Exchange Rate: Feeling The Pinch Of Low Purchasing Power

LAST year, the Central Bank of Nigeria predicted that inflation would rise to nine percent, from six per cent. This year, inflation has moved beyond the books into street corners, homes and markets.

The crash of the naira against the dollar has left bitter taste in the mouths of traders, who are lamenting increase in price of goods, some as much as 150 percent.

Mile 12 market is a hub of wholesalers, retailers and even caterers, who need to buy foodstuffs in large quantity. Traders in the market are also lamenting high costs of food items. For instance, a 210gram tomato paste sachet that used to sell for N70 now goes for N140. Eze Best, a rice and beans seller at the market said: “Before the previous administration handed over last year, a 50 kg bag of rice sold for about N7, 000. Around Christmas, the same bag of rice sold for N9, 000, and now it is over N12, 000, depending on the specie. The price of a 120 kg bag of brown beans is also rising from N20, 000 to N22, 000 per bag. We are just waiting and watching what government is going to do about the economy. People are pointing at the crash of the naira against the dollar and talking about diversification. But what we are selling has nothing to do with exchange rate.

We now buy a sack of pepper for N14, 000, but we bought it for N9, 000 last week. Onions was sold for N7, 000, but now sells between N8, 000 and N10, 000, depending on your ability to bargain. But ideally, it should be lower, because this is the season when pepper is in abundance.

“Our goods are expensive because people who are into other businesses such as importation are moving into this business. These people have gone into the beans business; rather than keep their money at home, they buy for storage. So, whenever the price of beans goes up, they quickly sell to make profit. It is the speculation that made the price to go up and there is no indication that the price will fall because for over four years now, the price of beans has been going up. It usually goes up every four to five years, but if you take into consideration the present economic indices, it will increase rather than fall.”

Godson Igbokwe, another trader at the market, corroborated Best’s stance, saying inflation has affected everything.
“Garri has increased from N3, 800 to N4, 600 per sack. A carton of Dangote noodles used to be N950, but now it goes for N1, 200. A carton of Indomie noodles sold for N1, 200 but now, it is N1, 400. They say the raw materials are imported and bought with dollars, which have been on the rise.”

Water, which is supposed to be one of the cheapest items is no longer so. Presently, a bag of sachet water goes for N120, while a sachet is now sold at N10.

Giving reasons for the increase, Olamide Emmanuel, a pure water seller, said he was informed by a representative of the company, where he buys water from that the dollar is affecting the end cost of “pure water” directly or indirectly, as all the things imported for its production have something to do with the dollar. These include the chemicals and nylons.

“I think government should be practical and sincere. They talk too much, but they should just go to the grassroot and help farmers. The rich men and politicians collect money meant for farmers, and will claim they are helping them, whereas the money will not trickle down. In this country, we spend millons on rice importation, but there is no modern rice mill, except in Ebonyi State, which is too expensive. Farmers need a rice mill that can shed, destone and polish rice in all the geopolitiocal zones of Nigeria. In the end, it will look like imported rice, and people won’t be able to tell the difference between local and foreign rice. Beans is produced locally, but some come from Niger, Chad and Cameroon,” he said.

The price increase is affecting all commodities in the market without exemption. According to Mrs. Deborah Ijaola, “we now buy a sack of pepper for N14, 000, but we bought it for N9, 000 last week. Onions was sold for N7, 000, but now sells between N8, 000 and N10, 000, depending on your ability to bargain. But ideally, it should be lower, because this is the season when pepper is in abundance. I really can’t say why things are this expensive, but well, the cost of transporting from the farms to various selling points might be a factor. Drivers would also tell you that dollar has increased in value.”

Mrs. Bukola Oluwatayo, fish seller at the Mile 12 Market also lamented the rising cost of doing business. “Things are so expensive, and customers won’t even consider that before they haggle. Sometimes I’m scared by the way they haggle. We used to buy a carton of Titus fish for N7, 000, but now it is over N13, 000. Before, not many people ate Shawa fish, then it was sold for N4, 000 per carton, but now it goes for N10, 000. It has not gone down since last Christmas. The amount we used to buy three cartons of fish is what we use to buy a carton now. Sales are generally low, but all we hear is that dollar has become expensive. Sales drop when things are expensive. But if meat is expensive just like fish, then what do we replace them with? A derica cup of rice is now N250 in my area. I really feel for children now, because if you give them money to buy food, what the money can buy is little.”

On her part, Alhaja Yetunde Ishola complained of low sales. “Usually, there’s a lull after a festive season, but after January, sales began to pick up. March is around the corner and Easter will soon be here, and there is no sign that sales will pick up during Easter,” she said

The tales of price hike and low sales are the same at Balogun market. Alhaja Yetunde Adekunle of Chic and Cheap bags said: “It is terrible. I recently went to buy goods in China, and the price of bags has not changed in that country. The exchange rate is discouraging and has made the price to go up in Nigeria. The greenback is even difficult to get and it is too expensive. If something is not done, some of us might close shops, as retailers don’t want to buy our items because of the hike. What makes it worse now is the kind of harassment we get at airports. The stress is too much. Before, you could travel with $10, 000 to buy goods, but now, to travel with cash is equal to stress, because they will harass you, and the officials will ask you to settle them from the money, because they have seen the amount of cash you are travelling with.

“All this would be included in the selling price. Sometimes you will get tempted not to declare the amount of cash you are taking along. But if you don’t declare and you keep the money in your luggage, and then it goes missing, whom do you complain to,” she queried.