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Inflation and corruption rattle Nigeria's economy

Categories: Sub-Saharan Africa, Nigeria, Development, Economics & Business, Governance

A Nigerian man leans on a white wall. Photo by Muhammadtaha Ibrahim Ma'aji [1] from Pexels.

Rice. A bus ticket. Nigerians are feeling the squeeze of rising prices for everyday staples.

In January, the inflation rate in Nigeria jumped to a record 12.13 percent, the highest since May 2018, according to Nairametrics, a financial online news portal that released the report on February 18. [2]

Nigeria's economy went into recession in 2016 due to a fall in the international price of crude oil from “highs of about $112 a barrel in 2014 to below $50″ in United States dollars, according [3] to the BBC.

The country pulled out of the recession [4] in “the second quarter of 2017,” according to Premium Times, and the International Monetary Fund further asserts [5] this positive outlook:

Economic growth in the fourth quarter of 2017 was positive for the third consecutive quarter, driven mainly by recovering oil production. The economy — excluding the oil and agricultural sectors — saw a first modest year-on-year expansion, after seven quarters of contraction.

Yet, a “rise in prices which inflation measures is the fifth consecutive and the highest in 21 months does not bode well,” for Nigeria for these reasons, according to Temitayo Fagbule, economist and chairman of the editorial board of BusinessDay, a financial daily in Nigeria.
Fagbule explained to Global Voices via email the various reasons why high inflation is hurting Nigerian citizens:
  1. Food e.g. rice takes a big portion of daily spend, but closure of borders [6] (to boost local production) last October has made this staple more expensive.
  2. It is likely to erode the national minimum wage, which was just raised after nine years but many state governments will struggle to pay.
  3. Rising prices strains spending power when good jobs, if any, are hard to find high in an economy limping out of 15 months of negative growth in 2016.
  4. It's double jeopardy for commuters in Lagos, the biggest city in Nigeria and where most small business operate. The rise in prices is an additional squeeze on their pockets — transport costs have more than doubled since the ban of okada [commercial bikes] and tricycles in February.

Corruption ranking tanks

Nigeria, — Africa's most populous country — is not only shackled by an economic dip, but also held hostage by corruption — particularly in the public sector.

Transparency International, a global anti-corruption movement based in Berlin, Germany, releases a year Corruption Perception Index (CPI) to rate the level of corruption for 180 countries around the world. CPI grades countries on a score of zero to 100, where zero is highly corrupt and 100 is very clean. The 2019 CPI  [7]ranked Nigeria, the 146th most corrupt country the world, with a score of 27 out of 100. This showed a fall from the 2018 ranking [8] in which Nigeria held the 144th position, with a score of 26.

While countries [9] can improve their CPI rating by “reducing big money in politics and promoting inclusive political decision-making are essential to curb corruption,” the CPI 2019 score for Nigeria shows little promise of this.

The Nigerian government faulted the CPI as baseless because it does not reflect realities on ground. Attorney General and Minister of Justice Abubakar Malami said that in regard to the fight against corruption, Nigeria has “been doing more, we have done more and we will continue to do more,” reports [10] the Cable, an online newspaper.

The Economic and Financial Crimes Commission (EFCC), Nigeria's anti-corruption agency, also decried Transparency International's “bogus and ambiguous criteria:”

However, about 80 percent of netizens who voted in a Twitter poll by Abuja-based Premium Times agreed that corruption had worsened in Nigeria in 2019:

Corrupt leaders are the reason why “we are on our knees,” quipped Ononogbo, a Twitter user:

SERAP, a Nigerian civil society group, quipped that the scores are “hardly surprising:”

The main opposition party, the Peoples’ Democratic Party, said that the ranking “speaks volumes [17]” that the current government which rode to power “on an anti-corruption mantra, has ended up becoming the most corrupt in the history of our dear nation.”

The ranking suggests that the Nigerian government has done little in the much purported fight against corruption. Journalist Adedolyin Shittu warned that denying the score results does no good — rather, it will [18] “exacerbate the corruption crisis the country is facing.”