Nigeria, Africa’s largest economy, is currently grappling with a perfect storm of economic challenges – stagnant minimum wages, runaway inflation, and volatile commodity prices that have wreaked havoc on our purchasing power. Amidst this dire situation, the need for robust commodity price control measures has become paramount.
Back in February, a Federal High Court in Lagos ordered the Federal Government to fix prices for essential goods and services within seven days, citing provisions under the Price Control Act of 2004. The decision stemmed from a lawsuit filed by a prominent lawyer, Femi Falana aoainst the Price Control Board and the Attorney-General of the Federation. Despite the enactment of the Price Control Act in 2004, the law remained dormant. In his judgement four months ago, Justice Ambrose Lewis-Allagoa ordered the government to reintroduce price control in Nigeria. However, since the landmark judgement, the President Bola Tinubu administration has remained reticent and failed to actively comply with the court order even as high inflation continues to significantly hamper the livelihoods of the citizens.
With the lingering impasse over a living wage in which the federal government is unyielding to the labour unions’ demand of N498,000 as the national minimum wage and seems favourably disposed to N62,000, the reintroduction of price controls, at this point, is a long-overdue measure that will, if implemented, provide relief to the country’s vast working class who may likely not get their benchmark living wage approved.
Without a hefty pay check or a corresponding price control measure, millions of Nigerians would struggle to make ends meet, as the cost of living will continue to soar. Without price control, basic necessities such as food, housing, and transportation will become increasingly unaffordable, eroding the value of the minimum wage increase. The situation is particularly dire for the poorest segments of the population, who will be forced to make difficult choices between meeting their basic needs and providing for their families.
Of late, Nigeria’s inflation rate has been on a relentless upward trajectory, reaching the highest level in decades. The National Bureau of Statistics’ latest Consumer Price Index and inflation report said Nigeria’s headline and food inflation surged to 33.95 percent and 44.66 per cent in May 2024. This galloping inflation has been driven by a variety of factors, including supply chain disruptions, currency devaluation, market forces irresponsibility among others.
The impact of this runaway inflation on the Nigerian populace has been severe. Prices of essential commodities, such as food, fuel, and healthcare, have skyrocketed, leaving many households struggling to make ends meet. The purchasing power of the naira has been severely eroded, making it increasingly difficult for the average Nigerian to afford even the most basic necessities.
Compounding the woes of the Nigerian economy are the actions of irresponsible market forces, which have exacerbated the country’s economic challenges. Unscrupulous traders, middlemen, and speculators have exploited the volatile market conditions to hoard essential commodities, drive up prices, and reap windfall profits at the expense of the Nigerian people.
This predatory behavior has been particularly evident in the pricing of agricultural products, where farmers are often forced to sell their goods at prices that do not cover their production costs, while consumers are charged exorbitant prices at the market. The lack of effective regulation and enforcement has allowed these market distortions to persist, further undermining the economic well-being of the Nigerian people.
In the face of these daunting economic challenges, the imperative of effective commodity price control measures has become increasingly clear. By regulating the prices of essential goods and services, the government can help to mitigate the impact of inflation, protect the purchasing power of the minimum wage, and curb the excesses of irresponsible market forces.
One of the primary tools for commodity price control is the implementation of price ceilings, which set the maximum price at which a particular good or service can be sold. This approach can be particularly effective in controlling the prices of essential commodities, such as food and basic household items.
By setting price ceilings, the Tinubu administration can ensure that these critical goods remain affordable for the average Nigerian, even in the face of rising inflation and volatile market conditions. This, in turn, can help to maintain the purchasing power of the minimum wage and provide much-needed relief to the country’s working class.
In addition to price ceilings, the government can also employ targeted subsidies to help keep the prices of essential commodities within reasonable limits. These subsidies can be directed towards the production, distribution, or retail of key goods, effectively reducing the burden on consumers.
Indeed, effective commodity price control also requires robust market regulation and enforcement to curb the excesses of irresponsible market forces. The government would need to establish clear guidelines and mechanisms for monitoring and enforcing price ceilings, while also cracking down on hoarding, price gouging, and other predatory practices. This can involve the deployment of dedicated market inspectors, the imposition of stiff penalties for violations, and the establishment of transparent and accessible complaint mechanisms for consumers.
Achieving sustainable commodity price control will require close collaboration between the government, the private sector, and civil society organizations. The government should engage in regular dialogue with industry leaders, consumer advocates, and other key stakeholders to understand the challenges faced by all parties and develop mutually beneficial solutions.
Nigeria’s participation in global trade and its reliance on imported goods and services can also complicate the implementation of effective commodity price control measures. The government will need to consider the potential impact of its policies on the country’s international trade relationships, as well as the potential for retaliation or counter-measures from trading partners.
Moreover, the volatility of global commodity prices, exchange rates, and supply chain disruptions can undermine the effectiveness of domestic price control policies, necessitating a coordinated approach that accounts for both domestic and international economic dynamics.
To address these challenges, the government may need to explore strategies such as trade agreements, strategic stockpiling, and international cooperation to ensure that its price control measures are sustainable and do not unduly disrupt its participation in the global economy.
One of the primary challenges in implementing effective commodity price control measures in Nigeria will be overcoming resistance from powerful vested interests, such as large corporations, traders, and middlemen who have profited from the current unregulated market conditions. These groups may lobby the government, exert political influence, or even resort to illicit activities to undermine or circumvent any attempts at price regulation. They may argue that such measures will stifle competition, reduce investment, and ultimately harm the economy, even though their primary concern is the preservation of their own profits.
Overcoming this resistance will require the government to demonstrate strong political will, a commitment to the public good, and a willingness to take on powerful economic actors who have entrenched interests in the status quo.
Certainly. price control mechanisms are not archaic as some people would want us to believe. There are some successful price control policies implemented by progressive, developed economies that Nigeria could potentially learn from.
In recent years, Malaysia has implemented a targeted price subsidy program for selected essential commodities, such as fuel, cooking oil, and sugar. The program focuses on providing direct subsidies to low-income households, rather than imposing across-the-board price ceilings. This approach has helped alleviate the burden on the most vulnerable groups without heavily distorting the market or discouraging domestic production.
Also, Indonesia has adopted a dual pricing system for fuel, where it maintains a subsidized retail price for the general public while allowing market-based pricing for commercial and industrial users. This approach has helped the government balance the need for consumer protection and fiscal responsibility, while still incentivizing domestic refiners and ensuring adequate supply.
Similarly, in India, the Essential Commodities Act empowers the government to regulate the production, supply, and distribution of certain essential commodities, including food items. Additionally, the country’s Public Distribution System provides subsidized food and fuel to low-income households. While the implementation has faced challenges, these policies have helped ensure the availability and affordability of essential goods for the most vulnerable populations.
In Thailand, the government has employed various price intervention schemes, such as price guarantees, buffer stock management, and direct subsidies, to support its agricultural sector. These policies have helped stabilize the incomes of farmers, maintain the affordability of key agricultural products, and promote the competitiveness of Thai agricultural exports.
When adapting these examples to the Nigerian context, it will be crucial for the government to carefully consider the unique market dynamics, institutional capacities, and socioeconomic factors that may influence the effectiveness of such policies. A thorough analysis of the local context, coupled with extensive stakeholder engagement, will be essential to ensure the successful implementation of any price control measures.
Ultimately, the success of these efforts will depend on the President Tinubu administration’s commitment to prioritizing the well-being of the Nigerian people and its willingness to take bold, decisive action to address the country’s complex economic challenges. With a steadfast focus on delivering tangible improvements to the lives of its citizens, Nigeria can emerge from this crisis as a stronger, more resilient economy that is better equipped to meet the needs of its people.