How Emefiele Plans to Achieve Single-digit Inflation in 5 Years

CBN Governor, Mr. Godwin Emefiele

One of the key targets which Mr. Godwin Emefiele, governor of Central Bank of Nigeria (CBN), is set out to achieve in the next five years of his second term in office is to bring inflation down to a single digit. But whilst that is laudable, there are indications that attaining the target by the CBN may be a herculean task as the economic environment remains unpredictable, reports Bamidele Famoofo

It is in the interest of government and the citizenry that single-digit inflation is achieved for the economy.  For instance, a low and stable inflationary environment is essential to economic growth because it supports long-term businesses. Besides, a low interest rate environment will help to lower interest rates charged by banks to businesses thereby facilitating improved access to credit, and a corresponding growth in output and employment.

Emefiele said monetary policy measures embarked upon by the CBN in the next five years will be geared towards containing inflationary pressures and supporting improved productivity in the agricultural and manufacturing sectors of the economy.

One of the things the CBN wants to do to achieve its single digits rate target is to work with other stakeholders in the economy to bring down the cost of food items, which it said, have considerable weight in the Consumer Price Index basket.

Emefiele noted that decisions by the monetary policy committee on inflation and interest rates will be dependent on insights generated from data on key economic variables. The CBN said it will continue to sustain a positive interest rate to the delight of its important stakeholders.

The CBN helmsman made it clear that his ultimate objective is to anchor the public’s inflation expectation at single digit in the medium to long term.


The CBN has missed its single-digit inflation target of between 6-9 per cent set for between 2017 and 2019. Record has shown that the only years when the CBN was spot on in its inflation forecasts were 2004, 2006, 2010 and 2014.

Meanwhile, the last time Nigeria enjoyed single-digit inflation was in the year 2015. The rate thereafter moved up dramatically from 9.5 per cent sometime in 2015 to 18.5 per cent in 2016.

But Emefiele’s CBN was able to crash the high inflationary rate triggered by over 60 per cent drop in crude oil prices between 2014 and 2016. Nigeria, largest economy in Africa depends on crude oil revenues for close to 86 per cent of its foreign exchange earnings and over 60 per cent of government expenditure.  

Proactive measures taken by the Central Bank to raise of interest rate in July 2016 brought done inflation from 17.6 per cent to the region of 11.22 per cent as at June, 2019. The figure recorded in June was 0.18 per cent points lower than the rate recorded in May 2019 (11.40) per cent.

On month-on-month basis, the headline index increased by 1.07 per cent in June 2019, this is 0.04 per cent rate lower than the rate recorded in May 2019 (1.11) per cent.

The percentage change in the average composite CPI for the twelve months period ending June 2019 over the average of the CPI for the previous twelve months period was 11.29 per cent, similar to the 11.29 per cent recorded in May 2019.

The urban inflation rate increased by 11.61per cent (year-on-year) in June 2019 from 11.76 per cent recorded in May 2019, while the rural inflation rate increased by 10.87 per cent in June 2019 from 11.08 per cent in May 2019.

On a month-on-month basis, the urban index rose by 1.10 per cent in June 2019, up by 0.05 from 1.15 per cent recorded in May 2019, while the rural index also rose by 1.05 per cent in June 2019, up by 0.02 from the rate recorded in May 2019 (1.07) per cent.

The corresponding twelve-month year-on-year average per centage change for the urban index was 11.65 per cent in June 2019. This is less than 11.66 per cent reported in May 2019, while the corresponding rural inflation rate in June 2019 was 10.99 per cent compared to 10.98 per cent recorded in May 2019.


While economic analysts applauded the CBN for its efforts to bring inflation down from what most of them described as alarming in 2016, they wonder if the CBN would ever be able to bring it down to a single-digit regime, given that it has remained sticky in the 11.0 per cent range for a long time.

The Chairman of StanbicIBTC Group, Mr. Atedo Peterside, is one of the stakeholders who believe the CBN does not have the will power to curb inflation to single digit. His words: “CBN Governors are very good at bringing down inflation from 18 or 19 per cent, a level considered politically unacceptable. 

But when it gets near 10 per cent, they get tired and it stays at level of about 11 per cent endlessly.”

He argued that the same method that brought inflation down from 18 per cent could further bring it down to five per cent. For Atedo, it is not rocket science to bring down inflation to five per cent in Nigeria like it has been achieved in other high inflation countries like Brazil at some points.

He gave reasons why the CBN must everything at its powers to reduce inflation rate to single digit in Nigeria. “If your inflation rate remains at 11 per cent year on year (YoY) while the U.S is at two per cent, every year you don’t adjust down your interest rate, you have a 9 per cent differential.  To be able to cope, you need not to devalue your currency but bring down your inflation.”  

The target will be difficult to achieve because of unstable economic environment in the country and external factors that trigger instability.

A Lagos-based economist, Mr. Obinna Uzoma, said the single-digit target seems like a far cry given current economic realities. He said there was a higher likelihood for inflation to trend higher than coming down as planned by the CBN because of the effect of rise in workers’ wage in the country. As far Uzoma is concerned, the CBN inflation projection should not be taken seriously as he claimed they hardly get it right when it comes to inflation targeting.

He, however, challenged the CBN to set specific targets on inflation which could be tracked. “If they left it open without an anchor, any inflation performance may look like the right one. 

Even though the goal is to achieve single digit inflation, it could take months or years to be achieved especially when the economic environment is very unstable.”


The CBN said it was not unmindful of the challenges it will have battle with to achieve its target on inflation vis-à-vis a double digit economic growth. Emefiele identified the fragile growth of the economy as a major domestic threat to achieving its five years growth target. 

He said the recovery of the economy from recession in 2017 was yet to deliver a significant benefit in terms of job creation, and there has not also been a substantial increase in credit to the private sector.

External factors which pose big threats to achieving economic goals set by the CBN as highlighted by Emefiele include the lingering trade war between the United States and China, U.S and Mexico and subdued growth in the Eurozone. Rising volatility in the crude oil market occasioned by the rapid increase in the supply of Shale Oil by the United States, remains a potential hindrance for growth in Nigeria.