By Salisu Yusuf
I was discussing with a friend who’s an auto broker and an arbitrage specialising in buying and selling goods from Benin Republic, Niger Republic and Nigeria. Our topic of discourse was the so-called global inflation put forward recently by the pro-government campaigners to defend our economic limbo.
From around 2000 to date, he argued cogently, the prices of goods and services were stable and fixed in Niger, Benin and Saudi Arabia – the economic reference points and benchmarks of our so-called economic analysts. They depend blindly on the economic malfeasance that befalls our country. The only change, he argued, is the exchange rate of our Naira to any foreign monetary denominator as our Naira plunges daily in value due mainly to our poor economic managers.
For example, around 2000, the tokunbo golf car was sold at 800,000 CFA Francs. Each 1000 CFA francs was exchanged then at ₦600. So, around that time, you could buy the car brand at around ₦768,000. Today, the same car is sold at the same 800,000 CFA francs. What only changes is the rate of exchange due to the Naira depreciation. Each 1000 CFA francs is exchanged at ₦960 instead of ₦600. So, the same car sold at ₦768,000 is now sold at ₦1.7m in the Benin Republic.
Moreover, a bag of rice that could be purchased at 18,000 CFA francs, equivalent to ₦10, 800, for the CFA francs, was sold at a lower rate. Today, the same bag of rice is sold at the same price of 18 CFA francs as two years ago, but at a high price of around ₦22,080 because of the Naira devaluation.
Some people measure this so-called global inflation theory with the price of a meal in Saudi Arabia. A friend once told me that a meal in a Saudi Arabian restaurant could cost you ₦5000, whereas ₦1000 could buy you a meal in Nigeria. I laughed at his low-level economic analysis. The ₦5000 Saudi meal is only realised if you exchange it for our depreciated Naira. If you calculate the number of Saudi Riyals exchanged for the ₦5000 is a low amount for a person living in Saudi Arabia. In other words, the Saudi Riyal is only valuable if, and only if it’s changed to Naira! This is the same economic scenario I explained earlier in the CFA francs/naira ratio.
The rate of exchange between Naira and Riyal, CFA Francs/ Naira, explains the economic limbo being faced by our country. This further illustrates the Federal Government’s resolve to increase the Hajj value-added tax from 5 per cent to 15 per cent. Moreover, it also hints at the government’s Hajj subsidy removal – hence, the exponential rise in 2022 Hajj fares to nearly ₦2.5m for the participating Nigerian pilgrims.
In the Niger Republic, prices of commodities are stable and fixed, as they do not fluctuate like in Nigeria. This is because President Bazoum manages the economy well; the government implements a protectionist economic policy, where Nigeriene goods are protected against their Nigerian counterparts through restrictions against export or putting high tariffs and handicaps placed through import quotas. Though many Nigerienes export petroleum in massive quantity from Nigeria, President Bazoum has restricted exporting of gas to Nigeria and restricts its consumption internally. Defaulters are taxed. Sometimes the products and their means of transportation are confiscated by gendarmes.
Meanwhile, the high inflation rate has affected the price of our internal commodities. For instance, the gas imported from Niger is much cheaper than ours in Nigeria. Daily, hundreds of motorcycle riders import the Nigeriene gas on a large scale without paying any import tariff. Antithetically, Nigerian petroleum products are being exported into Niger without paying for excision to the Federal Government because of the border closure.
Therefore, smugglers from, especially Niger, play their trump cards as they usually export our products freely, sell them in CFA francs at an exponential price in Niger, come back to our border and exchange the CFA into Naira, rebuy our commodities and go back to sell at a bargain price.
While we expect Mr President to cap up his swansong with a socio-economic legacy, we are daily disappointed that the man will finally end his tenure as a colossal failure, a disappointment to a poor talaka that stood blood, toil, tears and sweat to vote for this man.
Salisu Yusuf wrote from Katsina via email@example.com.