By Peter Egwuatu, Udeme Akpan, Yinka Kolawole, Godwin Oritse, Godfrey Bivbere, Rosemary Iwunze, Nkiru Nnorom, Providence Ayanfeoluwa & Mariam Eko
The Nigerian Economic Summit Group, NESG along with the leading Organised Private Sector, OPS, groups and private sector financial experts have warned that excessive reliance on monetary policy instruments cannot address Nigeria’s macroeconomic headwinds successfully.
The groups which headlined the 2023 edition of the Vanguard National Economic Discourse include The Nigerian Economic Summit Group, NESG, the Nigerian Association of Chambers of Commerce, Industry and Agriculture, NACCIMA, the Manufacturers Association of Nigeria, MAN. Among the institutional headliners was also the Emerging Africa Capital Group.
Speaking event the groups emphasised the need for broad based policy strategy especially the fiscal components to achieve inclusive growth.
They warned that the current monetary policy measures are coming with cost-push rather than demand based inflation.
They also observed that the cost-push inflationary pressures have pushed more Nigerians into poverty, even as printing of money fuelled inflation, adding that the rise in the cost of goods has led to huge reduction in the purchasing power of the people.
The Chairman of NESG, Niyi Yusuf, who was the keynote speaker at the Economic Discourse, the sixth in the annual series started in 2017, with the theme “Taming Inflation & Stimulating Growth: The Place of Fiscal & Monetary Policies”, stated that monetary policy alone cannot address inflation rather the measures should be holistic in order to tame inflation.
He explained, “Inflation was a big issue in 2022 and the monetary authority, the CBN increased the Monetary Policy Rate, MPR, four times last year, and was increased again yesterday (Tuesday) to 17.5%. So they are trying to use interest rate to tame inflation and what that has led to is increase in the prices of goods and services”.
He added, “As a nation, we have a huge debt burden and some say we are now at the cliff of a debt crisis. So the Ministry of Finance believes it’s a revenue issue, but a state where we spend over 80% of our revenue to service debt is really not sustainable. “That was what happened last year, low economic growth, we probably will land at three percent, which is almost the same as population growth and population growth is about 2.8%.
“The economy is growing but at a very slow pace, and we are a nation in a hurry, to feed 220 million people. We need to be having double digit growth in the economy.
“2023 would not be any different if we don’t make drastic changes and if we don’t take tough decisions.
“Most authorities have projected a 3% economic growth, and the Nigerian Economic Summit Group would think it would be slightly below 3%.
“But whether is 3% or 2.9 or 3.2, that’s not where we need to be because inflation this year is also projected to remain double digits. And so it’s clear that we need to find ways to reduce inflation and also find ways to propel growth. And of course, that speaks to the essence of the topic for today.”
Continuing, he said: “The CBN itself has recognized that inflation higher than 12 percent is not good for economic growth.
“So I think all authorities are aligned on the need to reduce inflation rate to single digit, because if we don’t do that, the prices of goods and services will continue to get out of hand. And so inflation eats everything, including eating profits and that is quite concerning.
“A bit of inflation is needed but we don’t need double digit inflation growth.”
CBN will deploy available tools to tackle inflation – Emefiele
Meanwhile, the CBN Governor Mr. Godwin Emefiele, has called on Nigerians to work together to move the nation’s economy forward, assuring that the apex bank will deploy all the tools available to it to curb the high inflation rate in the economy.
Emefiele who was represented at the Economic Discourse by the CBN’s Branch Controller, Lagos, Mr. Bariboloka Koyor, said the CBN has already deployed a series of policies to curb inflation.
He stated: “We are keeping our eyes on the indices as they are going and it is our responsibility to bring in the necessary controls and the regulations that we believe will be able to address all the issues.
“Inflation, like we know, at the moment is a little bit on the high side but we have taken policies and stance to moderate it.
“So I assure you that all Nigerians should have rest-of-minds. We are doing our best to regulate and make sure that the inflation is tamed to the best of our ability”.
He, however, stressed that achieving economic growth and low inflation requires the efforts and cooperation of all Nigerians.
“We believe that the economy of Nigeria is in our hands and so all of us will have to work together, both the monetary authorities as well as the fiscal authorities, all of us are Nigerians. Until we begin to take steps ourselves, having faith in our own country and in our own economy, we won’t be able to go too far.”
Fiscal must complement monetary policy – Toyin Sanni
Meanwhile, the Group Chief Executive Officer of the Emerging Africa Capital Group, Mrs. Toyin Sanni, has said that reining in inflation requires both monetary and fiscal policy approach, noting that monetary policy measures being deployed by the CBN were inadequate.
Sanni who was on the panel session of the Economic Discourse also said there is a need for total overhaul of the economy to attract investors, curb brain drain and achieve the desired level of economic growth.
She stated: “In the absence of a major reform initiative of the Nigerian economy, total overhaul, I will say, we will not be able to achieve the growth that we desire.
“There’s an expectation of further interest rate hikes and I think that expectation has already been manifested because we have the increase from 16.5 percent to 17.5 percent in the monetary policy rate.
“The whole idea is to target inflation and reduce the quantum of money in supply but it appears to be like a vicious cycle that is further leading to difficulties in terms of growth and output in manufacturing and at the end of the day, we all lose.”
Multiple forex rates must be eliminated – NACCIMA
Speaking at the event on issues bordering on the challenges of inflation and growth as it effects businesses, the Director General, NACCIMA, Mr. Sola Obadimu, said that eliminating the multiple exchange rate regime is a critical factor for arresting the high inflation rate in the country and stimulating economic growth.
Obadimu, who was a panellist at the Economic Discourse, said it is unfathomable that the Nigerian economy is running with divergent forex rates with about N300 gap between the parallel and official rates.
He stated: “We should be practical, we should be able to address the reality of the divergent interest rates because if you are saving, what do you get on your deposits? Why is it so wide what you get when you take a loan and when you put in your savings as a deposit ?
“And then the divergent forex rates, why do we have N300 margin or gap between the parallel and the official rates? Why do we even have all these multiple rates anyway?”
Govt agencies, touts frustrating manufacturers – MAN
Presenting the positions of the manufacturers at the Economic Discourse, the President of the Manufacturers Association of Nigeria, MAN, Otunba Francis Meshioye, said that the high level of inflation in the country is mostly driven by rising cost of production worsened by the activities of government agencies and touts popularly known as ‘agberos’.
Speaking at the Vanguard Economic Meshioye said the persisting rise in the inflation rate is not ‘demand pushed’, but ‘cost pushed’ noting that the CBN has been working more on the notion that inflation in Nigeria is ‘demand pushed’ rather than ‘cost push’.
Meshioye who was represented by the Director Corporate Services, MAN, Mr. Ambrose Oruche, also said that, the increase in the cost of goods and services was due to increase in cost of raw materials, power and other sundry.
He further argued that if CBN will look around and fine tune its policies’ alignment with manufacturing, it will be a critical development for manufacturers.
He wondered, “Why is CBN always focusing on managing the money supply? The issue is not the money supply. The issue is the cost of production, the increase on a daily basis on the cost of production, that’s the critical issue. If you are able to resolve all that, you will bring down the cost greatly”.
FG should develop economy to retain funds for growth — Awosika
Meanwhile, the Federal Government has been tasked to stimulate Nigeria’s economic development in order to retain funds for growth.
Chairman and Founder of The Chair Centre Group, Mrs. Ibukun Awosika, who took this position at the Economic Discourse also said the nation’s economy is haunted by many leakages.
Citing developments in the education sector as an example, Awosika who was the chairman of the 2023 edition of Vanguard National Economic Discourse, noted that the quest for foreign studies has culminated in the drain of resources which could have been retained for development.
According to her, Nigerias spent over $200 million for foreign studies within a few months of last year, stressing that the trend has become very alarming.
Unlike in the past when such students used to return to Nigeria on completion of their studies, she said most of them do not return to directly impact the nation’s economy.
Awosika said: “Over $200 million has been requested for school fees payment in other countries. If that value was retained within our economy, it will be driven in multiple cycles through a productive sector and what will be achieved will be unimaginable”.
Awosika also noted similar lapses in the manufacturing sector, where local industries have been crippled, thus forcing manufacturers to shut down while consumers embarked on massive patronage of import of various goods at the detriment of the nation’s scarce foreign exchange.
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