An economist and former Senior Special Adviser to the President of the African Development Bank on Industrialisation, Banji Oyelaran-Oyeyinka, has said comparisons suggesting that petrol is cheap in Nigeria are misleading, describing them as a \u201cfallacy of one price petrol comparison.\u201d\n<\/p>\n
Oyelaran-Oyeyinka said the global economy was currently facing a major shock, noting that \u201cthe world is experiencing a huge macroeconomic shock,\u201d adding that \u201caccording to the S&P 500 Index, $5 trillion has been lost in these two weeks of the war,\u201d excluding \u201cother measurable and unmeasurable factors.\u201d\n<\/p>\n
In a statement on Saturday, he said the assumption that Nigerians were insulated because of supposedly cheap petrol was flawed.\n<\/p>\n
\u201cThe backdrop here is that Nigerians are somehow insulated from this crisis because we do or should enjoy, likely the \u2018cheapest\u2019 petrol in the world. The price of petrol is $1.4\u2013$1.8 per litre across French West Africa. I lived in Abidjan for seven years so I know,\u201d he said.<\/p>\n
However, he stressed that \u201clow nominal petrol prices in Nigeria do not translate to affordability,\u201d explaining that \u201ca resource-dependent non-manufacturing nation is as a rule severely punished by natural and economic disasters and shocks.\u201d\n<\/p>\n
According to him, Nigeria\u2019s structural challenges \u2014 low wages, relatively high inflation, and inevitably low purchasing power \u2014 made citizens more vulnerable to global oil shocks than those in countries paying higher prices for fuel.\n<\/p>\n
Explaining further, he said purchasing power should be measured by labour time rather than currency conversion.<\/p>\n
\u201cPurchasing power parity is made clearer not by direct currency conversion, but by how long a worker must labour to earn a given sum,\u201d he said.\n<\/p>\n
He noted that \u201cfor a Nigerian minimum-wage worker, earning $2 takes approximately 460 minutes, or nearly 7.7 hours,\u201d compared to \u201cabout 16.5 minutes\u201d in the United States and \u201croughly 7 minutes\u201d in the United Kingdom.\n<\/p>\n
\u201cThis metric directly links global commodity prices to the daily reality and experience of the workforce,\u201d he added.\n<\/p>\n
The economist also described direct comparisons of petrol prices across countries as misleading.\n<\/p>\n
\u201cA nominal comparison of petrol prices per litre shows Nigeria among the lowest globally, but this is a fallacy,\u201d he said, adding that such comparisons must be viewed alongside labour productivity.\n<\/p>\n
\u201cThis is the true measure of development and underemployment. We are a low-income fragile economy which fragility throws households into a tailspin once you have an external shock,\u201d he stated. <\/p>\n
He emphasised that economic resilience depended on building a strong domestic manufacturing base and diversifying exports.<\/p>\n
\u201cProductivity or time-to-earn a wage is the metric that reveals the true cost of labour and exposes the fallacy of a single price comparison,\u201d he said.\n<\/p>\n
Oyelaran-Oyeyinka further noted that Nigeria should not be compared with advanced economies.\n<\/p>\n
\u201cAn underdeveloped country like us should not be compared with a superpower USA, UK or any other OECD country because of the simple reason that we have not earned that distinction,\u201d he said.\n<\/p>\n
He added that petrol affordability should be assessed relative to income, not just price.\n<\/p>\n
\u201cThe price per litre in Nigeria of N1,300\u2026 is just one variable in a complex set of development equations,\u201d he said, noting that \u201ccitizens of low-income nations earn low income and for the most part at subsistence levels, so petrol to be realistic becomes a luxury item.\u201d\n<\/p>\n
He explained that \u201cthe \u2018effective cost of petrol\u2019 is relatively higher for a Nigerian worker than for a worker in any industrial nation,\u201d stressing that this held true both in normal times and during economic shocks.\n<\/p>\n
Speaking further on broader structural issues, he said Nigeria remained trapped in a \u201clow-level income equilibrium,\u201d with about 70 per cent of the population in subsistence agriculture and persistent infrastructure challenges, especially power supply.<\/p>\n
\u201cTo get a true picture you must measure petrol cost in \u2018hours of labour.\u2019 With this measure it will manifest among the most expensive in the world because a Nigerian wage earner operates in a low-productivity system,\u201d he said.\n<\/p>\n
He concluded that currency conversion alone created a misleading picture.\n<\/p>\n
\u201cWhen you do a direct conversion of this Naira to dollars\/pound you generate an economic fallacy, it confuses and misleads folks,\u201d he said.\n<\/p>\n
\u201cDone this way, yes, Nigeria\u2019s petrol is relatively not cheap. Food and housing prices are also not cheap. We remain so until we achieve structural transformation of the Nigerian economy.\u201d\n <\/p>\n","protected":false},"excerpt":{"rendered":"An economist and former Senior Special Adviser to the President of the African Development Bank on Industrialisation, Banji…\n","protected":false},"author":2,"featured_media":857204,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[3090],"tags":[244233,51,487,4584,244234,1700,244235,244236,244237,244238,55491,167681,16,15],"class_list":["post-857203","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-banji-oyelaran-oyeyinka","tag-business","tag-cost-of-living","tag-economic-analysis","tag-economic-fallacy","tag-economy","tag-fuel-cost","tag-labour-productivity","tag-macroeconomic-shock","tag-nigeria-petrol-prices","tag-nigerian-economy","tag-purchasing-power","tag-uk","tag-united-kingdom"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/116309825008308016","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/857203","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=857203"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/857203\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/857204"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=857203"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=857203"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=857203"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}