 As expected, Nigeria's inflation rates accelerated to a new 17-year high of 21.09% in October, and 0.32% points increased from 20.77% recorded in September, raising concerns for Nigerians already battling with the weak household incomes and impot pass through costs. Already, there are concerns that the country's inflation trend may not have reached its peak considering the triggers like intermittent fuel scarcity, witness during the review period, stubbornly high gas and energy prices, lingering currency pressures and, of course, a build-up of higher Naira liquidity as the campaign season starts. These are all the things that are yet to be addressed. According to the latest Consumer Price Index reports released by the National Bureau of Statistics yesterday, flawed food inflation, I beg your pardon, also surged to 23.72% in the review month, which is 0.38% higher than the 23.34% rates that was recorded in the previous month, and 5.38% higher compared to what we had, which was 18.34% in October of 2021. Now, indeed, higher inflation and exchange rate volatility are associated with higher pass through of exchange rates into import prices, lingering currency pressures, et cetera, et cetera, and these are a couple of the issues that we're going to be addressing this evening. Well, joining us to discuss this and break it down so that we can make sense of it all is Gospol Obeile, he's the chief economist at Street Onamics Ltd. Thank you so much, Gospol. Always a pleasure to have you. Thank you so much, Mary, and really great to be here. Yes. Anytime I see these numbers, my head just starts catching fire, so I'm just going to let you do the numbers thing, and I'll just ask the questions. How about that? No, great, great, great. Okay, but then it might not be funny for those who have to deal with the inflation in the country. Salaries are not being increased, prices of everything is going up. Sometimes, for some, it has not just doubled, it has tripled, and the average Nigerian is trying to make sense of it all. At some point, the dollar was almost edging towards 900 naira, but thank goodness, I think it's come down to about 600 plus. But break it down for us. Why is it still in the up and up? Most would say that, oh, it's the Ukrainian war, but then we're not in Europe, we're in Africa. COVID has come and gone, we're still trying to get back on our feet, but what could be solely responsible for how skyrocketing the prices of things are going and of course gas? Yes, thank you so much. Really great to be here again. It's pretty much a very interesting conversation, and to a very large extent I would be very much surprised if the average Nigerian is surprised at the growth of the inflation numbers. And what we see actually are the clear effects or results of how vulnerable the economy is rather, you know, interact with global changes and local shocks as it were. Yes, the Russian Ukraine was still on at a different level now. But you cannot also take out the lingering effect of that war on commodity prices. Most of the products like grain, sunflower oil and the rest are produced from those regions in context number one. Number two, you also have the climate change economics, which means that climate change also comes in the form of change in raw material production and supply. So, soya bean is now very much in high scarcity right now. And just to bring you home a bit to seeing how the recent flood in Nigeria has also brought up a lot of questions and scare. In fact, they've been a projection by the Food and Cultural Organization that the flood crisis may likely lead to a new event of food crisis. And that may likely also lead to some increased 17 to 23 million Nigerians caught in poverty as the case may be. And that's how inflation really works. Once prices of goods and services begin to increase, especially prices of basic necessities like food, energy, transport, housing and all that, it means that the average individual will have to pay more to get a life. The cost of living would increase over time. And when the cost of living increased over time, it means that the block of your income you have available for expenses will keep shrinking. And that would technically also mean that people would not be able to satisfy their needs or meet their needs. At the level of satisfaction they may desire over a period of time. As a result, tougher choices were kicking and for the lower block of income earners in some form of poverty trap would also kick it. So, we've seen a lot of these conversations. As we've just forced scarcity, blackouts and in a worsting situation of Naira, we've seen all of those dynamics permeate into core basic disaster items for the average Nigerian. And that's where the pressure is and that's where the pain points are. Country is like the United Kingdom. I mean, one of the reasons why Liz Tross was butted out of office was because her short-term plan to cushion the effects of inflation was not realistic. And they didn't think it was great. So, I mean, one of the reasons why she was butted out and then they brought back the present Rishi Sunak is because they thought that his ideas were better. In Nigeria's case, what are the cushioning effects that our government have come up with or are tinkering on because of course I'm sure that we have an economic council which the vice president sits on. We have a minister of finance. We have, I don't know if she still coordinates the economy and all of that. But what is it that we can actually say would be a cushioning effects strategy of sorts that we can come up with that will help the situation? Being that our mainstay, which is oil, is being stolen every single day. We all were here when they found a sudden vessel that leads all the way to the sea and then it was destroyed, no questions asked, no investigations. So, what is it that Nigerians can hold on to as a glimmer of hope while we go through what we're going through? Thank you so much for that great question. There are major low-hanging fruits that can be leveraged as some form of cushioning effect. But they still serve as potential or they still exist in a potential form. The ability to unlock that potential into mainstream mechanisms through which inflation can be reduced or the cost of living can be reduced or the average Nigerian is much more productive and prosperous and then looking forward to a brighter and more optimistic future. The ability to pull that mechanism into the mainstream economy is where you begin to talk about public leadership. I mean, when you started the question, you talked about least trust and which is SNAC and the likes. These are external leaders who are probably, in one way or the other, seeking to deploy the mechanisms to unlock that potential of the low-hanging fruits to manage the impact and all that. So, those shock absorbers really exist. But the leadership capacity to build the mechanism through which those shock absorbers will be executed and deployed to deliver the assignment is a big question. We are in the political tension season right now and Q1 2023 is going to be largely around politics and the politics of elections. So, what that technically means is that for Nigeria and the Nigerian economy is more around political correctness than what is economic priority to the average Nigerian. So, whatever would help the government of today to retain power or whatever would help the opposition party take over are the major lengths through which economic policy will be delivered and that's the political correctness bit of things. So, for now, I mean, I do not think any major strategic approach will be taking to unlocking, you know, the growth mechanisms required to help Nigerians really rise above this challenge in as much as those potentials really exist. So, it's quite unfortunate and really taking into account that the Christmas season is around the corner and with the flawed talent we have right now or we're dealing with right now there will be a cost to increase in form of inventory stock pricing by suppliers, you know, and suppliers intentionally hold back some product, meaningfully well that supply chains have been broken, you know, prices of products and goods and services will increase in the market and further increase down the line as suppliers also sort of gain control over the value chain to take products to market meaningfully well that supply has been tampered with due to the flood situation. So, the promises are there, the potential is there, but you need a strategic leadership to unlock potential to results. I know that you're not a politician, but it's incredible how we say, oh, we have the low hanging fruit, so everything that we need to survive, we have it, it's just that we need the brains and the people to do it. But then we have a government in place that asked us to, you know, elect them because they knew what to do to help us get out of the rots that we found ourselves in in 2015, but then we seem to have dug ourselves into a deeper rot as we speak. We have a central bank governor who's trying to change the notes, I'm wondering of what benefit that would be to the economy as we speak. There's also a drag and push and shove between Nigeria and the UAE because we're unable to repatriate certain funds in foreign currency, but then I go back again to the issue of oil. The only thing that brings us this foreign currency, nobody really seems to be paying attention to how much of it is being stolen, and every time, you know, attention is drawn to it, it's sensationalised, and then we move on to other matters. So again, if we have a government in place and they're not strong enough, there's no political will to deal with this issue, are we ever really ever going to come out of where we are, and will the Naira ever be strengthened going forward? I don't think they've ever been in any political will to be very honest with you, Mary Ann. You've made me sure of the fact that the Government of Day had plans in 2015, and it's not just a current administration challenge. Over time, you know, our political economy hasn't been visionary enough and actually realistic again within the context of things, plus the will power to deliver. But you say you're going to deliver 30 million jobs when you come into power. The argument should not be 30 million jobs or 1 million jobs. The argument should be how do you plan to do that? What's the mechanism through which you plan to deploy it? Unfortunately, Nigerians are very carried away with emotional statements. There is no form of intelligence advocacy to interrogate manifestos. You know, the city, they are not organised citizens approach, or citizens organised agenda setting to engage politicians who are seeking to get into public offices as a result. When these guys get in there, they just move around, show around, and employers, the economy is worse off for it. However, it's also important to state that the normal sector has performed way better than the old sector in recent times. The normal sector made up more than almost 1.1 trillion Naira more in revenue than the old sector for H1 2022. And the numbers are there, anybody can go verify it, right? The normal sector is booming, but the problem is that the normal sector has made a critical two blocks of challenges. You have number one the fact that the markets are all organised and informal. You cannot compete, or you cannot, how will I put it, take a potential and unlock it for greatness when you are not organised and you are not in quotes in form of, you know, in form of formality to the process. So we need to further organise and formalise the normal sector. Take for instance now, Nigeria does not have a service industry policy. You know, do we have data on how many web developers we have in Nigeria? Do we have data on how many web developers are engaging in freelancing gigs and working from Nigeria and Lagos and earning in dollars? We don't have all that data, all right? We don't even have data on the critical manpower or the productivity dynamics around the young people that delivers growth and the real engine room for us. That's to say, you know, in essence, because service, the service economy contributes 57% to Nigerian GDP. There is a huge potential there. If the normal sector is contributing more to revenue, it means that the Nigerian economy is already diversified and holds the potential for foreign exchange receipts through the normal sector block. What we just need to do is to maximise, organise and formalise that market for regional and global competitiveness. So I do not think that we'll be going anywhere for that with this all sector conversation. I do not think we'll be going anywhere for that with the repatriation of funds. I also do not think that Nigeria will gain any value. Recently, some folks talked about Nigeria regaining value in the market. On the basis of what mechanism is what I would want to ask. The currency, any currency that yields any form of value over time yields value on two grounds. Number one, there is a productivity ground, meaning that your economy is productive, not consumption driven. You produce what you eat and then you produce it well enough that the chocolate you make in Nigeria can sell in Tesco in the UK, can sell in Zurich, Switzerland and it can scale foreign exchange in that order, which is not all. Secondly, there is a sufficient condition around the institutional management that has to do with protecting that currency. That's why I say that the Fed will do everything to protect the dollars. The Fed will strike alliances with other major central banks in the world to protect the dollars. And then for developing countries like Nigeria, who do not have the necessary conditions of productivity and the sufficient conditions of proper institutional management begin to, you know, they are literally at the mercy of the policies made by these, you know, world institutions as the case may be. So until we get down to the necessities, which is productivity and the sufficient blocks which are, you know, leading a coherent fiscal and monetary side protection and management of the currency, the Naira cannot truly get back on its value. Finally, before I let you go, like you mentioned earlier, we're in campaign season. We're having town halls. We're having debates here and there. And of course the candidates are going to different places and asking for people to vote for them. What should be the front and centre of the, you know, whatever these politicians have to offer us in a manner of speaking as opposed to the sloganarism that we see every other day that hope is here, business is here, blah, blah, blah. And of course we, the people, what should we strategically be asking for going forward? The big ticket questions, you know, to sort of interrogate politicians right now should be around the what, the how and the why. Especially the how and the why. You know, especially the how and the why. A lot of times it bothers having me on, you know, evidently driving advocacy, evidently using evidence to sort of like interrogate the manifesto process and the thinking behind that manifesto as it were. You know, also interrogating the capacity, the competence of people, you know, to be able to deliver that thing, the articulated, that mechanism they've shown to you on how to create one million jobs in one year. You know, we need to see it, we need to know it. This is where you expect a lot of non-governmental organisations who say they stand in representation, they represent the citizens. You know, these folks need to lead more intelligently, engaging data and interrogating more intelligently. Then the citizens themselves, the little critical blocks that they are in, awareness is very important, literacy is very important. And also it's very difficult, but the concept of vote buying as well is also very critical. Teaching people that you need to vote and ensure that your votes are counted and all of that. But much more importantly, positioning young Nigerians in the mainstream of party administration, which is where the choices, sorry, which is where the options emerge, you know, for the people, for the critical mass to make choices for them. You know, so I'm trying to say, so at the end of the day, it has brought heavily on intelligent representation by both the masses and the people who represent the masses, you know, both at the social enterprise business and NGO level. And positioning train interrogate the what, the how, and the why. It's very important. I think also that to a very large extent the political economy that we have in Nigeria today is largely extractive. You know, extractive institutions believe that they need to be in control of resources, you know, or economic access to retain them, to stay in power and all of that. And until Nigerians realize that there is need for them to begin to engage more intelligently to disrupt that extractive flow, there will be no future for inclusion in Nigeria. And once there is no future for inclusion, there is no future for prosperity. Let's also be clear, even in developed economies, people compromise at very high levels, but not at the expense of the major, most important, basic things that the citizens need to just get a life or to aspire for a brighter future. But right now in the context of Nigeria and even many other African nations, the ability to aspire or the hope to aspire has been eject by increasing cost pressure on the citizenry. And once you can keep the citizens, you know, poor and expect them, then you can take advantage of them in every election yet. That's the game. Well, Gospel, always a pleasure to have this kind of conversations with you because, you know, I leave here a bit more enlightened on how the economy works. Thank you. Gospel Obeire is the chief economist at Street Nomics Limited. Thank you so much for being here. Thank you very much for having me, Mary. We can only hope for the best from here on. Well, that's the show tonight. I hope that you all had a great time. We will be back tomorrow talking for development. On the biggest stories on the Nigerian political scene and sometimes we delve outside of Nigeria into Africa and, of course, the rest of the world. I'm Mary Anacor and I'll see you tomorrow at 7 p.m. Don't forget you can watch Plus Politics again on our YouTube pages, Plus TV Africa and Plus TV Africa lifestyle. And don't forget that we are also live streaming on our mobile app and, of course, on Linux. It's also an app so you can watch us wherever you are in the world. Have a beautiful evening. Don't forget to get your PVC and make sure that you know that that PVC is your passport to a new Nigeria. Have a good evening.