By Richard Odusanya
Nigeria, a country with 133 million multidimensionally poor people, where inflation has risen for 10 consecutive months and is currently at a record 21.47 per cent, according to the National Bureau of Statistics. Nigeria’s currency which was N197 before the exit of the previous administration in 2015 has crossed N438 and N830 at the official and unauthorised parallel markets respectively in recent past. The country’s debt profile, exchange rate and foreign reserves are not doing well. From a single digit inflation and unemployment rate in 2015, Nigeria’s inflation and unemployment currently stand at 20.77 and 33.3 per cent. The characters in the Apex bank Central Bank Of Nigeria (CBN), is equally worthy of note.
Also, the debt profile is exposed to risks associated with the volatility of oil prices, as well as enhanced short-term debt vulnerabilities and cost of debt servicing arising from CBN financing. However, the economy has continued to struggle with many inhibiting burdens like inflation, weak revenue generation, degenerated infrastructure, forex challenges, unsustainable cost profile seen in debt services and subsidy payments, and the daunting threats of worsening insecurity. The naira has recorded unprecedented volatility in the midst of the storm.
Similarly, the Economy of Nigeria is a middle-income, mixed economy and emerging market with expanding manufacturing, financial, service, communications, technology, and entertainment sectors. It is ranked as the 27th-largest economy in the world in terms of nominal GDP, and the 24th-largest in terms of purchasing power parity and the largest Sub Saharan Africa’s. The Total Domestic Debt Stock as at June 30, 2022, was N26.23 trillion (USD63.24 billion) due to New Borrowings by the FGN to part-finance the deficit in the 2022 Appropriation (Repeal and Enactment) Act, as well as New Borrowings by State Governments and the FCT.
Again, the Total External Debt Stock was USD40.06 billion (N16.61 trillion) as at June 30, 2022, which was about the same level as the figure for March 31, 2022, which stood at USD39.96 billion (N16.61 trillion). Over fifty-eight percent (58%) of the External Debt Stock are concessional and semi-concessional loans from multilateral lenders such as the World Bank, International Monetary Fund, Afrexim and African Development Bank and bilateral lenders including Germany, China, Japan, India and France. The Total Public Debt to GDP as at June 30, 2022, was 23.06% compared to the ratio of 23.27% as at March 30, 2022, and remains within Nigeria’s self-imposed limit of 40%.
It is against this backdrop that we try to examines the effects, benefits or otherwise of immediate intervention to the plights of the citizens in a depressed economy, vis-a-vis the issue of salary increase. The Minister for Labour and Employment Dr Chris Ngige, just announced that there will be salary increase for the civil servants by January ’23 – coming from a Minister of an outgoing administration is an issue of serious concerns – at a time that our debt profile is freighting and we are begging for debt forgiveness. Please do not misunderstand me, I don’t have anything against the Minister’s pronouncements. However, we must take into account and consider the following:
• Benefits of the immediate intervention to the masses.
• Pros and cons of the immediate interventions vis-a-vis salary increase and the consequences of such increase that usually result in artificial inflation and how to cushion the resultant effects.
• Where is the money coming from? Loan? Foreign Reserve? PPP and other possible areas? Previous budget, new budget or supplementary budget?
• Will it not put the next incoming administration and the Nigeria’s economy in jeopardy irrespective of the political party that will emerge from the general elections in a couple of weeks?
Furthermore, the annual inflation rate in Nigeria accelerated for the 10th straight month to 21.47% in November of 2022 from 21.09% in October and above market estimates of 21.15%. The Nigeria galloping Inflation rate, today stands at 21.47 percent, coupled with the high rise of consumer goods is unsuitable for any Salary Increase as this will further cause unfavorable price increase.
In my view, Nigerians and the Nigerian workers do not need salary increase now, what they need is for the government to put in place stringent measures that is capable of eliminating the causes of high cost of living which are:
1. Price of fuel.
2. Multiple exchange Rates.
3. Housing.
4. Unnecessary and double taxation.
5. Insecurity.
6. High cost of medicals and health care delivery system.
7. Stable power supply, generation and distribution.
8. Unaffordable cost of education.
9. Good roads and mass transportation system.
10. Issue of 33.5 unemployment rate.
If all the above can be regularized, made affordable and block leakages in the system, the Nigerian Economy will rejuvenate and the purchasing power of the people will bring back smile to every home. We need to take holistic measures on solving the real problems not salary increase because it brings nothing but more pains to the Nigerian People and the Nigerian Economy.
Finally, our beloved country Nigeria is about to witness a positive turnaround as we look forward to a continuous peaceful coexistence, an election year and a prosperous year 2023.
HAPPY NEW YEAR IN ADVANCE
Richard Odusanya
odusanyagold@gmail.com
