Economic Hardship: FG, Moves To Reduce Energy Cost, High Import Duty To Crash prices Of Foodstuff, Cement Across Nigerian MarketsBy Stephen Ubanna Worried by the outcry of Nigerians over the increasing cost of foodstuff and building materials, particular, Cement in the country due to the free floating of the naira in the country’s Autonomous Foreign Exchange Market, AFEM, to the North American country of the United States, US, dollars, and other major world currencies, the Nigerian government appears to have move moved to reduce the high cost of energy and duties on imported food items, wheat, spare parts, raw materials, machineries and other items to make them affordable.The Economic Community of West African States, ECOWA, French speaking member countries were said to have taken advantage of the devaluation of the naira to strengthen the CFA, that now exchanges for 1000 to N2, 200.00 at AFEM, thus making it possible for the Beninois and Nigerien Traders, particular, to troop into the Nigerian markets in the northern part of the country through the several unapproved routes to buy the country’s cheap agricultural, local and foreign manufactured goods imported into the country.
Dave Umahi, an Engr. And a former governor of Eboyi, south east Nigeria, and minister of Works may have spoken the mind of President Bola Ahmed Tinubu, who incidentally was a former governor of Lagos state, when he stated that the government is exploring ways of reducing the high cost of energy and . import duties . This because both energy and improved forex supply to import raw materials and spare parts are crucial for cement production to crash the prices of food stuff and building materials across the country. He was particular about the reduction of the price of cement which have forestalled many building and road projects across the country. The former Eboyi state governor had said that the decision to reduce duties on machineries, raw materials, wheat and other food items imported into the country through the nation’s seaport and Land borde areas and airports was reached at a recent meetng between government Representatives and Cement Manufacturers which includes Dangote Industries, BUA, Larfarge amongst others in Abuja, the Federal Capital Territory. Given the agreement at the meeting, Umahi , Doris Uzoka –Aniete, minister of Industry, Trade and Investment and Representatives of the country’s three major cement companies ,Dangote, BUA and Lafarge were said to have signed a Communique to show that the government is aware of the difficulties of the Companies operating in Nigeria, particular the Cement companies such as the high cost of energy to power the plants and skyrocketing import duties on spareparts , poor road infrastructure , foreign exchange crisis and the cross-border smuggling of cement and other food items to the neighbouring Benin Republic, Niger and Cameroon .
This may have nformed why the Industry, Trade and Investment minister, had said that she will strengthen discussion with office of the National Security Adviser, NSA, and Bashir Adewale Adeniyi, MFR, led Management of the Nigerian Customs Service, NCS to devise strategies for stopping the smuggling challenge across the country. Vice President Kashim Shettima, who was a former governor of the north Eastern state of Borno had said that there are 32 illegal smuggling routes around Ilela, a border Community between Nigeria and Nigerien where trucks loaded with maize and cement were taken to neighbouring West African countries to sell because of the stronger CFA,
currecy.Signs that the over 3,000 smugglers who operate at the Ilela border axis are no longer finding it funny to facilitate the free passage of their smuggled goods became more pronounced with the border closure with Niger by the Authority of the Heads of State and Government last August. This is evident as Lines of hundreds of trucks of the daredevil smugglers stretch back many kilometers close to Benin’s northern border with Niger. These had resulted in their cargo wasting and their drivers going broke after weeks of being stranded at he closed border because of the suspension of Commercial and Financial transactions with the West African country. Until the border closure, Nigeria used to be Niger’s main trading partner, believed to have exported $193 million worth of goods, particular, tobacco, maize, cement, cattle and fruit to the country. This is in addition, according to the United Nations to the supply of electricity to the country.
Ibrahim Lawal, a Professor and former Director, Nigerian Policy for Strategic Studies, Kuru, Jos, Plateau state, had said that the economic hardship Nigerians are currently facing under the Tinubu’s Administration is the direct result of former President Muhammadu Buhari’s disregard for the World Bank’s recommendation to end the subsidy between 2015 and 2023.Notwithstanding the pain caused Nigerian s with the removal of fuel subsidy by the present Administration, Olayemi Michael Cardoso, governor of Central of Nigeria, CBN, had said that reason why the country over the last seven months had experienced forex crisis to fund the AFEM was because of invalid foreign outstanding claims . The CBN governor had said that out of the $7 billion backlog of unfulfilled US dollars discovered following an audit by the CBN, Consultant, $2.4 billion was found to be invalid foreign outstanding claims .
He had told those that cares to listen that the claimants to the unfulfilled payments in US dollars in some instances were unable to provide the required import documentation for the claims and in some cases the entities the entities did not exist, meaning that these claims which had been ‘’pressuring the naira and unsettling the country’s foreign exchange market for a while’’ has been saved and pumped back to the AFEM, to meet the demand of Corporate Organisations.As the CBN Monetary Police Committee, MPC, which had adjusted the asymmetric corridor around the MPR basis points , to +100/700 from +100/300 from 32.5% ratio to 45%, raised the Cash Reserve Ratio, and still retain the country’s liquidity Cash Ratio, at 30% as well as seeks to mop up naira liquidity , many believe that ‘’it will reduce the naira cash chasing scarce US dollars at the AFEM and thus help to stabilize the local currency , described as one f the world’s worst performing currencies this 2024.
They asserted that the recent foreign exchange measures initiated by the CBN, will ultimately lead to the restoration of prices and foreign exchange rate stability. Sabi Abdullahi, minister of State Agriulture and Food Security , who may have spoken the mind of President Tinubu, had said that ‘’the economic policies that had had been rolled by the government between May 29, 2023 and now would soon start yielding results’’.
Bwala Daniel , a Chieftain of the Opposition PDP, who had analyzed the present government tough economic policies over the last seven months, had asked Nigerian s’’ to support Tinubu in this difficult time and throw their weight behind the Administration to succeed’’. He noted that this time of hunger and problems in the country is not time for politicians’’ to be talking of party and defection but to join forces with the government to find solutions to the myriads of the country’s economic challenges, particular, rising prices in food stuff , energy costEcand foreign exchange crisis’’.
