Nigeria’s rising inflation figures have eroded the benefits of the new N30,000 minimum wage for Nigerian civil and public service workers, Peter Njiforte, a business analyst and a Professor of economics at the Ahmadu Bello University, Zaria has said.
Nigeria’s inflation in January jumped to 16.47 per cent principally driven by rising insecurity and the squalid transport infrastructure, according to the National Bureau of Statistics.
The food component of the inflation rose as much as 20.57 per cent in January from the 19.56 per cent recorded in December 2020.
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The Central Bank of Nigeria had in the last five years struggled to achieve its target of a single digit inflation rate of nine per cent.
Nigeria had opened its land borders in January following the take-off of the African Continental Free Trade Agreement, a move experts said would ease the rate of the rise of inflation.
With the rising inflation, the expert told THE WHISTLER that the benefits of the new minimum wage signed into law by President Muhammadu Buhari in April 2019 has been eroded.
Between 2019 to January 2021, inflation had risen from 11.4 per cent in April 2019 to 16. 47 per cent in January 2021.
Njiforte said, “The benefit of the minimum wage is exacerbated by the inflation rate. A lot of people do not take into consideration what percentage of the salary was increased.
“Nigeria is highly import dependent so a fall in exchange rate will hike import cost. Electricity tariff has equally increase costs of doing businesses and you expect people to equally increase prices. With the increase in price of fuel, generally, it is going to have a serious multiplier effect. They all add to the rising inflation.
“The insecurity challenge that we are having has severe implications on food prices. So many communities can no longer stay and farm. So many of the communities that are attacked are farming communities. It is from these communities that aggregators go to for farm produce that they will supply to the larger market.
“My minimum wage is about 12 per cent to 13 per cent of my salary but see how much I pay for electricity. I used to buy electricity N26 per unit but now I buy that same unit for about N62.
“That is more than a 100 per cent increase. Look at prices of other things, they have more than doubled. A kilogram of fish that we used to buy for N250 is now N650, that was what a common household bought easily.”
For the expert, the solution to the issue may not be increasing the minimum wage.
He added, “The government can tinker with other variables like trying to see how you can step up production of essential commodities.
“I don’t think increasing the minimum wage will be the solution because if the minimum wage is increased by about 20 per cent and inflation rises by 30 per cent what happened? It means that the benefit of the minimum wage has been eroded by inflation.”
He suggested lifting the ban on certain selected commodities like maize and rice would be a short term remedy to the food component of the inflation.
He expressed optimism that the inflation figures may moderate any time soon due to infrastructural related challenges.