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Inflation as it affects you; prices of “Boli, Epa, and Ewa Agoyin”

The economic intersection between the price of Boli, epa, ewa agoyin and inflation



I’m still baffled and incredibly miffed! I was shocked last week when I stopped at a roadside kiosk in Lagos whilst trying to buy a piece of boli. The boli was priced at two hundred naira (40 pence); two hundred naira! My outrage was profound.

Boli (roasted plantain) and epa (groundnuts) are a popular street food pairing in southern Nigeria. This boli obviously wears a bow tie and a sports jacket since it costs thirty percent more, I thought to myself.

Oh dear, the shock didn’t end there; ‘mama puts‘(roadside cooked food sellers) are at it as well, a bowl of ewa agoyin (cooked beans) with three pieces of boiled plantain continues to command a rather stable price of three hundred naira. However, the quantity served has been halved. And it doesn’t end at ‘mama puts‘. This trend in food shrinkage can also be found in a popular street sausage roll that once had a robust piece of meat in it, but now hosts a hollow shell.

Effectively, one pays a hundred naira for an empty sausage roll. Where is my sausage? It’s called a sausage roll after all. It doesn’t end with food, dear readers; did you know that the cost of a new Volkswagen Passat in Ghana is four million naira? In Nigeria, you’d be lucky to get it for ten million. What is going on here? What is really going on?

The economists in our midst would tell us that this phenomenon is inflation in action; a noticeable reduction in the value and quantity of goods we can buy or a painful tax that robs us of our purchasing power.

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The price of goods has worsened significantly of late. I’ve noticed it. Have you?

High inflation is a destructive force that must be tackled. Imagine how you’d feel if the price of that piece of boli jumps to four hundred naira by the end of the quarter.

The boli has not changed, it is still the same type of boli, why must one pay more? The battle against rising prices is for policymakers and not the consumer. To fight this destructive force, several weapons are available at the disposal of policymakers, primarily the central bankers. The most common weapon deployed is the provision of better alternatives for people to invest their disposable income.

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Instead of buying the rather expensive boli, if my 200 naira could fetch me 250 naira or more by the end of the year, I’d hold back on buying boli and invest the money elsewhere. When the boli seller realizes that she can not sell a significant amount at that price, she will adjust her business plans and pursue a slightly more productive commodity or adjust her prices downwards.

This is one mechanism that orthodox economics suggests to policymakers on dealing with high inflation. Inflation, for many people, is an esoteric and intangible concept and this may explain why there is a limited outcry from consumers.

Nigeria’s central bank act lists monetary and price stability as its first objective. This however does not show up in its handling of inflation expectations. Evidence that fighting high inflation works abounds plentifully in the developed world. In Nigeria today, policymakers continue to do the opposite of orthodoxy. They make it more difficult to invest the cash elsewhere and encourage consumers to buy more boli today rather than wait a few months to purchase it.

Fela Kuti chronicled and explained Nigeria’s historical inflation phenomenon in his song; Overtake, Don Overtake, Overtake (“O.D.O.O”) where the futility of saving in a high inflation environment was evident.

His protagonist kept saving but could never afford to buy a fan because of the rising prices; the poor lad. Why save now when you won’t be able to afford goods tomorrow?

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This doesn’t seem to be a new problem in Nigeria. This song was released in 1989; boli gets more expensive by the day in Nigeria.

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DIYE Economics

Thirty years on from Fela, Nigeria remains stuck in the wicked clutches of Do it yourself economic” (DIYE) ideas. The DIYE concept was coined thirty-five years ago by economist, David Henderson.

What is DIYE? David Henderson, the former chief economist at the OECD, delivered a strong and well worded six-piece lecture on the BBC’s Reith lectures addressing policy and economics in 1985.

He eloquently expressed the difference between orthodox economic prescriptions and DIYE prescriptions.

DIYE is mostly bad. DIYE is a simple view of economics; it consists of views held primarily by non-economists. It is negatively called pre-economics, having hints of the old mercantilist views.

If Henderson were alive, Nigeria’s “Home Grown Economic” policies will be classed under DIYE. His arguments then were clear, DIYE is mostly binary, non-continuous in its view of economic matters, and should be tossed to the rubbish heap.

Orthodox economics, the antidote to DIYE is primarily the view of economists and stresses the important role of prices and markets in the economy. Let me be clear, orthodox economics doesn’t imply that all economists agree on appropriate policy or even the tools to solve various problems. However, it’s been successful at delivering meaningful outcomes for many countries.

Economically poor countries tend to embrace DIYE at the expense of economic growth and development. The orthodox view on inflation is that policymakers keep a keen “eye” on the price of goods in the economy.

This logic is why low inflation and a stable financial environment has been the gold standard employed by most governments around the world. Inflation management in Nigeria today is not in line with the orthodox view of economics. Actively targeting low inflation has delivered meaningful results to countries the world over.


Nigeria has vacillated between exchange rate targeting and monetary targeting since 1959 with attendant high levels of inflation. Nigeria also has a low productivity problem. High inflation leads to salary increases that are not related to productivity, meaning many employees are getting paid more money simply because the prices of goods increase.

It is easy, rather inexpensive, and intellectually lazy for governments to print more money and increase general prices in the short term. With production expectations adjusting in the long run there is no meaningful contribution to growth.

Reducing the rate at which the prices of boli, epa and ewa agoyin grow is beneficial to the economy and may signal the emergence of meaningful growth in the near term. Negative outcomes manifest when governments act otherwise and chase DIYE economic goals.

In the next article; I discuss what happens when government debt gets out of line. I also discuss the links between Fela Kuti and George Osborne.

This article was written by Dayo Oduwole. Mr. Oduwole is an economist based in Lagos Nigeria.

Nairametrics frequently publishes articles from experts such as financial analysts, economists, researchers and investors. We also feature articles from guest writers and bloggers who wish to push their views and opinions through our platform. To get your articles on Nairametrics, kindly send an email to [email protected] and we will publish it within 24 hours of approval by our editorial team.

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Recession; proactive measures not cyclical factors can resuscitate economy

The National Bureau of Statistics (NBS) released the GDP report for Q3 2020 which officially confirmed the economy has slipped into a recession.



FG warns Nigerians about on-going N3million COVID-19 grant scam, IMF, World bank loans, Over 56% of 2019 budget expenditure was released for capital projects , FG changes decision to sell stake of oil assets in JVs, Finance Bill: Nigeria exempts small businesses from Company Income Tax , Finance Bill is for the good of Nigerians – Finance Minister, Zainab Ahmed, Nigeria, five other West African countries reject ‘Eco’ as ECOWAS single currency, FG rejects calls for tax reduction, tax relief for donors to intervention funds, Nigerian economy going into recession, might contract by -8.9% - Finance Minister, Nigeria to spend $33.20 billion in 2021 up 17.2%, will spend 25% of budget on debt servicing - Finance Ministry, COVID -19: FG accesses $750m loans from World Bank for states

Earlier this week, the Minister of Finance, Budget & National Planning, Zainab Ahmed attended the 26th Nigerian Economic Summit and in her presentation highlighted some of the steps and investments the government is making to bring the economy out of a recession. Some of the points she highlighted were; stimulating the economy by preventing business collapse through ensuring liquidity, retaining and create jobs through support to labour intensive sectors such as agriculture, undertake growth-enhancing and job-creating infrastructural investments in roads, rails, solar power and communications technologies, promoting manufacturing and local production across all levels as well as advocating the use of made in Nigeria goods & services. She also highlighted focus on pro-poor spending as a strategy to mitigate the impact of covid-19 on poor households.

We recall that during the weekend, the National Bureau of Statistics (NBS) released the GDP report for Q3 2020 which officially confirmed the economy has slipped into a recession. Following the 6.10% contraction recorded in Q2 2020, the economy further contracted though at a decelerating rate of 3.62% in Q3 2020. We reckon that prior to the covid-19 crisis, economic growth had began to slow with Q1 2020 GDP growth of 1.87% trailing prior 5-quarter average of 2.29% (excluding Q1 2020). The economy has largely survived on an oil-led recovery which we consider cyclical with other core sectors lagging and reeling from the fallout of the impacts of the 2016/17 recession.

In our view, the government needs to be proactive and strategic about policies it intends to adopt to resuscitate the economy. The focus on social welfare, fiat-led interventions in agriculture, emphasis on infrastructure development and advocacy for local manufacturing is reminiscent of prior strategies that can’t be really be considered successful. In our opinion, the economy is in dire need of influx of investments and adequate skill pool to spearhead resource allocation, which we believe can be provided by the private sector. Thus, the public sector should in our view invest in tackling structural issues around ease of business operations (borrowing costs, regulatory & licensing bureacracies/inconsistencies, public agency corruption & FX policies etc.) as well as strengthening regulatory & legal frameworks while the private sector drives the investments for accelerated growth in manufacturing, infrastructural development, agriculture and other core sectors.

In our view, supporting a free market-led economy (given the more organised nature of the private sector than the public sector) would see a return of foreign direct investments into the Nigerian economy while local entrepreneurs would be motivated to take more risks to develop businesses. The outlook for oil prices remain weak and production levels may remain below historical levels as OPEC attempts to keep price stable. Thus, the possibility of a cyclical recovery is limited, only proactive measures to correct long term structural issues would restore the economy on the path of accelerated inclusive growth.

CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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Understanding T.I.N.A. in the Nigerian financial system

As investors face an environment where uncertainty persists, the alternative left will be to park their excess funds in a safe place until Covid-19 passes.



This week, I want to talk about T.I.N.A….(no not the girl)

T.I.N.A. is an acronym for There Is No Alternative. It is used to describe a situation where the markets have excess liquidity and have no outlet to invest, so they invest in low yielding government securities because there is simply no alternative out there.

The financial markets today are awash with liquidity.

In the US for example, the CARES Act 1 cost an estimated $2.3t (11% of US GDP) including $510b to prevent bankruptcies and $349b in Small Business Administration Loan.

All this cash simply increases the liquidity of the financial system. The US Federal Reserve further lowered rates to a band of 0-0.25% in March 2020, the effect? Rates offered by banks on deposits have crashed.

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Thus investors face an environment where the economy is shut because of Covid-19, and uncertainty persists. The only alternative left to the market is to park their excess funds in a safe place until Covid-19 passes, that safe place being US Treasuries and Bonds.

Thus the Fed and US Treasury can offer the low yielding paper to the market because the market is chasing safety, the investors buy because there is no other safe alternative out there, safety first.

It’s the same in Nigeria, the economy has contracted due to the COVID-19 mandated shut down and also exchange rate and land border closures.

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These issues have strained the economy and have been amplified by falling economic output. As a result, investors are very risk-averse and are not willing to expose their capital to risk, thus they are seeking the safety of the sovereign paper.

(READ MORE: The economy may end up weaker if inflation rate is not controlled – CBN report)

The Central Bank of Nigeria (CBN) faced with a glut of liquidity has done what any prudent banker will do, it has dropped the fees it pays to lenders when it borrows money from them.

Thus the Nigeria Treasury bill rate which is the cost of the CBN borrowing at the short end of the market, (less than 365 days) has fallen.

Take the latest auction of Treasury Bills dates 11/11/2020, the rate now being offered by the CBN for 91day and 364-day paper is 0.0350% and .300% respectfully.

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The low rates to my mind is not a surprise, but consider that the CBN offered to borrow N19b from the market, but received subscriptions from the markets to place N99b, this at 0.0350%.

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Why are investors flooding the Sovereign Debt market with money? Because there is no alternative viz a viz risk and reward.

The Nigerian Stock Exchange All Share Index for instance has fallen from a recent high of 42, 624 in January 2018 to 32, 990 as of the Week ending Friday 20th, 2020.

In essence, the Nigerian investors prefer to book negative real return by holding risk free government paper than take any investment risk by exposing their capital to commercial lending.

(READ MORE: Uber, JP Morgan Chase, Moderna gain, COVID-19 vaccine triggers U.S Stocks Up)

Again this is a normal consequence when there is uncertainty in the markets but the lack for a better word “greed” in the markets has offered the CBN a rare chance to drop rates even in an inflationary environment.

The consequences of T.I.N.A. in the Nigerian financial system is clear.

Low rates will discourage savings, already the Pension Fund Administrators have a decision to make if they will continue to hold a full 8% of their portfolio in a negative-yielding but safe investments. T.I.N.A. also supports the Central Bank of Nigeria’s strategy to force banks to lend to the real sectors.

By dropping the risk-free rates in the economy, the CBN is making a point that there is no more free lunch, rather yield will have to be generated from creating risk assets and earning a return.

This sounds good on paper but the investing environment in Nigeria is yet unchanged positively, new taxes are being proposed, land borders are still shut, wages are still low and falling due to inflation.


In general, the Nigerian consumer is in a weak state with very low buying power, as evidenced by the sachetization of the consumer space. It will take a brave investor to commit funds, but then again, fortune, they say, favors the brave.

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Traders’ Voice… A recession, for how long?

With the oil sector likely to remain depressed in Q4 2020, expectations of recovery will rest mainly on the future performance of the non-oil sector.



Recession! I think we all saw this coming. The Nigerian economy declined for the second consecutive quarter by 3.6% YoY in the third quarter of 2020, following a 6.1% drop in the preceding quarter. It marks the 2nd recession in the country in four years amid a significant decline in the oil sector, coupled with the rippling effects of the restrictions implemented across the country in early Q2 in response to the COVID-19 pandemic.

During the Sunday sermon, my pastor made a spirit-filled statement. He said, “it is hard to create sustainable wealth with a shaky foundation.” This statement did not only resonate with me spiritually, but it also did economically. In the case of Nigeria, ever since we shifted all attention to crude oil, it has been one economic struggle or the other. If I start talking about the macro-economic and sociocultural headwinds that watered down the effect of the fiscal and monetary stimulus packages, I would be forced to ‘off my mic’. At the end of the sermon, we were all asked to say this short prayer “Oh Lord, heal my foundation.” I also made the same prayer for Nigeria. However, deep down, I know we will need just more than prayers to address the fundamental issues hindering growth in the economy. The question remains, how long will it take to diversify the economy?

Over the years, huge amounts of investment have gone into the Agricultural sector in a bid to diversify the economy from crude oil. However, the agricultural sector remains underdeveloped and unable to sustain the economy (maybe we need to decide on what sector can really take us to the promised land). Although Nigeria is not the only country that has been gravely affected by the Covid-19 pandemic, I think it is safe to say that the Nigerian economy was already showing signs of weakness following a steady decline in crude oil prices and external reserves.

Just thinking out loud, for a country that is so rich in natural recourses, has a youthful population, favorable weather and fertile land, why do we struggle to generate multiple revenue streams? I guess it is true what they say, “one man’s trash is another man’s treasure.”

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The oil sector recorded a real growth rate of -13.89 percent YoY, driven by the depressed price of crude oil this year. We also witnessed a significant drop in oil production, which declined by 18.13% YoY to 1.67 Mbps, representing its lowest level since the third quarter of 2016, due to compliance with OPEC+ cut agreements.

ICT remains the outperformer in the non-oil sector

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The non-oil sector recorded a real growth rate of -2.51 percent YoY in Q3 2020, which is down by 4.36 percent relative to the rate recorded in Q3 2019, but represents an improvement of 3.54 percent when compared to the 6.05 percent contraction recorded in the preceding quarter. The gradual economic reopening pursued during the third quarter aided the improvement. The underlying subsectors that supported the non-oil sector include Information and Communication (14.56%), Agriculture (1.39%), Construction (2.84%), Financial and Insurance (3.21%), and Public Administration (3.58%).

For how long?

With the oil sector likely to remain depressed in Q4 2020, expectations of recovery will rest mainly on the future performance of the non-oil sector. We expect that the N2.3 trillion stimulus package contained in the economic sustainability plan will play a major role in supporting the recovery of the non-oil sector.

Nevertheless, the economic impact of the #EndSARS protest remains a concern as well.

All eyes are on the MPC meeting…

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The MPC will be holding its last meeting for the year and with the recent macro-economic data (GDP and inflation), market participants will be anticipating the outcome of the meeting more than ever. The MPC will have to decide between further supporting economic recovery or taming inflation. The Central Bank of Nigeria unexpectedly slashed its monetary policy rate by 100 bps to 11.5% during its September 2020 meeting, bringing anchor to the lowest since 2016.

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Inflation vs Interest rate (2015-2020)

*White line… inflation
*Blue line…. MPR benchmark rate

Where is the money?…….

The decision of the MPC will be a major determinant of market direction for the rest of the year. We face three
possible scenarios.

1. Bull case (rate cut): A further rate cut at the MPC will most likely renew interest on the long end of the
curve in the bond market as the short to mid end have received most of the traction in weeks. We will
also witness renewed interest in the equities market after last week’s pullback created possible entry

2. Base case (maintain status quo): The relatively quiet trend will persist in the bond and equities market.
Participants will be looking forward to the PMA on Wednesday where stop rates could print negative.

3. Bear case (rate hike): Although least likely, this would lead to a sharp knee jerk negative reaction
across all financial assets especially in the fixed income market.

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