By Matthew Ma
As Nigerians, we bear the responsibility for the steep cost of living in Nigeria. It is alarming to consider how each individual’s actions have contributed to the deterioration of our economy. Whether it is a vendor selling spoiled produce, a gas station employee tampering with meters, a trader who keeps increasing his product in the name of dollar increase, or a religious leader demanding excessive tithes in the name of faith, we have all played a significant part in the current rise of prices for necessary goods.”
Nigerians are currently facing a dire situation as hunger and the exorbitant cost of essential commodities continue to escalate at an alarming rate across the entire nation. The problem has left many Nigerians struggling to afford even the most basic necessities, such as food, shelter, and healthcare. The rising cost of living has only added to their misery, making it difficult for them to make ends meet and provide for their families. It is a time of widespread suffering and distress, with the most vulnerable sections of society being hit the hardest. To make matters worse, the government of Nigeria has been criticized for not doing enough to address the problem and alleviate the suffering of its citizens. Many people feel let down by President Bola Tinubu, who they believe has failed to provide them with the necessary support and aid during this difficult time. The lack of adequate measures to tackle the issue has only added to the sense of desperation and hopelessness among the people. Over the past eight months, Tinubu’s policies have had a detrimental effect on the economic situation in Nigeria. The decision to remove fuel subsidies and float the Naira in foreign exchange markets has resulted in a significant increase in the black-market exchange rate, which now stands at N1,701 per US dollar, up from N460.702 in May of last year. Additionally, the removal of fuel subsidies has led to a price increase of over N650 per liter, up from N238 in May 2023. As a consequence, the inflation rate has soared to 28.92 percent as of December, with food inflation at 33.93 percent. This has caused the cost of goods and services such as rice, beans, yams, and other staple foods to rise, thereby making it difficult for people to afford a decent meal. The housing situation is particularly dire, with rental costs having skyrocketed across the country, making it increasingly difficult to find affordable accommodation. This problem is especially acute in densely populated areas of Lagos such as Eko Atlantic, Banana Island, Lekki, Victoria Island, Ikeja GRA, Maryland, Ikoyi; Abuja such as Maitama, Wuse 2, Asokoro; and Port Harcourt such as Old GRA, New GRA, Trans Amadi, and Ada George, where the supply of suitable housing is severely limited. Given that shelter is a basic human need, it is regrettable that such high rental costs appear to be inevitable, resulting in a heavy financial burden on individuals, particularly when combined with other essential expenses such as utilities. Hence, the crucial matter that requires consideration is whether the government ought to enforce price controls on vital goods.
The concept of “price controls” refers to the legal limits set by the government on the minimum or maximum prices of specific goods and services. The objective behind implementing price controls is to regulate the affordability of essential goods, including food, rent, and petrol. However, while these controls may make certain products more accessible to consumers, they can also lead to significant market disruptions, losses for producers, and a decrease in the quality of goods. Despite the potential drawbacks, price controls have a long history, going back thousands of years. For example, during the third century B.C., the ancient Egyptians implemented a sophisticated system for the production and distribution of grain. The government regulated every aspect of the process, from the cultivation and harvesting of the crops to their storage and transportation. The authorities appointed inspectors and overseers to monitor the quality and quantity of the grain, as well as to ensure that it was distributed fairly and efficiently. This system played a crucial role in sustaining the Egyptian economy and supporting the large population of the Nile Valley. In addition to the practices mentioned above, the Babylonians (18th and 6th centuries BCE) established standardized rates for specific products and services to ensure fairness in trade. Similarly, the ancient Greeks enacted legislation to prevent merchants from unjustly inflating prices, which could harm the economy and social stability. The Roman Empire also implemented diverse measures to regulate pricing, including capping prices on select items, limiting merchants’ earnings, and managing the supply and demand of goods. These measures were intended to prevent monopolies, ensure the availability of essential goods, and protect consumers from predatory pricing practices. By instituting such regulations, these societies sought to create a fair and equitable marketplace that benefited everyone. In contemporary times, there have been instances of governments enforcing price controls in their respective countries. A classic example of such price control measures can be traced back to Nigeria’s history in 1984 when the military regime, led by Major General Muhammadu Buhari, implemented measures to regulate the prices of essential commodities. This action was taken in the aftermath of the democratically elected administration of President Shehu Shagari’s removal from power, which was marred by rampant corruption and economic hardship. However, despite the inflation challenges, the Shagari administration decided to postpone taking any action to address it, citing the upcoming general elections as a significant hurdle. Unfortunately, this decision had the opposite effect and only made the inflation situation worse.
Due to the substantial inflation rate, there was a scarcity of foreign exchange in Nigeria, leading to difficulties in importing vital commodities like rice, sugar, and milk. To combat this challenge, Shagari introduced an “import licensing” mechanism, where permits were granted to a specific set of importers, and a restricted amount of dollars were reserved for them. Additionally, the president formed a task force to import rice, which would be sold at regulated prices. Unfortunately, many individuals who received foreign exchange were not actually importers or manufacturers and did not require the allocation. It was suspected that they diverted the scarce currency to the streets, resulting in what is now known as the “parallel market” for trading in dollars. Shagari’s government went into absolute turmoil. The government tried to tackle the situation by implementing an emergency “stabilization plan,” which involved cutting down on spending, reducing imports, and increasing duties. However, these measures proved to be insufficient, and the country continued to experience severe economic turmoil. The prices of goods and services skyrocketed, and unemployment rates surged due to widespread retrenchment. The opposition parties heavily criticized the ruling party, the National Party of Nigeria (NPN), for their inability to manage the economic crisis. The country was in a state of despair when Brigadier Sani Abacha announced the overthrow of Shagari’s government on December 31, 1983. The announcement was welcomed with celebrations across the country, with the hopes of a better economy and lower prices.
Rev. Ma, S.J, is a Jesuit Catholic priest and PhD candidate in public and social policy at St. Louis University in the state of Missouri, USA.
