By James Emejo
Analysts yesterday urged the federal government and the Central Bank of Nigeria (CBN) to boost current interventions in agriculture and tackle rising insecurity in the country as ways of curbing soaring inflation.
They called on the apex bank to consider increasing foreign exchange supply to bring down exchange rate, especially now that crude oil prices are relatively high.
The calls came amidst increasing inflationary pressures despite the recent reopening of the land borders, as the headline index spiralled to 16.47 per cent in January from 15.75 per cent in December.
The analysts also urged the service chiefs to confront the seemingly intractable security challenges, which has inhibited agricultural production and contributed to the rising food prices in the country.
According to the National Bureau of Statistics (NBS), the Consumer Price Index, (CPI), which measures inflation, increased to 16.47 per cent (year-on-year) in January compared to 15.75 per cent in December.
The NBS blamed the 0.71 per centage points increase on higher food and commodity prices.
The CPI report for January released yesterday by the statistical agency showed that the composite food index rose by 20.57 per cent in the period under review compared to 19.56 per cent in the preceding month.
Also, core inflation, which excludes the prices of volatile agricultural produce, stood at 11.85 per cent in January up by 0.48 per cent when compared with 11.37 per cent recorded in December.
The NBS attributed the rise in the food index to increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetable, fish and oils and fats.
Similarly, highest increases in prices of passenger transport by air, medical services, hospital services, passenger transport by road, pharmaceutical products, paramedical services, repair of furniture, vehicle spare parts, motor cars, miscellaneous services relating to the dwelling, maintenance and repair of personal transport equipment- all contributed to the rise in the core index in the review period.
Urban inflation rate rose to 17.03 per cent (year-on-year) in January from 16.33 per cent in December, while the rural inflation rate increased to 15.92 per cent in January from 15.20 per cent in the preceding month.
However, the analysts, in separate interviews with THISDAY, said monetary authorities would not be able to cage inflation amidst insecurity in almost all the states of the federation, especially the agrarian communities.
Managing Director/Chief Executive, SD&D Capital Management Limited, Mr. Idakolo Gbolade, said concerns around ease of doing business, particularly double taxation and rigorous measures of registering businesses, coupled with inadequate infrastructure, were stifling business and reducing profitability.
He also linked the current inflationary pressures on the CBN’s “ill-informed policy on banning or refusal to regulate cryptocurrency operations in Nigeria which has served as a catalyst for capital flight for foreign exchange, thereby weakening our reserves and further leading to the depreciation of the naira.”
He added that inadequate measures taken by the federal government on COVID-19 vaccinations and support to businesses affected by the pandemic could also lead to a spike in inflation.
Also, President, Capital Market Academics of Nigeria, Prof. Uche Uwaleke, told THISDAY that the inflationary pressure emanated largely from the food component.
He said this reflected the lingering effects of increases in Value Added Tax (VAT), pump price of fuel and electricity tariffs as well as insecurity and transport bottlenecks.
He stated that inflationary pressure had refused to abate despite border reopening and reduction in levy on imported cars.
Uwaleke, therefore, urged the government to scale-up interventions in agriculture, boost forex supply as well as tackle the growing insecurity in the country.
Also, responding to the uptick in inflation, an economist and Associate Professor of Agricultural Economics at University of Port Harcourt, Anthony Onoja, said the January inflation was a reflection of the regressive trend of Nigerian economy between 2020 and 2021 “whose recovery time appears indeterminate.”
He said 2021 carried over challenges of last year which came with unusual developments such as COVID-19 pandemic, insecurity, restricted export and import market regimes as evidenced from a prolonged border closure.
Onoja explained that the situation has been compounded by poor harvests from the farms, low prices of oil, erratic macroeconomic policies and diminishing production capacity utilisation in the various economic sectors.
He said the way out of the economic quagmire was to support the Micro, Small and Medium Scale Enterprises (MSMEs) with conducive environment, particularly infrastructure development and credit, attraction of Foreign Direct Investment (FDI), restructuring the foreign exchange regime and investment in COVID-19 vaccines and restrictive monetary policies.
He said:”With respect to fiscal policies, the Nigerian government should concentrate on national projects that are capable of creating job opportunities and increasing access to social protection schemes.”
Onoja also identified the poor management of the foreign exchange regime, poor capacity utilisation in the real sectors and increase in several consumption items and services like petroleum products, VAT increase, electricity tariff rise amidst rising unemployment as major drivers of inflation.
