The concept of “price controls” refers to the legal limits set by the government on the minimum or maximum prices of specific goods and services. The objective behind implementing price controls is to regulate the affordability of essential goods, including food, rent, and petrol. However, while these controls may make certain products more accessible to consumers, they can also lead to significant market disruptions, losses for producers, and a decrease in the quality of goods.
“As Nigerians, we bear the responsibility for the steep cost of living in Nigeria. It is alarming to consider how each individual’s actions have contributed to the deterioration of our economy. Whether it is a vendor selling spoiled produce, a gas station employee tampering with meters, a trader who keeps increasing his product in the name of dollar increase, or a religious leader demanding excessive tithes in the name of faith, we have all played a significant part in the current rise of prices for necessary goods.”
Nigerians are currently facing a dire situation as hunger and the exorbitant cost of essential commodities continue to escalate at an alarming rate across the entire nation. The problem has left many Nigerians struggling to afford even the most basic necessities, such as food, shelter, and healthcare. The rising cost of living has only added to their misery, making it difficult for them to make ends meet and provide for their families. It is a time of widespread suffering and distress, with the most vulnerable sections of society being hit the hardest. To make matters worse, the government of Nigeria has been criticized for not doing enough to address the problem and alleviate the suffering of its citizens. Many people feel let down by President Bola Tinubu, who they believe has failed to provide them with the necessary support and aid during this difficult time. The lack of adequate measures to tackle the issue has only added to the sense of desperation and hopelessness among the people. Over the past eight months, Tinubu’s policies have had a detrimental effect on the economic situation in Nigeria. The decision to remove fuel subsidies and float the Naira in foreign exchange markets has resulted in a significant increase in the black-market exchange rate, which now stands at N1,701 per US dollar, up from N460.702 in May of last year. Additionally, the removal of fuel subsidies has led to a price increase of over N650 per liter, up from N238 in May 2023. As a consequence, the inflation rate has soared to 28.92 percent as of December, with food inflation at 33.93 percent. This has caused the cost of goods and services such as rice, beans, yams, and other staple foods to rise, thereby making it difficult for people to afford a decent meal. The housing situation is particularly dire, with rental costs having skyrocketed across the country, making it increasingly difficult to find affordable accommodation. This problem is especially acute in densely populated areas of Lagos such as Eko Atlantic, Banana Island, Lekki, Victoria Island, Ikeja GRA, Maryland, Ikoyi; Abuja such as Maitama, Wuse 2, Asokoro; and Port Harcourt such as Old GRA, New GRA, Trans Amadi, and Ada George, where the supply of suitable housing is severely limited. Given that shelter is a basic human need, it is regrettable that such high rental costs appear to be inevitable, resulting in a heavy financial burden on individuals, particularly when combined with other essential expenses such as utilities. Hence, the crucial matter that requires consideration is whether the government ought to enforce price controls on vital goods.
The concept of “price controls” refers to the legal limits set by the government on the minimum or maximum prices of specific goods and services. The objective behind implementing price controls is to regulate the affordability of essential goods, including food, rent, and petrol. However, while these controls may make certain products more accessible to consumers, they can also lead to significant market disruptions, losses for producers, and a decrease in the quality of goods. Despite the potential drawbacks, price controls have a long history, going back thousands of years. For example, during the third century B.C., the ancient Egyptians implemented a sophisticated system for the production and distribution of grain. The government regulated every aspect of the process, from the cultivation and harvesting of the crops to their storage and transportation. The authorities appointed inspectors and overseers to monitor the quality and quantity of the grain, as well as to ensure that it was distributed fairly and efficiently. This system played a crucial role in sustaining the Egyptian economy and supporting the large population of the Nile Valley. In addition to the practices mentioned above, the Babylonians (18th and 6th centuries BCE) established standardized rates for specific products and services to ensure fairness in trade. Similarly, the ancient Greeks enacted legislation to prevent merchants from unjustly inflating prices, which could harm the economy and social stability. The Roman Empire also implemented diverse measures to regulate pricing, including capping prices on select items, limiting merchants’ earnings, and managing the supply and demand of goods. These measures were intended to prevent monopolies, ensure the availability of essential goods, and protect consumers from predatory pricing practices. By instituting such regulations, these societies sought to create a fair and equitable marketplace that benefited everyone. In contemporary times, there have been instances of governments enforcing price controls in their respective countries. A classic example of such price control measures can be traced back to Nigeria’s history in 1984 when the military regime, led by Major General Muhammadu Buhari, implemented measures to regulate the prices of essential commodities. This action was taken in the aftermath of the democratically elected administration of President Shehu Shagari’s removal from power, which was marred by rampant corruption and economic hardship. However, despite the inflation challenges, the Shagari administration decided to postpone taking any action to address it, citing the upcoming general elections as a significant hurdle. Unfortunately, this decision had the opposite effect and only made the inflation situation worse.
Due to the substantial inflation rate, there was a scarcity of foreign exchange in Nigeria, leading to difficulties in importing vital commodities like rice, sugar, and milk. To combat this challenge, Shagari introduced an “import licensing” mechanism, where permits were granted to a specific set of importers, and a restricted amount of dollars were reserved for them. Additionally, the president formed a task force to import rice, which would be sold at regulated prices. Unfortunately, many individuals who received foreign exchange were not actually importers or manufacturers and did not require the allocation. It was suspected that they diverted the scarce currency to the streets, resulting in what is now known as the “parallel market” for trading in dollars. Shagari’s government went into absolute turmoil. The government tried to tackle the situation by implementing an emergency “stabilization plan,” which involved cutting down on spending, reducing imports, and increasing duties. However, these measures proved to be insufficient, and the country continued to experience severe economic turmoil. The prices of goods and services skyrocketed, and unemployment rates surged due to widespread retrenchment. The opposition parties heavily criticized the ruling party, the National Party of Nigeria (NPN), for their inability to manage the economic crisis. The country was in a state of despair when Brigadier Sani Abacha announced the overthrow of Shagari’s government on December 31, 1983. The announcement was welcomed with celebrations across the country, with the hopes of a better economy and lower prices.
Buhari implemented price controls on essential goods to benefit the masses, a decision that was deemed appropriate. As a result, soldiers were deployed to the streets to enforce these controls by entering warehouses, shops, and markets and dictating selling prices. I have vivid memories of soldiers arriving at the central market in our village and pressuring traders to sell their goods at prices lower than the rates at which they had purchased them from wholesalers. One soldier, armed with a whip and a rifle, asked a businessman, “How much is Omo?” The businessman replied, “Fifty Naira.” The soldier then demanded that it be sold for 30 Naira and proceeded to repeat this process with other items. The businessman was understandably upset. As the soldier made his purchase of three to four items, the vendor implored him to visit the next stall. During that time, I was almost done with my primary school education, which meant I had a clear recollection of everything that was happening around me. Strangely enough, I enjoyed the experience despite the chaos and uncertainty that surrounded the nation. My opinion was that the prices of goods and services were excessively high. Therefore, the root cause of the problem was the traders and stockpilers who were unscrupulously inflating prices for their own benefit. It was high time that they were taught a lesson about the consequences of increasing prices without considering the plight of the masses. However, in my high school years, I gained a newfound appreciation for the complexities of economics. I learned about the delicate balance of supply and demand and how prices naturally rise when demand outstrips supply. It was during this time that I also came to understand the limitations of price control – a concept that was not previously emphasized in primary school. Although my parents were not directly involved in the trade, they were unhappy with the soldiers’ raid, which only added to the already tense atmosphere. They contended that the soldiers’ behavior was unjustifiable, as the vendors couldn’t sell their goods for less than they had paid for them. Essentially, the merchants were forced to trade at the same price they had purchased the items for. Despite the military’s attempts to enforce price controls, prices did not decrease. Instead, the situation worsened as dealers hoarded their goods to avoid selling at a loss, only selling when soldiers were absent.
Once again, there is a call for price control of commodities in Nigeria. However, it raises important questions. Have we not learned from past mistakes? Is it possible to regulate commodity prices without addressing the underlying factors contributing to the issue? For instance, can the government effectively control prices without addressing the import licensing system that allocates permits and limited dollars to a select group of importers? Furthermore, is it realistic to expect price control when some individuals receiving foreign exchange are not importers or manufacturers and don’t require allocation? And what about the impact of bankers diverting foreign currency to the streets, leading to the emergence of a “parallel market” for trading in dollars? There are various motives behind the decision of governments to implement price control. Price controls offer a crucial benefit by shielding consumers from abrupt price surges. Consider the scenario when the government withdrew fuel subsidies, and the demand for necessities like food, water, and medical supplies kept increasing every day. With the rising demand, suppliers capitalized on the opportunity to hike the prices of Garri, Akpu, and Yams. This situation has made these essential goods unattainable for many people. However, by putting in place price controls, governments can stipulate the highest price for these items, guaranteeing access for all consumers, particularly those with lower incomes. The implementation of price controls can serve as an effective strategy to combat inflation. Rapid price hikes often lead to a decline in consumers’ purchasing power, ultimately impacting their overall quality of life. Price controls, however, limit the upward movement of prices, which helps to mitigate inflationary influences. This approach contributes to economic stability and reinforces consumer trust by providing a clear picture of the prices for goods and services. Governments sometimes impose price controls to ensure that consumers can afford goods and services that are essential for their well-being. A commonly used method of regulating prices is through implementing a price ceiling, which is the maximum price that companies can charge for their products or services. This strategy is essential in industries like housing and rentals, where excessive pricing can strain individuals’ budgets and limit their access to secure and satisfactory housing. The healthcare and medication sector is also an area where price ceilings are frequently implemented, as many individuals depend on medication to maintain their health or manage chronic conditions. The objective of the price ceiling is to encourage fairness and affordability in the market while preventing price gouging and the exploitation of disadvantaged consumers.
Although the intention behind enacting price controls may be noble, however, in practice, they often prove ineffective. A significant concern with price controls is the risk of supply shortages. By setting prices below the market equilibrium, suppliers may lack the incentive to produce or sell goods at that price point, resulting in a decrease in supply. This, in turn, can trigger shortages and prolonged wait times for consumers. A prime illustration of this phenomenon occurred in Nigeria in 1983, where price controls led to a shortage of essential commodities and limited availability of basic food items in stores. One concern regarding price controls pertains to the possibility of black-market formation. When prices are artificially lowered below the market’s equilibrium point, suppliers may be incentivized to sell their goods through illicit channels at elevated prices. This can cause the emergence of black markets, where items are sold at prices above the regulated rate. These markets operate outside of legal boundaries and can be challenging to manage, leading to a loss of tax revenue and potentially jeopardizing consumer well-being. Economist Hugh Rockoff has observed that regulating the price of clothing can be challenging, as simple alterations such as adding inexpensive decoration or substituting cheaper materials can easily upgrade or downgrade the value of a garment. Although price controls seem like a reasonable concept, many economists argue that they should only be implemented in exceptional circumstances. When price ceilings artificially suppress prices, consumers tend to demand more than producers can supply, resulting in a shortage of the regulated product. As Nobel laureate Milton Friedman famously stated, “Economists may not know everything, but we do know how to create a shortage. If you want to create a tomato shortage, for instance, pass a law prohibiting retailers from selling them for more than two cents per pound. Voila! You’ll have a tomato shortage in no time.” Another negative outcome of implementing price controls is the potential reduction in the quality of goods or services provided. This is because when prices are set too low, there is a high likelihood that producer revenue will suffer. In order to mitigate this loss of income, producers may resort to cost-cutting measures such as reducing production or releasing lower-quality products. As a result, consumers may end up receiving products that are of lower quality than they were accustomed to. Moreover, price controls can also lead to financial losses for producers. If the price of a product or service is set too low, the cost of producing it may exceed the revenue generated from its sale. This can lead to financial losses and, in worst-case scenarios, bankruptcy for producers who cannot afford to continue operating at a loss. Another significant impact of price controls is the potential decline in research and development efforts. When profits are reduced due to price controls, producers may be less willing to invest in research and development. This can lead to a shortage of new and innovative products in the market, which can have a negative impact on consumers who rely on new products to meet their changing needs and preferences.
As the prices of essential goods continue to rise on a daily basis, questions have been raised about the steps the Nigerian government can take to address the situation and alleviate the burden on its citizens. Specifically, what measures can be put in place to curb inflation and control the prices of essential commodities? Additionally, who should take responsibility for the situation? Is it the fault of the masses, who may be demanding more goods than the market can supply? Or is it the fault of dealers who may be hoarding goods or selling them at inflated prices? Or is it the fault of the government for not effectively regulating the market or implementing economic policies that can control inflation? Some analysts have argued that the masses are to blame, as they demand more goods than the market can supply, leading to price hikes. Others point fingers at dealers who continuously hoard goods or sell them at excessively inflated prices. Meanwhile, some believe that the government bears responsibility for not effectively regulating the market or implementing economic policies that can control inflation. As a writer who frequently addresses issues related to Nigeria, I have often faced criticism for seemingly writing from a position of privilege without offering any concrete solutions. However, what these critics may not realize is that I am not only deeply invested in the welfare of Nigeria as a whole, but I also have loved ones who reside in the country and face the same challenges when it comes to accessing basic necessities. As a result, I fully empathize with the struggles that many Nigerians face on a daily basis, especially when it comes to the high cost of essential commodities. For this reason, I delve into some solutions the government can play to ensure that the high cost of living is manageable for the country’s citizens.
While there is no easy or definitive solution to this complex topic, there are a number of measures that can be taken to help ease the burden on those who are most affected. For example, local, state, and federal governments could implement policies that provide more significant support to small-scale farmers and other producers, which would stabilize prices and ensure a more consistent supply of goods. Additionally, more substantial investment in infrastructure, particularly in rural areas, could help to reduce transportation costs and make it easier for people to access the goods and services they need. Agriculture plays a significant role in Nigeria’s economy, underscoring the importance of investing in the sector to improve the availability of essential commodities. This investment could take the form of subsidies for farmers, infrastructure improvements, and the introduction of innovative technologies to increase yields. It is disheartening that farmers in Benue state, known as the nation’s food basket, still utilize traditional farming methods. A more suitable approach in the current climate would be commercial farming to boost the economy and reduce hunger on the land. Nigeria is a developing country that heavily relies on imports for its everyday goods. Unfortunately, this dependence on imported goods leads to higher costs of living for its citizens. In order to address this issue and promote local production, the Nigerian government can introduce policies that encourage businesses to produce goods domestically. This can be done through tax incentives such as reduced tax rates for companies that produce goods locally. It’s disheartening to witness a single module of garri being sold for N2000, all in the name of a mere dollar increase. Similarly, it’s saddening to see a small bag of Akpu being sold for N10000. Nowadays, the price of goods can vary throughout the day, with fluctuations occurring in the morning, afternoon, and evening due to changes in the exchange rate. The current situation is unfortunate, as it affects the purchasing power of the average consumer, thereby making it difficult for people to afford essential food items for sustenance.
Corruption is a deeply ingrained issue in Nigeria, and it is a significant factor behind the country’s high cost of living. It affects every aspect of public life, from government procurement to law enforcement. Addressing corruption in Nigeria is crucial to reducing the cost of doing business in the country. This, in turn, can help to lower the prices of goods and services, making them more affordable for the average Nigerian. There are a multitude of advantages to reducing corruption, which go beyond simply lowering costs. For instance, we can combat corruption from traders who stockpile goods and manipulate prices at their discretion to bankers who receive foreign currency despite not being importers or manufacturers. The government can also target the black-market exchange rate as part of its efforts to combat corruption. It is discouraging to witness the Bureau of Change wielding more influence over exchange rates than the Central Bank. Addressing corruption is a complex and demanding task that requires a multifaceted approach. This involves implementing legal and institutional reforms, anti-corruption initiatives, and public awareness campaigns to educate people about the adverse effects of corruption. By taking these measures, we can create a more transparent, fair, and just society that benefits everyone.
Access to electricity is a fundamental need that is crucial for the growth and development of modern society. Unfortunately, in Nigeria, the cost of electricity is relatively high compared to other countries, which makes it a significant contributor to the high cost of living. The high cost of electricity has had a negative impact on the economy. It has made many companies leave Nigeria and establish elsewhere. The reason for their departure is that power supply is often unreliable, and blackouts and brownouts are common. In addition to the high cost of electricity and the erratic power supply, the billing method of electricity companies is also a significant factor that has made producing companies leave Nigeria for other nations. The billing method is often excessive and does not reflect the actual consumption of electricity. These challenges have made it difficult for Nigerians to access affordable and reliable electricity, which is critical for economic growth and development. In order to address this issue, there is a need to explore alternative sources of energy, such as solar power. Solar energy is a renewable and sustainable energy source that can help to reduce the cost of electricity in Nigeria. By harnessing the power of the sun, Nigerians can generate their own electricity and reduce their dependence on the national grid. In addition to lowering the cost of electricity, solar power is also environmentally friendly and can help to reduce Nigeria’s carbon footprint. With plenty of sunshine throughout the year, Nigeria is well-positioned to take advantage of solar power. The government and private sector should consider investing in the development of solar power infrastructure to make it more accessible and affordable to Nigerians. By doing so, Nigeria can improve access to electricity, reduce the cost of living, and contribute to a more sustainable future. Addressing the challenges that our nation faces can only be possible if we work together as a cohesive unit and remain steadfast in our commitment to finding meaningful solutions that benefit every citizen, irrespective of their background, political affiliations, or socioeconomic status. It is time to move beyond the era of blame games in politics and put our country first. Many countries across the world have achieved remarkable progress by prioritizing national unity over individual or group interests. As a nation, we should strive to do the same. We must eschew the politics of tribalism and divisiveness and focus on building bridges of understanding and cooperation. It is incumbent on each of us to speak out against corruption and other vices that threaten our collective well-being.
As Nigerians, we bear the responsibility for the steep cost of living in Nigeria. It is alarming to consider how each individual’s actions have contributed to the deterioration of our economy. Whether it is a vendor selling spoiled produce, a gas station employee tampering with meters, a trader who keeps increasing his product in the name of dollar increase, or a religious leader demanding excessive tithes in the name of faith, we have all played a significant part in the current rise of prices for necessary goods. The high cost of living is a pervasive issue that affects individuals of all ages and genders, regardless of their political, religious, or socioeconomic status. It is a problem that cannot be solved by a single person or entity alone. Instead, it requires a united effort from all members of society to combat it. This can be achieved through various means, such as increasing awareness about the problem, advocating for policies that support affordable living, and finding ways to reduce personal expenses. By working together as a community, we can create a more equitable and sustainable future for everyone. Regrettably, it is discouraging to witness the apathy of our younger generation towards this issue. Instead of channeling their efforts toward influencing politicians, they tend to engage in social media disputes among themselves. Gone are the days when youths would hit the streets to protest against corrupt government policies and government officials. In recent times, many young people are more concerned with criticizing public figures for their perceived shortcomings. This can be seen in the way they lashed out at football players like Alex Iwobi for not winning the African Nations Cup or the way they dragged celebrities like Yul Edochie for his personal life decisions. Moreover, it is disheartening to witness the extent to which some youths constantly engage in bitter arguments over the supposed superiority of famous musicians like Davido, Burna Boy, Wizkid, or Rema. While there is nothing inherently wrong with having an interest in pop culture or expressing one’s opinions about public figures, it is absolutely wrong if these arguments escalate into online battles that do nothing but breed hostility and animosity toward the nation. Therefore, instead of focusing our energy and time on trivial matters, let us direct our frustrations toward those responsible for the current state of our nation. Our leaders have let us down, and it’s high time for the younger generation to confront them and demand accountability for their actions. One way to address the issue of ineffective governance is by holding our elected representatives accountable for their actions, or lack thereof. This can be achieved by organizing recall elections to remove those officials who have failed to deliver on their promises or who have shown a lack of concern for the needs and interests of the people they were elected to serve. By doing so, we can ensure that those in power are genuinely representing the masses and working towards the betterment of society as a whole. It’s time to take action and work towards creating a better future for us and generations to come.
Rev. Ma, S.J, is a Jesuit Catholic priest and PhD candidate in public and social policy at St. Louis University in the state of Missouri, USA.