Business
Doomsday: Economy shutdown looms
…as NARTO, NLC/TUC strike threaten ailing economy
Nigerians may see the mother of all hardships, beginning from Monday, February 19, following the planned suspension of operation by the National Association of Road Transport Owners (NARTO), over rising operational costs.
The industrial action is expected to trigger acute fuel shortage and other supply chain systems, which is capable of paralysing economic activities across critical sectors of the struggling Nigerian economy.
This is coming at a time the cumulative effects of reforms of President Bola Tinubu, have created the level of hardship many Nigerians can no longer bear. Almost on daily basis since the beginning of February, hungry Nigerians are trooping to the streets to express their anger over the escalating cost of food, medicine, rent, utilities, and basic services. Similarly, the labour umbrella bodies, the Nigeria Labour Congress and Trade Union Congress, have declared February 27 and 28, as mass protest days to press home their demand for new wage increase.
There has been an unusual upsurge in prices since Tinubu assumed office last May, after his removed of petrol subsidy tripled the cost of the commodity. The crisis was aggravated in June, with the Central Bank of Nigeria (CBN) floating the naira. From less than N500 per $1 then, the naira is currently exchanging at over N1,600/$1.
The immediate impact is higher costs in every sector, though income is mostly stagnant. From the June 2023 rate of 22.79 percent, inflation accelerated to 28.99 percent in December. Food inflation inched to 33.93 percent.
Despite government’s several interventions, more Nigerians and organizations have continued to lament the rising cost of living and production. The ugly scenario can only get worse now that petrol and diesel scarcity is going to trigger a serious deficit in the supply of both raw materials and finished goods.
The National President of NARTO , Yusuf Lawal Othman, who announced the planned strike in a press statement he issued from Abuja, said members of the association are suspending operation “because what we spend on operation is more than what we get in total: both in local and bridging”.
According to him, the members have been operating at a loss and it is no longer sustainable for them to endure the losses.
NARTO’s National President said, “We will have to suspend operations latest from now till on Monday. We cannot continue to operate at a loss. Most people have parked. A lot more are going to the park. But from the point of the association itself, we are going to suspend operations on Monday.”
According to recent reports released by the Society for Planet and Prosperity, GCA Capital Partners and Climate Advisers Network, about 75 percent of electricity consumed in Nigeria comes from diesel and petrol-powered generators.
Findings by the coalition indicated that about 25,000 megawatts of power utilised in Nigeria was from diesel and petrol-powered generators, while the national electricity grid only supplied less than 5,000 megawatts.
Season of threats
Few days earlier, the Association of Master Bakers and Caterers of Nigeria (AMBCON), had threatened to withdraw its services nationwide from February 27, should the Federal Government refuse to implement the agreement it entered into with the association in 2020.
It called for the immediate implementation of financial support palliatives for bakers as promised by the Federal Government as post COVIDprogrammes for Small and Medium Enterprises for bakers who have lost over 40 percent of their membership and still counting.
On Saturday, some wholesalers and retailers of liquor and non-alcoholic beverages decried low level of patronage amidst soaring costs, following price increment by bottling companies across the country.
he vendors, in separate interviews with the News Agency of Nigeria (NAN) in Lagos said there had been a percent price increase when compared with same period in 2023. Already, notification of upward price review has been issued by the bottling companies. Checks revealed that a 50cl pet bottle of different brands of soft drink currently sells for N300 as against N150 in 2023.
Also, alcoholic beverages including canned beer with current price pegged at N700 were previously N400, while a can of Malt drink increased to N400 from N250. Similarly, the intoxicant business recorded almost 100 percent price increment from N350 to N600 during the period under review.
Mercy Igalawuye, a supermarket operator, noted that sales of the items had dropped considerably by 30 percent in her store. She charged the government to review the nation’s economy holistically, while addressing inflationary pressures across the country.
“Let the government look at areas where it can help, because the way it is, it’s only God and the government that can help us”, she said.
“People can barely eat or afford basic things anymore not to talk of luxury like soft drinks. This is why it is important that government should intervene before things get totally out of hand for the masses.
On Friday, the Nigeria Labour Congress (NLC) declared a two-day nationwide notice for 27 and 28 February to protest the economic hardship being experienced in the country.
NLC President, Joe Ajaero, who disclosed this during a press conference at the Labour House in Abuja, explained that the decision to go on a protest was taken after the expiration of the 14-day ultimatum earlier issued to the Federal Government over the nationwide hardship.
The previous week, both the NLC and Trade Union Congress (TUC) issued a two-week ultimatum to the Federal Government to address the food crisis or face mass protests.
In a joint statement, the NLC and TUC said they were concerned about the “non-implementation of the 16-point agreement reached with the Federal Government on October 2, 2023.”
“These agreements, which were reached with the federal government were focused on addressing the massive suffering and the general harsh socioeconomic consequences of the ill-conceived and ill-executed IMF/World Bank induced hike in the price of PMS and the devaluation of the naira’, the NLC said at the time.
“Constrained by this development and recognizing the urgency of the situation and the imperative of ensuring the protection and defence of the rights and dignity of Nigerian workers and citizens, the NLC and TUC hereby issue a stern ultimatum to the Federal Government, to honour their part of the understanding within 14 days from tomorrow, the 9th day of February, 2024.”
Looming job losses
Meanwhile, the Director General of the Nigerian Employers Consultative Association (NECA), Adewale-Smatt Oyerinde, has raised the alarm that the country’s worsening economic problems can lead to retrenchment of workers.
Recently, several companies have closed up their businesses in Nigeria, citing economic challenges.
Oyerinde told a news medium at the weekend that in this time of gross naira depreciation, employers could consider staff reduction as an option for survival. He noted that the erosion in the strength of the naira tended to shrink the working capital of businesses and lower their volume of output.
Oyenride said, “Once businesses are constrained to lower capacity utilisation and output level due to the dissipation of their working capitals resulting from the gross depreciation in naira value, they (employers) will naturally consider all options available for survival, including staff reduction.
“A significant proportion of businesses in the country depend on imported raw materials and machines; therefore, the erosion in the naira’s value tends to shrink the working capitals of these businesses and lower their volume of output.”
