The Nation Newspaper Forces fuelling high price regime, despite naira’s rebound
engineered a remarkable rebound of the Naira, which, sometime last week, exchanged at N1,390 and N1,340/$ at the official and parallel markets respectively. But this heartwarming return to exchange rate stability is yet to translate to a reduction in prices of goods and services. The buying strength of most Nigerians has also not gained traction.
Unfortunately, this has not been the case, as the high price regime persisted. The exchange rate stability is yet to translate to a reduction in prices; the buying strength of most Nigerians has also not gained traction either. There is also a consensus around the fact that, while price increases respond faster to upward increases in key factors of production, the reverse is the case when the factors are going down. In other words, the naira appreciation, which, no doubt, gladdened the hearts of Nigerians, will take some time to kick in before it begins to reflect in the price of goods and services in the market.
That’s not all. Usoh also said the previous year, Nigeria had a lot of challenges with farmers’ access to inputs, which was caused by the high price of inputs. Also sharing his perspective on the time lag for the stability in the exchange rate to begin to reflect in prices of goods and services, a Professor of Animal Science at the University of Ilorin, Kwara State, Abiodun Adeloye said stocking of goods is an issue. He recalled that when the value of the naira was crashing and the dollar was rising, people were buying at very high rates and a lot of them because of the trend were buying in anticipation that they would sell at higher prices.
The Executive Secretary of the West African Fertiliser Association , Dr Innocent Okuku expressed a similar sentiment. He said the food that is being sold today in the market was not just harvested but was harvested last year, and the process snowballed into the early part of the year. Another critical factor keeping prices high despite the recovery of the naira, according to Prof. Adeloye is the cost of transportation which hasn’t gone down.
The Managing Director of Coleman Wires and Cables, Mr George Onafowokan said the appreciation of the naira would not bring immediate gains to manufacturers. While urging the government to implement policies that support manufacturers, Coleman MD encouraged the government to tighten everything to balance the forex position. He expressed optimism that the naira will appreciate more and that manufacturers will reduce prices when the currency regains its strength in the market.
“There was a time I warned the Federal Government about the impending food insecurity in the country but my advice was ignored,” Bafarawa said. Increased attacks against farmers by these groups have led to displacements, market disruptions and loss of livelihoods. Rising cases of kidnapping for ransom have limited the availability of labour for farming operations as farmers now dread going to their sites.
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