Dear Subscriber,

Hardship protests fueled by inflation and profligacy

The news that headline inflation slowed to 33.4% for the first time in 19 months sounded like music to the ears of the Nigerian government. The Nigerian leadership has been grappling with a disaffected citizenry struggling with high inflation, epileptic power, a weak Naira, and chaotic bureaucracy in their everyday lives. Inflation especially food inflation has reached a record high of 40%. That is why the invitation and threat of the “End Bad Governance protest” resonated with the masses.

Bad decisions – You can run but you can’t hide

The government had mistakenly believed that the use of discredited traditional rulers and compromised union leaders could diffuse the tension and forestall the protests. In the end, the protests took place, and the country learned the hard way that economic misery cannot be disguised or wished away.  The people have not only criticized the government for the inefficient management of the palliatives but also for the prophylactic (lavish) lifestyles at a time of widespread misery.

The government had been asking for additional time to allow the economic programmes to manifest in improved welfare of the people. Luckily the situation is beginning to improve slowly as any economist will testify. The transmission time lags between policy decisions and impact are taking much longer than anticipated.

Protests are as old as mankind please ask the French (1789)

Protests are a universal way of expressing grievances and are as old as mankind. They are not confined to Nigeria or developing countries. The French Revolution of 1789   had grievances similar to the Nigeria of today. There exists a common denominator of crisis including class, political, and ideological struggles. The history of protests in Nigeria dates as far back as the Aba woman’s riot (1929), the Agbekoya riots in Ibadan (1969), the Ali must-go riot (1978) a protest over a 50 kobo increase in students’ cost of meals per day from ₦1.50k to ₦2.00 under the Muritala/Obasanjo administration (i.e. ₦2.00 then is the equivalent of ₦4,500 today).

A flicker at the end of the tunnel??

The FGN is now accelerating its efforts to ensure that policy changes have a positive and meaningful impact on the people’s welfare. The impact of import duty waiver on essential commodities will definitely taper prices and have a knock-on effect on the costs of production. The Naira has steadied in the forex market and is beginning to appreciate marginally. We expect it to trade at N1500/$ this quarter (Q3’24).

The FGN $500mn Eurobond issue should be successful and will help provide technical support for the Naira at the current trading levels. The good news is that the FGN is learning to respond quickly to negative economic developments and make changes where necessary. The problem is that the credibility costs of poor decision-making can increase the already wide trust deficit.

In this edition of the LBS Breakfast session, Bismarck Rewane and the FDC Think Tank offer critical insights into these issues and their implications for consumers, your business, and investment strategies.

Enjoy your read!