A GLIMMER OF HOPE

The reforms of the Tinubu administration have started bearing fruits, reckons Dennis Ochei  

It’s not yet uhuru but cheers have begun in some quarters as the reforms by the Central Bank of Nigeria (CBN) begins to bear fruits. While the national currency, the naira is experiencing stability, the prices of essential goods have begun to gradually reduce.

At the Chartered Institute of Bankers of Nigeria’s 58th Annual Bankers’ Dinner and Grand Finale of the Institute’s 60th anniversary in Lagos last year, the CBN governor, Olayemi Cardoso reeled out his plans to strengthen investors’ confidence, attract capital inflows, stimulate domestic investment, and ultimately improve the level of external reserves.

Central to the reform is the need for convergence of both the official window and the so-called black market or parallel market of currency exchange. Before now, speculators drove the forex market, widening the difference between the two windows. It led to the rapid fall of the naira.

Cardoso wielded the big stick hoping to curtail round tripping in the FX market. He stepped in to ensure bureau de change operators recapitalise and re-register in order to sanitise the sector.

The result is relative sanity and the near stability that’s being experienced. Roadside traders of currency have vanished. The exchange window between the two markets are converging rapidly.

Consequently, the naira stability is having a direct positive impact on the economy. Market indications point to stability in prices of goods with some states reporting gradual drop in prices already. In some markets across the country, some prices have dropped by as much as 10% according to various market Intelligence reports. Some as marginal as 2% and some 5%, all indicating a positive trajectory that the economy is heading in the right direction and that the apex bank’s reform is yielding fruits.

Staple foods like parboiled rice, maize, beans, yam and millet have experienced gradual drop in prices across some states, in response to reforms.

Reports in Gombe State for instance indicated that a 50 kilogram bag of foreign rice sells for N66,000 as against N82,000 few weeks ago, while a 100 kg bag of local variety rice sells for N120,000 as against N130,000 in the same period. Also, a measure of beans was sold at N1,800 as against N1,900, while a 100kg bag of the produce sold at N78,000 as against its previous price of N83,000 in the same state.

Perishable produce also showed a decrease in price, though marginally. For instance, a medium-sized basket of tomatoes sell for between N8,000 and N11,000 as against its old price of N9,500 and N13,000, depending on its quality. Similarly, a bag of onions which previously sold between N13,000 and N20,000 sells at N12,000 and N18,000, respectively.

 Bauchi has experienced a drop in prices of goods as maize at Wunti market saw a decrease in price to N58,000 for100kg, a bag of beans sells at N75,000, soybeans N32,000 and sorghum N43,000, as against its old prices of N60,000; N75,000, N80,000 and N50,000, respectively. At the Dutse grain market, a 100kg bag of local variety rice sells at N140,000 as against N160,000, while millet sells at N68,000 as against N72,000 it sold in the past weeks. Similarly, a 100kg bag of maize and sorghum sells at N68,000 as against N72,000, and wheat sells at N80,000 as against N88,000.

In Abuja, similar drop in prices has been witnessed as a measure of beans is retailed for between N2,400 and N2,800 depending on the market one visits. Also, a tuber of yam sells for N1,500 and N2,500 depending on the size and market. Prices of various kilograms of rice, maize and other items have also experienced a drop.

In Lagos, Delta, Edo, Anambra and Ebonyi, there are also reports of marginal drop as some of these needed foods make their way into the market. It’s understandable that the rate of price drop is higher in the far north as those places are sources of production where the goods are supplied to the south.

As the mainstream and downstream sectors of the petroleum also stabilise, cost of production is expected to drop as well as transportation of goods. 

In addition to reducing the cost of production, the harvest period is expected to further slow down inflation. The oscillation in prices is expected but overall drop in prices show a clear direction that with harvest period getting nearer, prices are expected to fall significantly.

Indeed, many economists have hailed the market reactions to the reforms instituted by the President Bola Tinubu administration. According to Bismarck Rewane, the Chief Executive Officer of Financial Derivatives Company, the last inflation report which indicated a gradual cool in headline inflation means “inflation will begin to decline from the month of July.”

 “We think that give or take with how the minimum wage is handled, said Rewane, “we will begin to see moderation in rate of inflation in the month of July into August — not drastically, but what we call disinflation will begin to kick in at that time. So there is a flicker of light at the end of the long tunnel.

“After difficulty and chaos comes light at the end of the tunnel, I think that cautiously we are optimistic that things are going to start improving slowly.”

Ochei writes from Makurdi