As inflation continues to rise despite the various interventions by monetary and fiscal authorities, we must take more decisive and multifaceted action to stabilize prices and support our citizens’ purchasing power. We acknowledge that curbing inflation and stabilizing prices are not easy steps to take, especially as we strive for reasonable growth to create jobs and reduce the poverty level in Nigeria. The inflation rate rose to 33.69% in April from 33.20% in the previous month, as the National Bureau of Statistics (NBS) reported. In a direct response to this persistent rise in inflation, the Central Bank of Nigeria hiked the benchmark interest rate by 150 basis points to 26.25% from 24.75%.

With several hikes in the past months, we are yet to record a significant impact on stabilizing prices. The twin burden of high inflation and interest rates is overheating the economy and causing increased volatility and uncertainty. The private sector is once again thrown into more profound loan repayment crises as interest rates adjust to the new monetary policy rates. We are likely to see a reduction in demand as purchasing power weakens and this may lead to lower industrial production and loss of jobs eventually.

We wish to reiterate our position on the need to implement targeted fiscal and monetary interventions that can boost food production, lower the cost of doing business, overhaul transport infrastructure, increase investment in innovative security architecture driven with technology, create a more enabling environment for the power and oil and gas sectors, and boosting non-oil exports. Specifically, the Chamber had recommended that the CBN apply an import duty exchange rate lower than the official rate at a fixed rate for a determined period. This is expected to help businesses plan better and serves as a palliative that benefits a high proportion of the populace. Earlier in the year, we called on the government to implement specially targeted support for strategic industries.

The ongoing debate on a new minimum wage for Nigerian public workers is becoming a critical variable in the discourse about the next levels of government recurrent spending that may further fuel inflationary pressures into the second half of the year. The Government should begin to plan for the massive commitment of resources to implement the new minimum wage when the debates are over. This calls attention to reducing the cost of governance, eliminating duplicate functions in government agencies through mergers, and investing more in the deployment of technology to automate some government processes. Beyond the instrument of rate hikes to curb inflation, economic managers should consider non-cash interventions to reflate the economy without necessarily increasing the currency in circulation. If this tightness continues, we should not expect to achieve our growth projection of about 3.37% this year.

The government should seek more options to support industrial productivity, fight insecurity, invest more in infrastructure like power and transportation, deploy more technology for automation to ease the cost of doing business, and give a boost to non-oil exports to increase our foreign exchange earnings. By adopting these comprehensive measures, we can effectively curb inflation and foster a stable, resilient economy. It is essential to act swiftly and decisively, drawing on successful examples and tailoring them to our unique economic context.




21 May, 2024

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