In response to mounting pressure on the government from President Bola Ahmed Tinubu’s reforms, Nigeria’s cabinet members called emergency meetings to discuss the country’s economy and food prices.
On Monday, there were protests in the northern part of Niger state. The demonstrators, who were primarily women and young people, stopped a main road in Minna, the state capital, demanding assistance with living expenses.
Since taking office in May, Tinubu has eliminated currency restrictions and fuel subsidies, which has tripled the price of gasoline and increased living expenses as the value of the naira has fallen dramatically against the US dollar.
The discussions started on Tuesday and included senior aides, the national security advisor, the director of the central bank, and the ministers of finance, information, budget and national planning, and agriculture.
Information Minister Mohammed Idris told reporters, “By the time these meetings are over, we’ll be able to issue a definite statement on what the position of government is in this regard.”
“All I can say is that talks are taking place and that Nigerians will soon be able to find a solution.”
Ministerial meetings were slated for this Wednesday and Thursday, following Tinubu’s quick return to Nigeria on a private visit to France.
Nigerians have been advised by government representatives to have patience with the reforms, which Tinubu claims will increase foreign investment in the continent’s largest economy.
But Nigerians are being severely impacted in the immediate term: The national department of statistics states that in December, food costs were 33.93 percent and inflation was 28.92 percent.
Since the government freed up the local currency and eliminated a multi-tier exchange rate system, the value of the naira has rapidly declined in relation to the US dollar.
The central bank reported that the naira was trading at 1,400 to the dollar on Monday, up from about 450 to the dollar prior to the reforms.
That is close to the rate on the parallel black market.
Imported products cost more as the naira weakens because companies must pay more in dollars to import things into the nation.
The Economist Intelligence Unit (EIU) stated in a research note that although the country’s foreign reserves will continue to face pressure, the central bank’s effective devaluation of the naira last week might encourage investment.
Nigeria, the biggest oil producer in Africa, has long suffered with a lack of foreign exchange due to a decline in petroleum production and a lack of confidence among foreign investors.
Regarding the naira, the EIU report stated, “We believe the improvement will take time to bed in and Nigeria will still need an IMF program.”
The currency is currently trading near the rate of the parallel market. Large-scale hard currency inflows won’t be encouraged by this alone without other legislative initiatives and reforms to the oil industry.
