An economist, Bismark Riwane, and other experts have predicted that the high cost of power and diesel will lead to the collapse of many businesses.
Riwane, who said this in a telephone conversation with our correspondent in Lagos on Sunday, said that businesses were under pressure and the margins were being compressed. He noted that there was an increase in the cost of power, which was unpalatable to businesses.
“Two things are happening: one electricity supply has dropped and the price of diesel went up by 300 per cent. “Two, the foreign exchange availability was reduce significantly. Therefore, people became desperate to replace their inventory.
Therefore, unfortunately, every day they produce they are moving closer and closer to their collapse. That is the basic rule of economics and that is happening in the electricity market. And for the foreign exchange market, the supply of forex fro basic inventory is not available and, therefore, the more unavailable it is the more people have to buy forex at a prohibitive cost. So, cumulatively, all of these things are leading to a massive increase.”
The Presidential Economic Advisory Committee has previously listed the implications of this state on the economy. I think that is the highest economic advisory body to the government aside from the National Economic Council. So they have listed it, the question is: What is the government doing about this? We don’t have a response.