Inflationary Pressure from High Tariff (IV)

By
Sampson Iroabuchi Onwuka

The case in point will be the outbreak of 19th century Irish corn and potato embargo which Thomas Malthus argued that local prices had to appreciate first and formally to gauge the rate of importation of corn from Ireland. It was a wrong and right argument. Wrong because of the rent issue and the case of subsistent wage, right because of diminishing returns with view of relatively matching number of small scale English Agriculturist in the 19th century English population. Of course William Jevon from sales and pure market perspective challenged Malthus and his point on total and marginal utility apply in Nigeria since utility must compensate wage, a classic Betham on Utilitarian economy (on what we need, including industries and stadium) with the twist on labor and wage increase.

The evolution of markets, the very wealth of nations, especially in its infant period, sometimes represents a sought of gauge on the country’s commercial character and usually help to study missed set of opportunities. For any country in the world where there is any form of stock market, the purpose has always been to help encourage investment, especially foreign investment. Monopoly which guarantees their survival snails the process but the question naturally arises as to how to form a kind of equilibrium between importation of goods we don’t already have in Nigeria and protection of local markets from harassment.

That must stretch to greatest moments of most third world countries which occur when there is a transfer of production capacities like manufacture from Government owned to private. Privatization scheme is a paradigm shift from the Government owned to private, but from the early days of that transition strategy onwards, countries with weak markets dynamics always encounter the problem of monopoly and high Tariffs.

For instance, the current issue of stake holders of NERC and MYTO (Multi Year Tariff Order) which matter arising from Government attempt at removing subsidy at current per unit use of 6.00Kw to 7.00Kw and would likely rise to 10.0Kw. The Electricity Tariff has risen up to 30% in a matter of months and is expected to compete with challenge the ridiculous 90% Tariff imposed on GSM products by Ernest Ndukwe of N.C.C. until Natcoms (National Association of Telecoms subscribers) managed to force a jettison on the back breaking and somewhat illegal tariffs.

If this High Electricity Tariff should ‘retention’ then the fixed income earners would simply toe the line of Nigerian Medical doctors now on strike. There is no way to pretend that China’s mispriced interest in Niger Delta Electric Power Supply is not a stimulus for this. There is no pretending that this is a step in the right direction but the difference between a Redchip still falling in price and a ADR China Bluechip still rising are to be understood if we can hope to demonstrate that the unnamed companied interested in Nigerian power supply is one too few and will import foreign rates that hold no prisoners about very fixed rate in Nigeria…a case of Alfred Marshal partial parity and in many counts, the roots of high inflation in the country