 You're welcome back. It's still the breakfast on plus TV Africa. Right now it's like Nigerians are being served breakfast as it were, even though this program is breakfast. So I just remembered that everybody will be served breakfast last last. That's what we're experiencing in Nigeria. Families are facing tough times, friends are facing tough times, students are facing tough times, everybody is facing some kind of tough time or the other. That may be except the National Assembly members and those in government, but as it is, if you're an ordinary Nigerian you must be facing tough times. Because even if you have a domestic servant in your house and you are so well to do and the domestic servant is facing so much tough times, you don't know what it does to the mental health of that person and you don't know how safe you are from the person that is helping you in house chores and all those kind of things. Inflation has gone seven years high right now. Nigerians are facing these tough times. And we're being joined right now by Nick Agoule, our regular on the show. Good morning and welcome to the program, Nick. Good morning to our viewers globally. Everybody is now saying, I would like to be like Nick, that I can go to the UK when I like and come back to Nigeria when I like. That is life in retirement. When you retiree, you have the freedom to do that. But retiree in Nigeria or retiree elsewhere. Because when you talk about retirees, people in Nigeria don't even want to retire because they are freed. They may not even have their entitlements. Yes, I'm retiree both in Nigeria and here in the UK. I'm privileged. I've got three pensions. So I thank God that I'm able to fend for myself because times are really tough, especially in Nigeria. Okay, well, we will assume a lot of things, but that's not to say right here. But now, seven years high inflation and the headlines Nigerians are facing tough times. Let's hear how you project that the situation is going to be maybe in the next six months from now. I agree with you totally. Nigerians are really facing tough times, really tough times. Because yesterday, we woke up to fuel price being hiked from about 500 plus to about 617 even in some places. 630 as much as 650. And to consider that the fuel price was 180, 190 back here at the end of May. Even in June, early June when this new government had just taken power. And today, we're in July and the price has moved from 180, 190 to 600 and something trying to touch 700. You can't even believe how Nigerians are surviving with this kind of thing because this is one of the feeders of inflation in Nigeria. Because petrol affects a lot of things. You know, ordinarily in a place like in the UK where I am, petrol would affect many things except for transportation. But in Nigeria, you use petrol for generation or power. And in all the businesses that have to use petrol now at this high cost to generate power for their businesses are going to hack the prices. So Nigerians are facing really tough times. The foreign exchange rate has moved from the central bank official rate of about 450 to a dollar now is over 800 naira a dollar. So there's so much that is being thrown at Nigerians. And my worry is that I'm not hearing voices from the government in terms of what is being done to ease the pains, to ameliorate the pains, to give Nigerians a sense of hope that something is being done. It's not just about trade justice at Nigerians and expecting that they can absorb it. There has to be, on the other side, a particular action that needs to be taken by government that we ensure that the pains are lessened. And we are going to have the purchasing power that we give Nigerians the basic necessities that they are looking for. Well, it's really terrible. But when it comes to inflation, let's help us understand some of the things that leads to this kind of inflation going up. You've mentioned some of these things, but let's know more. Maybe we are just assuming that the people in power know what to do, but let's keep telling them that these are some of the things that cause inflation. And because of inflation, the livelihood of people is going down and down and down all the time. So let's list these things out for the people who are watching us now to know. Thank you very much. So inflation is caused by two factors. So let's define inflation. What is inflation? Inflation is a persistent rise in the prices of goods and services that people consume. So like petrol was 180, 190, then it became 500 and something. Today it is 600 and something. There is inflation in the price of petrol. That's what it is. What are the consecutive factors of inflation? There are two factors. The first factor is demand. If people are demanding a product more than the supply of that product, the price of that product will tend to rise. That is just the basic fact. The second factor is cost. If producers of goods and services are experiencing increasing costs, they are going to transfer those costs to the consumers. Because if they don't transfer those costs to the consumers, they will start making losses. So inflation can also arise from producers of goods and services experiencing higher costs of input, which they don't transfer into the prices. And that is why in economics, I'm not an economist, but I did a lot of economics. I'm an accountant, I'm a childhood accountant, but I did a lot of economics. So I'm able to say something authoritatively on this. That in economics is what we call demand-to inflation and cost-push inflation. So the demand-to inflation is the inflation that is generated because people have so much money and they are chasing too few goods. So if you look at the inflation in the price of the dollar, if it's a demand-to inflation, why? Because Nigerians are perpetually demanding the dollar for whatever input they want to do. And since Naira is the one chasing the dollar, the price of the dollar keeps going up. You need to pay more Naira to get one dollar. You need to pay more Naira to get one dollar. That is demand-to inflation. On the cost-push inflation, as you can see in Nigeria now, the cost of input into the goods and services that producers are actually producing for Nigerians to consume is rising. And where are the rising costs coming from? Number one, the rising cost is coming from foreign exchange. So if you imported generators and you have this generator that costs one thousand dollars, as of May this year, you went to the central bank, you got dollar at four hundred and fifty Naira. That will mean you brought that generator at the cost of four hundred and fifty thousand. Today, if you return to go and get the dollar, you have to pay eight hundred Naira to get the dollar. So the cost of that generator will automatically now jump from the four hundred and something you bought it to eight hundred and something. The dollar itself has been one thousand, but you are now experiencing forest crisis. So you will have to transfer that eight hundred and something now into the eventual price that you are going to say that generator for. So the cost is going to go up. The second thing that increases the cost of boost and services, as we see, is interest rates. And this is why we had issues with the former central bank governor. They got a monthly lead central bank. They continuously kept increasing interest rates to cut inflation. In terms of that, Nigeria's inflation is cost-pushed. It's not demand-pulled because Nigeria doesn't even have money to go and buy anything. There are people who are working that are not being paid and those who are being paid are being paid peanuts. I mean minimum wages are thirty thousand. Just imagine that. Thirty thousand. So Nigerians don't even have the money to go and buy. The inflation Nigeria is suffering is cost-pushed inflation. But they got a monthly lead central bank. Fifth increasing interest rate to cut inflation. And once you increase interest rate, it means that producers of goods and services are going to pay higher interest on the both ways that they are making from the banks. And they will transfer that higher interest into the prices of the goods and services that they are producing. And that is even going to push the inflation up more. Then of course the cost of imputes that people are making is going to push up their inflation because we are afraid to develop our local production base. So we are importing almost everything to bring it to Nigeria. I wonder what that means is that as the foreign exchange is deteriorating. As the Niger now is deteriorating in value against the dollar. The importers of wheat for baking bread, of spare parts, of motor vehicles, of medicines, of food, of petrol, of all those things that were imported. The prices are not going to be going up because the dollar, the Niger is deteriorating against the dollar. So these are some of the factors that are causing inflation in Nigeria. In summary, I am saying Nigeria's inflation is cost push more than demand pull. And I spread the central bank of Nigeria to understand that because you don't use hike in interest rate to solve cost push inflation. Instead, you look at the causative factors on why those costs are rising and you deal with them. So for instance, petrol, to deal with the rising cost of petrol is to remove Nigerians from using dollar to buy petrol. So that we can refine our petrol locally. If we refine our petrol locally, that means we produce crude oil, we push the crude oil into the refineries in Nigeria. They produce petrol in seafood for Nigerians. The problem that petrol is rising in cost man is that we have allowed our refineries to die. So we are using the dollar to go and bring in petrol. And as the value of the dollar is strengthening against Nigeria, the price of petrol will continue going up. So that is how you solve a cost push inflation. That's just an example. You deal with the causative factor of the cost and not increasing interest rate, which in itself adds to the cost of manufacturing goods and services, which is also inflationary. Well, inflation has reached more than 20% as we speak right now. But when you talked about the dollar, I was just wondering. There is a story on the Deishon newspaper this morning. The headline is that UK agency OK's Naira for trade financing. Is this going to give us some kind of relief of the Naira against the dollar? I think I saw the headline. I saw the headline of that story, but I have not read the details of the story. I don't believe that story. Why I don't believe that story is that it's not making any headline in any of the UK templates or national TV network. A new story like that, if it was an official thing from government, it will make it onto the headlines in the UK here. I watch TV every day and I will say that. And the reason why I don't think the story is probably not true is that if the UK OK's the payment for Naira, for the boost and services that we can enable the government, I will give you a very simple example. Kufis. Kufis is one of the biggest costs that Nigerians face in a palm study because there are thousands of children here. Nigerian children are here paying Kufis probably an average of £16,000 a year, £20,000 depending on the cost. In medical studies, you pay £20,000 a year, which by today's rate is like £20 million per year. Kufis, you are not talked about accommodation and the upkeep of the child. So let us now see the UK universities are now accepting Naira. The payment of Kufis. When the UK university accepts Naira from a Nigerian parent, the big question is, what is that UK university going to do with Naira? What are they going to do with it? Do you understand? So are they going to pay their lecturers in Naira? Are they going to pay for their electricity, pay for their rent or anything in Naira? They can't do that. That is the reason why they don't accept Naira from you. If you come to the UK now to buy generators, for instance, and the UK manufacturer accepts Naira from you and gives you a generator to take to Nigeria, would the UK manufacturer use that Naira to go and buy the imputes that they use in manufacturing the generator? I say no. So I don't think that headland makes money. It doesn't make money. But if your currency is convertible, for instance, an American importer can pay to a UK exporter dollars and they will accept it. They will accept it because when they take that dollars, they can easily convert that dollars to plants. And that's why we say a currency is convertible. If a currency is convertible, then you can do business in the local currency. But if a currency like Naira is not convertible, nobody is going to accept it from you. What I'm saying here is that if I take dollars now and just walk down the street to my high street here and I give the dollar to the bureau to change, they will give me pounds. But if I take Naira and show to that bureau to change now, the man will look at me and say, is this man crazy? He'll ask what I mean. So that story I can assure you has no foundation. Well, some of the details that we have is that under the arrangements, the UK will provide up to 85% of funding for projects containing at least 20% of British content. The Naira financing will follow the same structure as someone buying in sterling except that Nigerian firms taking out a loan in the local currency can benefit from a UK government backed guarantee. That's what those are some of the details that they said. And in fairness, the headline said a UK agency, not UK government. I don't know anyway if it is possible for an agency to okay that kind of trading between countries or it has to be the government that will do that before it can hold water. But this is what they said about the currency. Now, having said... The way this kind of thing would happen is this. The solution to all this thing is local production. Local production. As soon as Nigeria now, we decided that we are going to unlock value from our rich agricultural land because the UK does not have enough land to do farming. UK imports a lot of their food. So if Nigeria decides that we are going to put a tractor on each available piece of land in Nigeria and impact on an industrial agriculture and Nigeria now begins to produce food in plentiful so that the UK is now coming to Nigeria to buy food. And a rich man like that will work. Because what happens is that if a UK university for instance takes Nigeria to Nigerian students as school fees the UK university can use the Niger now to buy food in Nigeria and export it to the UK. So that is the kind of thing that will work. There are other things like here in the UK if you pick your phone call, your phone number to call any of your service providers. Unless you want to call your electricity company, your gas company, your water company, your telephone company. The person that is going to answer that call is in India, is in Malaysia, is in Singapore, is in the Philippines. And it means then that the companies here in the UK need the local currency in those countries to pay their business center employees who are there. If Nigeria takes advantage of something as simple as that meaning we now have created an economy that is secured enough that is transparent enough that is properly powered with electricity and the big companies in the UK come to Nigeria, set up business centers, employ the young and vibrant Nigeria in their business centers. Those companies will need Nigeria to pay those employees. So those companies will be able to take Nigeria from Nigeria companies doing business with them in exchange so that they cannot use that Nigeria to pay their local cost. So we just have to produce our goods and services locally to attract people to come and buy. And then they will start looking for Naira to pay for those goods and services. And it's the only way that the Naira can strengthen. Our engineers like what we are discussing here are very artificial, they are not fundamental, they can't deal with the matter. Alright, thank you so much Nika Gule for like always coming through today and being a part of this program. There's much we can take on this segment. Thank you. Thank you very much. But Nigerians please, the times are hard, but let's keep hope alive that these will get better. Amen to that. Okay, we've been talking with Nika Gule, a public affairs analyst talking to us from the UK. And we'll take a short break, look at the weather, come back to discuss our next hot topic. Stay with us.