Economic experts want the federal government to intervene more decisively in curbing the current inflation in the country as the various measures already taken seem to have been of little or no effect.

They are seeking a multifaceted approach to deal with the situation with attention paid to productivity, foreign exchange and insecurity in the economy.

As part of the strategy to put the inflation in check, the Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC) is likely to further raise the benchmark interest rate between 50 and 100 basis points when it reconvenes tomorrow and Tuesday, analysts have predicted.

The MPC had in February raised the interest rate by 400 basis points to 22.75 per cent amid soaring inflation and further raised it by 200 basis points to 24.75 per cent the following month.

Dr Muda Yusuf, a former Director General of the Lagos Chamber of Commerce and Industry; Prof. Jonathan Adeyemi Aremu, an International Economic Relations specialist at the Covenant University (CU), Ota, Ogun State; Prof. Okey Ikechukwu, Executive Director, Development Specs Academy Abuja; Dr. Samson Galadima Simon, Chief Economist at ARKK Economics and Data Limited, Abuja; Peter Adebola, a Lagos-based stockbroker; Mr. Gbolade Idakolo, Managing Director/CEO SD&D Capital Management Limited; and Prof. Uchenna Uwaleke, a finance and capital market specialist at the Nasarawa State University said in separate interviews that the current situation in the country was dire and required an urgent solution.

Dr. Yusuf said the current low value of the naira has continued to encourage the outflow of agricultural products beyond the shores of Nigeria thus “complicating the supply side challenges, especially of food crops.”

He said: “Elevated inflationary pressures also aggravate pressure on production costs, weakens profitability, erodes shareholders value and dampens investors’ confidence.

“Only very few producers or service providers can transfer cost increases to their consumers. The implication is that manufacturers and other investors are currently under tremendous pressure.”

Government, he said, should “address the challenges bedeviling production, productivity, foreign exchange and insecurity in the economy. The real sector of the economy needs to be incentivised to ensure moderation of production costs.”

Besides, he said government should “review its tariff policies by granting concessionary import duty on intermediate products for agro allied industries and other industrialists. The same is true of investors in the logistics sector.”

He added: “The exchange rate benchmark for the computation of import duty should be pegged at N1000/dollar. This is necessary to reduce the pressure of escalating costs of cargo clearing and minimise uncertainty in the international trade processes.

“The policy choice of complete floating of the naira requires a rethink in the light of the current inflationary outcomes, volatility and market imperfections.”

He said while the prospects of softening energy prices have become brighter with the commencement of domestic refining of petroleum products, especially the Dangote refinery, “it will be difficult to tame inflation if we do not fix power, logistics and forex issues. Regrettably, there are no quick fixes in these areas. But it is important to prioritise these issues and ensure stability and recovery.”

Prof. Aremu: “Seriously speaking, there are errors that have been made in the past week. The cumulative effect of it is still continuing.

“Over the years, without production, so much money has been spent in the economy. Under various intervention programmes of which even at a time when the government did not have money, they had to go into Ways and Means to advance it, to go and borrow money.

“In the history of the Central Bank, which I am part and parcel in the Research Department, that is not how to manage the Ways and Means. When you pump so much money into the system without equivalent production of activity, we expect this kind of problem to arise. And that is why it is having a lot of spiral effects.

“Apart from pumping money through many of these intervention programmes, something came up in 2022 when they wanted to change the colour of the Naira for whatever purpose. The Central Bank has a right to do that.

“What has happened in the past is affecting the effectiveness of Central Bank monetary policy. Now let me say this thing very, very quickly. There is what we call the quantity theory of money.

“Now, the goods and transactions are going down. That means the production activity in the economy is going down.

“Like what the Central Bank did, the past governor of the Central Bank and his team, they increased the money supply without paying attention to the volume of goods and services.

“To be productive, that is the cause of inflation. So let us actually appreciate the difficult work which the CBN is trying to do now in terms of monetary policy intervention.

"Also, if the volume of goods in the economy involves increasing to the extent that you cannot sell overseas to be able to have more foreign exchange. Okay. Obviously, you won’t have more foreign exchange. Domestic consumption, there is no increase.

“Domestic production and exports are not there like before. Yes. Obviously, that is going to be reflected in exchange rates.

“To be able to make sure that the money in the system is actually made to go in line with the production of activity, what the government should be doing at the same time is to ensure that activities that increase production will be put in place so that more goods are available for domestic consumption, more goods are available for sale to foreign exchange as well where we are going to have money.

“So these are the things that ought to be put in place. That is why I think that the government is trying to actually make sure they harmonise the tax system so that it will no longer be punitive enough to discourage producers.

“So they need to be given enough encouragement so that we can go ahead under the Guaranteed Trade Initiative, which is there because Nigeria is among the 22 countries that are to participate under GTI.

“But up to now, we have not been able to make sure that we have a date when Nigeria is going to shift to other African countries.

“Look, Ghana, Kenya, South Africa, there are about eight countries that started this in 2022. Nigeria is coming to it in 2024.

“The opportunity AFTA is going to create is that number one, we shall be able to sell more of our products to African countries. We shall not be using our foreign exchange to be able to buy from other African countries.

“We shall be able to use the foreign exchange we are using to buy from other countries in South Africa. We shall be able to use it for other things.

“And let me say this one also: that as much as possible, we need to actually firm up every of the bilateral treaties which we have signed, and ratify them.”

Peter Adebola: “One of the major causes of inflation has been security challenges in many parts of the country. Many farmers are out of the farm due to the fear of kidnapping and killing.

“The effect of what had happened in the past is what we are witnessing now. The compounding effect of kidnapping and killing since 2015 up until now is reflected in the food prices.

“Although the current administration is doing a lot to curb this problem, it has not been completely eradicated and this is affecting food production which continues to push demand for food far above food supply and of course, prices will be going up if demand continues to outweigh the supply of food.

“The removal of fuel subsidies has a great impact on transportation costs, production costs and, of course, distribution costs.

“All these costs put together are impacting the commodities prices.

“The current administration promised Nigerians that the Port-Harcourt refinery would be up and running by December 2023 but by May 2024, the refinery is yet to produce one litre of petrol.

“By the time we start refining the petroleum products we need in Nigeria, the prices will come down and the demand pressure on the US dollar will reduce and the Naira will become stronger.

“Besides, the depreciation of the naira is impacting inflation. Government should be sincere and accelerate its food production programme to boost food supply.

“Using monetary policy to control inflation is sub-optimal. It will be appropriate to use monetary policy to curb inflation if it is a demand-pull inflation, but the inflation we currently have is cost-push inflation if we talk generally.


“We cannot afford to be increasing interest rates as the inflation rate is increasing. If we continue to do this, the inflation rate will continue to increase because as the interest rate increases, the cost of funds will continue to increase and this will impact production costs which may reduce the aggregate supply.

“If the demand remains the same or increases, the prices will continue to rise and the inflation rate will continue to spiral. God forbid that we go back to 1993 when the inflation rate was 61.3% and 1994 when the inflation rate got to 76.1%.

“Government should go back to the drawing board and come up with security architecture that will enable farmers to go back to the farm. The legislative arm of government should come up with laws that will impose capital punishment for kidnapping and terrorism.

“Our economic policy should focus on domestic economic growth and not be tilted towards encouraging foreign investors to the detriment of domestic economic activities.

“Privatisation of government petroleum refineries so that the private sector runs these refineries efficiently and effectively. If the government can take this bold step, our refineries will be up and running within one year after the privatisation.

“Government should dispose of all idle government assets to fund the budget rather than increasing the domestic and foreign borrowing that is increasing our debt burden. Fast-track the process of ensuring stable electricity.

Prof. Ikechukwu said the federal government did not handle the removal of fuel subsidy well.

“Assuming the announcement was made, and within a week there was a rollout of measures and policies, nobody would have complained,” he said

He also said policy reversals undermine investor confidence and exacerbate public uncertainty.

“The policy flip-flop doesn’t give anybody confidence, especially against the background of inflation biting and incomes stagnating.”

He urged the federal government to prioritise expenditures, especially in comparison to other expenses like the N90 billion spent on Hajj.

“It then becomes evident that the allocation of funds needs to align with national priorities.

“By alleviating the financial burden on tertiary education students, and ensuring that secondary education is also adequately supported, families can redirect their resources towards other essentials.

“This realignment of priorities can lead to an increase in discretionary income for families, ultimately contributing to economic growth.”

Dr. Simon said much of the economic challenge was caused by the CBN’s Ways and Means financing and various interventions, which pumped over N40 trillion into the economy during the tenure of the last administration.

He criticised the continuation of this practice, despite promises to halt it.

He also stressed the need for a permanent solution to insecurity, which severely impacts agricultural productivity.

“We need to find a permanent solution to insecurity, whether it’s bandits in the northwest or Boko Haram in the northeast,” he said.

Prof. Uwaleke advocated coordinated efforts to boost food output through agricultural mechanization and subsidising fertilizers for genuine farmers.

“There should be a deliberate, urgent, and concerted effort on the part of the federal and state governments to boost food output,” he emphasised.

He also highlighted the potential benefits of rolling out Compressed Natural Gas (CNG) buses to reduce transportation costs and urged the government to fix the country’s refineries to bring down energy costs.

“The cost of energy needs to come down, which is why the refineries need to be fixed urgently,” he noted.

Mr. Idakolo recommended aggressive implementation of welfare policies and suggested a form of price control to stabilise the economy.

He also called for increased refining capacity to reduce pressure on the exchange rate and advised against imposing additional taxes and levies for at least two years to allow current policies to take effect.

“The government needs to look inwards and stop additional burden on the people and businesses,” he stated.

CBN set for fresh interest rate increase
The MPC is said to be inclined to further raise the benchmark interest rate to check inflation

National Bureau of Statistics (NBS) data showed that the country’s annual inflation rate rose to 33.69 per cent in April from 33.20 per cent in March.

The NBS said the April 2024 headline inflation rate showed an increase of 0.49 per cent points when compared to the March headline inflation rate.

On a year-on-year basis, headline inflation rate was 11.47 per cent points higher than the rate recorded in April 2023, which was 22.22 per cent.

In response to these inflationary pressures, Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said the Monetary Policy Committee (MPC) is likely to increase the MPR by 50 to 100 basis points during its meeting on May 20-21.

“This monetary tightening aims to curb inflation by elevating borrowing costs, thereby reducing consumer spending and cooling off demand,” he said.

Analysis of the NBS data showed that on a month-on-month basis, the headline inflation rate in April 2024 was 2.29 per cent, which was 0.73 per cent lower than the rate recorded in March 2024 (3.02 per cent).

Therefore in April 2024, the rate of increase in the average price level is less than the rate of increase in the average price level in March 2024.

Also, food inflation rate in April quickened to 40.53 per cent on a year-on-year basis, which was 15.92 per cent points higher compared to the rate recorded in April 2023 (24.61 per cent).

Analysts at Financial Derivatives Company Limited further said that the price of food commodities in Nigeria has maintained an upward trend since the beginning of the year, significantly impacting consumers nationwide.

This persistent rise, initially driven by currency misalignment and supply chain disruptions, has now been exacerbated by the planting season, which typically leads to food shortages.

In April 2024, the annual food index experienced a notable increase, rising by 0.52 per cent to 40.53 per cent, up from 40.01 per cent in March. However, on a monthly basis, the food index declined by 1.11 per cent, falling to 2.50 per cent.

This minor relief does little to offset the broader trend of inflation. During this period, Nigeria’s headline inflation climbed to a 28-year high of 33.69 per cent from 33.2 per cent in March.

Key commodities experienced significant price hikes in April, with garri increasing by 33 per cent to N40,000 (bag), tomatoes surging by 42.85 per cent to N50,000 (basket), and onions rising by 37.5 per cent to N55,000 (bag).

Additionally, the prices of essential items such as bread, yams, vegetable oil, and fish rose.