Inflationary Pressure from High Tariff (II)

By

Sampson Iroabuchi Onwuka

For instance, when Nigerians pay so much for GSM products, for SMS connection or software, it reverts to overall high price which injure the local fixed income earners. High price market is seriously expensive for local businesses but cheap for foreign investors many of them demand repatriation in Dollars for profit made through the profit. So this is where the pun begins in Nigeria, we need cell phones but not have to any price for it. Above all, we should not have to take the rate that is only commensurate with dollar minded market. Given the dependency ratio of Nigerians on cell phones and the problems of fixed income of the many Nigerians, It is save to conclude that against a depreciating Nigerian Naira, Nigerians are paying far too much for the ordinary cell phone use, irrespective of the reduction in Tariff. It also makes Nigeria a very expensive cell phone industry….one of the most expensive in the world.

We can estimate the market demand of real effect of high phone call in Nigeria, the use of cell phones in Nigeria make cell phone call a derivative of the general pull on demand. Demand may by itself be a sensitive barometer in testing the range of pressure to buy a product that we don’t already have, but it is steady bait against. This can easily result in paying too much for essential needs of the society. You can it a ‘Want’ category, a market of self interest, and the product under this condition drives the market.

In many parts of Nigerian manufacturing department, we find a virtual absence of local investment or the presence of newer companies. The reasons are not farfetched, for we know that Nigerian companies in dollars terms will never compete with turnkey investment from God know where. These other companies in the guise of foreign investment in a big Nigerian market will talk up the Nigerian Commerce ministry and make high pitch for monopoly on any selling industry in Nigeria. In the name of supporting local economy and improving home supply they blind the department from seeing the size of damage that a few unrestrained companies can do in Nigeria.

Such move will always take place in Nigeria since we know that it will almost naturally cripple any form of competition from local Nigerians interested in the same business. The Bull side of this market is that a guarantee for steady profit on shortest possible period is certain even if means doing away with Nigerians entirely. The Bear side is however dead, so dead that the minimum government intervention which occasional burst inflationary prices is back sated in green of the argument that High Tariff was a way of protecting local manufacture. The bear side of the market which is noted for its role in preserving fixed income earning, and civil servant, may have given way to the facts of self interest involved in unprotected markets.

This vacuum system is responsible for just about everything. It is a looting system accomplished through high tariff on just about any profit driven entity is inflationary pressure on Short term, to which the local are party to. The long term view that prices will fall will never happen given the Balkanization of Nigerian Naira. Remember income on general term, is largely fixed.