Inflation: Recent Economic Changes in Nigeria

Since the previous administration of Muhammadu Buhari restricted access to dollars for a list of 43 imported items in Nigeria, the prices of goods and services have skyrocketed arbitrarily. This policy has left most Nigerians vulnerable and made their lives uneasy. Consequently, businesses have collapsed due to reduced consumer spending. This decision has led to increased tensions, instability, and a rise in criminal activities in Nigeria. The government cited reasons for this policy, but the unintended consequences have had a severe impact.

Some of the restricted items include rice, cement, margarine, palm kernel, palm oil products, vegetable oils, processed meat, vegetables, poultry, tomatoes, soap, cosmetics, clothes, private airplanes, Indian incense, tinned fish, steel sheets, roofing sheets, wheelbarrows, metal containers, enamelware, steel drums, wire mesh, steel nails, wooden products, furniture, toothpicks, glassware, kitchen utensils, tableware, tiles, plastic products, polypropylene granules, and cellphone wrappers, as well as fertilizers and maize.

The restrictions on accessing dollars for importing these items have negatively affected the lives of Nigerians. This policy was one of the worst decisions of the previous administration, as importers needed dollars to purchase these essential items, leading them to buy dollars at exorbitant prices from Bureau de Change (BDC) operators. As of this month, the price of the dollar has reached $1/N1040 at BDC rates, affecting the prices of petrol and cooking gas, which are dependent on the dollar.

The present administration has recognised the hardships caused by this policy, along with the removal of the oil subsidy. In a press release on October 12, 2023, the Central Bank of Nigeria (CBN) announced its decision to lift the ban on the 43 items that were previously restricted from accessing dollars during the previous administration. This new policy is expected to lead to a reduction in the price of the dollar and a decrease in inflation, significantly improving the economic situation.

It's important to note that this lifting of restrictions is temporary, as the CBN mentions in its press release that "interventions will decrease as liquidity improves." Additionally, the CBN aims to promote orderliness and professional conduct in the Nigerian foreign exchange market, ensuring exchange rates are determined by market forces.

This decision, if well-implemented, will ease the burden on the lives of common people, lower the price of the dollar, and reduce inflation. Even though it's temporary, it will help subsidise food items and meet the essential needs of the people.