MAJOR CAUSES AND PROFFERED SOLUTIONS TO THE SKYROCKETING INFLATION



1. Consumption with minute production: Rice produced in the country is an infinitesimal fraction of what is consumed daily; hence, we need to import heavily to complement it. We consume a lot of other food and non-food items that will do not produce as well. Importing means buying with the almighty Dollar which affects our forex and external reserves negatively.

2. Import-based consumption: Food items, petroleum products, electronics, IT services, etc are all imported. It is even surprising that most citizens luxuriously prefer imported products to indigenous ones. The country cannot boast of a phone brand despite our love for phones. The merchants/importers need dollars to import them. The forex law is, "the higher the demand for a currency, the higher its exchange rate, ceteris paribus."

3. Many of the few available formal manufacturing and service companies are foreign-owned, e.g. Nestle, google, Stanbic, Olam, MTN, DSTV, Unilever, etc. They will remit to their parent companies in dollars from this country. Remitting to them in dollars from here means dollar drainage in the system which will cause pressure on its rate. When the rate rises, it affects importation of other products and which results in inflation in the system.

4. Lack of confidence in locally produced products, both goods and services: A lot of indigenous corporations employ the services of pwc and KPMG to audit their accounts at the expense of indigenous audit firms. Also, we all fear to eat local rice because of stone.

5. Most, if not all manufacturing and service companies, use imported gadgets and technology bought with dollars. Printers, cameras, clippers, computers, OS, software, etc. Don't forget, the higher the demand for dollars, the higher its rate, vice-versa.

6. Not refining our God-given crude oil. Our budget is benchmarked on the price of crude oil that is taken out just to return it at very high prices in final petroleum products. Coupled with this are the swap system and subsidy regime that didn't speak well for the economy for years.

7. Other immediate and root causes of the prevalent forex crisis.

SOLUTIONS
a. We should produce so that we can get most things we need within and export the rest on a regular basis to earn foreign exchange. First on the list are agricultural, fashion and petroleum products. As we have done in the entertainment sector, we should produce in other sectors also.

b. Government should create an enabling environment for local industries to breathe. This environment will be in form of favourable policies and patronage of local contents by different tiers of government. They should lead by example.

c. Local industries should prioritize research and development to come up with topnotch and competitive products.

d. Privatization of the moribund petroleum refineries to engender efficient local production of petroleum products such PMS, diesel, kerosene, gas, etc. If this can be achieved, then outflow of dollars from the country will reduce significantly while inflow will increase and this will improve our exchange rate and external reserves.

e. We should be patriotic to encourage our local industries by patronizing them till they become good as we did for China in the days of "Chinco gadgets."


All hands must be on deck to tackle this menace.

Interesting...

You tried but . . . the problems are deeper in reality.

Moneyfem:

MAJOR CAUSES AND PROFFERED SOLUTIONS TO THE SKYROCKETING INFLATION.

6. Not refining our God-given crude oil. Our budget is benchmarked on the price of crude oil that is taken out just to return it at very high prices in final petroleum products. Coupled with this are the swap system and subsidy regime that didn't speak well for the economy for years.





d. Privatization of the moribund petroleum refineries to engender efficient local production of petroleum products such PMS, diesel, kerosene, gas, etc. If this can be achieved, then outflow of dollars from the country will reduce significantly while inflow will increase and this will improve our exchange rate and external reserves.

e. We should be patriotic to encourage our local industries by patronizing them till they become good as we did for China in the days of "Chinco gadgets."


All hands must be on deck to tackle this menace.

Local refinery will remain the only key to extricate our economy from the hell-hole trap we found ourselves in. And the quickest way out is Legalization of illegal refinery. No two ways about it

starstaz:


Local refinery will remain the only key to extricate our economy from the hell-hole trap we found ourselves in. And the quickest way out is Legalization of illegal refinery. No two ways about it

If you want to operate something that should be legal, you go and get license.

CodeTemplar:
You tried but . . . the problems are deeper in reality.

Yes, especially politically.

Yes, having functional refineries will go a long way in ameliorating the current problems. On legalizing illegal refineries, I think that will spell more danger.

starstaz:


Local refinery will remain the only key to extricate our economy from the hell-hole trap we found ourselves in. And the quickest way out is Legalization of illegal refinery. No two ways about it

Your solutions are good and very attainable but our politician's myopic ness and greed can never allow it to happen even when the citizens are ready to sacrifice.

In fact, people have been turned to sacrificial lambs. Successive governments keep telling people to make sacrifices whereas few people in the same governments, both public servants, mismanage national resources.

Savedday2:
Your solutions are good and very attainable but our politician's myopic ness and greed can never allow it to happen even when the citizens are ready to sacrifice.