to the farmers’ associations at a formal event held on the university campus.
Addressing the farmers, the Vice-Chancellor, represented by the Deputy Vice-Chancellor (Administration), Prof. Moshood Jimba, said the agricultural loan scheme aimed to support farmers in boosting food production and enhancing food sustainability.
“The loan is meant to support your farm operations, especially in the upcoming planting season,” he said.
Prof. Shaykh-Luqman reaffirmed KWASU’s commitment to its mantra of being a “University for Community Development,” leveraging its expertise and resources to initiate programmes that drive local development.
The Managing Director and Chief Executive Officer of KWASU Microfinance Bank, Alhaji Hakeem Hassan, noted that the agricultural loan scheme was piloted last year with 15 farmers as beneficiaries.
He added that the pilot scheme yielded positive results for both the farmers and the bank, as all beneficiaries successfully repaid their loans.
Following this success, he said, the scheme had been expanded to include more farmers under various farmers’ associations.
The News Agency of Nigeria (NAN) reports that the associations benefiting from the agricultural loan scheme include Alanu Agbelere Farmers Group, Agbedola Ketere Group, and Itesiwaju Agbe Group Omoni.
Others are Agbeloba Farmers Association (Malete Market), Agbeyewa Elemere Farmers Group, Agbe Olofeere Group, and Agbeloga Malete Farmers Group.
Speaking on behalf of the farmers, the Chairman of Agbeloba Farmers Association (Malete Market), Alhaji Mohammed Abdulrazaq, expressed gratitude to the university and the bank for their trust.
He pledged, on behalf of the beneficiaries, to utilise the loans effectively and ensure prompt repayment.
The Kano State Government has begun implementing the second phase of its livestock empowerment programme valued at N2.3bn under the Kano State Agro-Pastoral Development Project (KSADP).
The Commissioner for Agriculture and Natural Resources, Dr Mamood Danjuma, disclosed this while addressing newsmen on Thursday in Kano.
Danjuma said the initiative aims to support beneficiaries with livestock, feeds, drugs, and salt lick to enhance their economic well-being.
According to him, 911 beneficiaries are being supported with two rams each, feed for three months, drugs and salt lick, while 2,386 women are being supported with two goats and a buck goat in the poorest households in the state.
He explained that the total package under the empowerment programme showed that 1,342 bulls were procured by the government at the cost of N560m, 1,822 rams were procured at the cost of N175m and 7,158 goats bought at the cost of N451m.
“Under the cattle scheme, each cattle gains 100kg over a period of 120 days. The fattening period is for 120 days, making three cycles possible in a year.
“As for the small ruminants fattening scheme, with the same 120-day fattening period yielding an extra 15kg/animal.
“The project promotes goats’ reproduction through women who will take care of the animals and sell the young ones to improve their income and standard of living,” he said.
He said that the programme promotes economic empowerment, particularly among women, by providing them with livestock to care for and sell, ultimately improving their income and standard of living.
Gov. Nasir Idris of Kebbi, has vowed to sustain free distribution of fertilisers to farmers up to the end of his tenure.
The governor made the promise at Shanga Local Government Area while addressing party loyalists in continuation of his thank-you tour to Local Government Areas of the state.
He observed that sustaining the free distribution of fertilisers to farmers would boost the morale of farmers, increase food production and contribute to national food security.
Idris also pledged to sustain the payment of Hadaya (sacrificial ram) for intending pilgrims in his efforts to assist the pilgrims.
He thanked the people of Shanga for the support and cooperation they have been rendering to his administration.
Speaking on education, the governor said his government would continue to offer free education to the people of Kebbi to pave the way for an educated society.
He recalled that the state government had been providing N175 million monthly for secondary school students’ feeding but now increased it to N300 million per month.
Receiving those who dumped People’s Democratic Party (PDP) for All Progressives Congress (APC), the governor, assured them of equal treatment, insisting that the present administration was for the entire people of the state.
On requests of road construction linking villages in the area, Gov. Idris assured to fulfil the demands to ease movement of goods and people in the area.
In his speech, the APC Chairman in the state, Alhaji Abubakar Kana-Zuru assured the new members that they would be given equal treatment.
He urged the council chairman, commissioner and other political office holders to integrate the new members to give them a sense of belonging.
In a welcome address, Babangida Aliyu, the party Chairman, Shanga Local Government appreciated the governor for bringing development to their area in different sectors.
The News Agency of Nigeria (NAN) reports that the occasion also featured formal reception of about 8,000 PDP supporters including local government party exco, delegates and state assembly party candidate, Mustapha for 2019 and 2023 to ruling APC
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