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Nigerians are not realistic about the economy – CBN official



Inflation: CBN, World Bank on collision course

The hope of Nigerians for a quick turn around in the economic fortunes of the country, which have seen standard of living decline sharply, may not be possible in the near and immediate terms given the underlying fundamentals and trade structure of the nation. Most Nigerians have come under increasing economic pressure in the past one year since President Bola Tinubu came to power on May 29, 2023.

Because of the negative impact of the devaluation of the naira has had on both inflation and value of the naira, which plummeted to N1900 to a dollar before rallying to N1200, in apparent vindication of the forecast by Goldman Sachs, that the currency may end the year at that rate, public attention had been on the Central Bank of Nigeria, CBN, to do whatever it could to ameriolate the economic hardship and suffering of people. However, the CBN seems to be pushing back, as Nigerians are putting a responsibility on it, which is not its to bear.

President Tinubu had on inauguration day declared fuel subsidy was gone, which set off a spiral of inflation on all goods and services, forcing the CBN to raise benchmark Monetary Policy Rate, MPR, or interest rate, which determines banks’ lending rates, thus further fuelling inflation.

The Monetary Policy Committee (MPC) at its 295th meeting last week raised the Monetary Policy Rate (MPR) by 150 basis points from 24.75 percent to 26.25 percent while the Liquidity Ratio (LR) was left unchanged at 30.0 per cent.

Also, Cash Reserve Ratio (CRR) was retained at 45.00 percent for deposit money banks and 14 percent for merchant banks while the asymmetric corridor was retained at +100/-300 basis points around the MPR.

However, a competent CBN source, said at the weekend that Nigerians, who are worried by the rising inflation, are looking in the wrong direction and blaming the wrong party. “What do Nigerians expect the CBN to do, manufacture dollars? he asked. This economy is almost dead; we are not producing anything and we are importing everything, how do you think the naira will rise?, he queried.

“We are only responding to the policies of the fiscal authorities, we don’t run the economy, they do. We are simply fighting the fire the have set by trying to moderate inflation. Raising interest rate is the only tool to fight inflation, to do otherwise, is to create an inferno”, the source, who could not be named said.

Nigerians have been battling with inflationary pressures with its curtailing effect on consumers’ purchasing power in the last eighteen months. This was exacerbated by the removal of petrol subsidy and unification of foreign exchange windows, with the consequent devaluation of the naira.

The headline inflation rate has been on a constant increase, rising to 28.82 percent in December 2023 from 21.34 percent in December 2022, triggered by various factors including high energy cost, and insecurity, especially in the farming communities in Nigeria, among others. Within the same period also, food inflation surged to 33.93 percent from 23.75 percent a year ago.

The trend has continued unabated in 2024 with headline and food inflation moving further up to 33.69 percent and 40.53 percent in April from 29.90 percent and 35.41 percent at the beginning of the year respectively.

“Look at government policy of raising taxes, for instance, the recent electronic transfer or transaction levy, you think it came from us? What is the effect of tax on inflation? It spikes, and government is taxing everything and removing subsidies, what do you think would be the implications? The other day, the chairman of the Presidential Committee on Fiscal reform, Mr. Taiwo Oyedele, was reported to have suggested increasing the Value Added Tax, VAT from 7.5 to 15 percent. What will it mean? Higher prices of goods and services, which is inflation.

“Then, when the MPC raises the MPR, Nigerians would start shouting, but they would not blame those responsible for the problem. The CBN has no magic wand, things are not likely to improve unless there are fiscal policies to drive it, such as FDI (foreign direct investment), food production, security, policy stability – these are factors that attract investing. What about corruption, it is the worst disincentive to investment.

“Above all, we have to stop importing everything, because it costs dollar to do so, and we don’t have enough dollar. There is very little or nothing we can do until certain fiscal policies are in place; this is the reality. I can tell you this only privately, if I am speaking publicly, I will try to give hope, which is false hope

“Things are bad now but don’t think they will get better soon, because the indicators or factors that would guarantee it are not there yet.

“Just imagine the new minimum wage being discussed pegged at say, between N70,000 and N100,000, and the effect of it on inflation? We must be serious and tell ourselves the truth; the country is is deep economic problem and there is no quick solutions, either from the fiscal or monetary authorities. This is the reality,” he said with finality.

Data from the World Trade Organisation revealed a stark contrast in manufacturing export values among Nigeria, South Africa, Egypt and Morocco in 2022. While South Africa, Morocco and Egypt recorded $45.38 billion, $30.61 billion, $20.14 billion respectively, Nigeria recorded a modest $3.21 billion.


According Manufacturers Association of Nigeria (MAN), the capacity utilisation of the manufacturing sector reduced from 56.4 percent recorded in 2022 to 55.1 percent in 2023. Also, the growth of the sector reduced to 1.40 percent in 2023 from 3.35 percent and 2.45 percent recorded in 2021 and 2022 respectively.

Last week, Leader of INRI Evangelical Spiritual Church, Primate Elijah Ayodele, called on President Tinubu to do something, because Nigerians are suffering.

’Nigeria is still bleeding, it may not affect the rich but every day, people are crying, because of how bad things are. Tinubu should do a survey of prices of commodities in the market and see how bad things are for Nigerians. Tinubu must not allow anyone deceive him that it is well, it is not yet well. People can’t afford a three-square meal, it’s getting worse every day. Don’t be deceived at all; people are in serious pains except those who are in government’’

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