A two-day protest kicked off in Nigeria’s commercial hub of Lagos on Tuesday (Feb. 27) morning shortly before other locations nationwide followed.
One of the country’s main unions, the Nigeria Labour Congress (NLC), has called workers to demonstrate outrage on the mounting hardship and insecurity.
The watchword was “endhardshipnow”.
Nigerians are living through one of the west African nation’s worst economic crises in years triggered by surging inflation and the consequences of monetary policies that have pushed the currency to an all-time low against the dollar.
“Open all food storage silos and ensure equitable distribution across the country,” one of the demands in a letter circulated in the media read.
The trade union umbrella NLC called on the government to abandon World Bank and IMF policies which they believe are adding to hardship in Nigeria.
On Monday (Feb. 26), the finance minister announced the resumption of direct cash transfers to help over 12 million vulnerable households.
The situation is at its worst in conflict zones in northern Nigeria, where farming communities are no longer able to cultivate what they eat as they are forced to flee violence.
Before the protest Tuesday, Wale Edun told the BBC that President Bola Tinubu was “listening and acting in order to meet the needs of Nigerians”.
How did things get so bad?
Nigeria is not just Africa’s largest economy. Its gross domestic product is driven mainly by services such as information technology and banking, followed by manufacturing and processing businesses and then agriculture.
The challenge is that the economy is far from sufficient for Nigeria’s some 210 million population, relying heavily on imports to meet the daily needs of its citizens from cars to cutlery and not producing enough. It is therefore easily affected by external shocks such as the parallel foreign exchange market that determines the price of goods and services.
Nigeria’s economy is heavily dependent on crude oil, its largest foreign exchange earner. When crude prices plunged in 2014, authorities used its scarce foreign reserves to try to stabilize the naira amid multiple exchange rates. The government also shut down the land borders to encourage local production and limited access to the dollar for importers of certain items.
The measures, however, further destabilized the naira by facilitating a booming parallel market for the dollar. Crude oil sales that boost foreign exchange earnings have also dropped because of chronic theft and pipeline vandalism.
Why is the naira plummeting in value?
Under the previous leadership of the Central Bank of Nigeria, policymakers tightly controlled the rate of the naira against the dollar, thereby forcing individuals and businesses in need of dollars to head to the black market, where the currency was trading at a much lower rate.
There was also a huge backlog of accumulated foreign exchange demand on the official market — estimated to be $7 billion — due in part to limited dollar flows as foreign investments into Nigeria and the country’s sale of crude oil have declined.
Authorities said a unified exchange rate would mean easier access to the dollar, thereby encouraging foreign investors and stabilizing the naira. But that has yet to happen because inflows have been poor. Instead, the naira has further weakened as it continues to depreciate against the dollar.
What are authorities doing?
CBN Gov. Olayemi Cardoso has said the bank has cleared $2.5 billion of the foreign exchange backlog out of the $7 billion that had been outstanding. The bank, however, found that $2.4 billion of that backlog were false claims that it would not clear, Cardoso said, leaving a balance of about $2.2 billion, which he said will be cleared “soon.”
Tinubu, meanwhile, has directed the release of food items such as cereals from government reserves among other palliatives to help cushion the effect of the hardship. The government has also said it plans to set up a commodity board to help regulate the soaring prices of goods and services.
On Feb. 15, the Nigerian leader met with state governors to deliberate on the economic crisis, part of which he blamed on the large-scale hoarding of food in some warehouses.
“We must ensure that speculators, hoarders and rent seekers are not allowed to sabotage our efforts in ensuring the wide availability of food to all Nigerians,” Tinubu said.
By Feb.16 morning, local media were reporting that stores were being sealed for hoarding and charging unfair prices.