The Nigeria Economic Summit Group (NESG) has expressed concerns regarding the escalation of inflationary pressures within the Nigerian economy, attributing this to the escalating costs of food prices.
During a quarterly briefing on the nation’s economic forecast, the Chief Executive Officer (CEO) of the NESG, Dr Tayo Aduloju, articulated these concerns. He anticipates that the Central Bank of Nigeria (CBN) will persist in its inflation-targeting policies, potentially leading to an increase in the Monetary Policy Rate (MPR).
Inflation has been on a consistent upward trajectory in recent months, as reported by the National Bureau of Statistics (NBS), which observed a headline inflation rate of 34.19% in June.
Furthermore, the report indicated a food inflation rate of 40.87% on a year-on-year basis, marking a 15.62% increase from the rate observed in June 2023 (25.25%).
The surge in food inflation was attributed to the escalating prices of various food items, including Millet Whole Grain, Garri, Guinea Corn, etc. (Bread and Cereals Class), Yam, Water Yam, Coco Yam (Potatoes, Yam & Other Tubers Class), Groundnut Oil, Palm Oil, etc. (Oil & Fats Class), and Catfish Dried, Dried Fish-Sadine, Mudfish (Fish Class), among others.
Naija News reports that this inflationary trend underscores the severe impact of rising food prices on the Nigerian populace, with many families struggling to afford three-square meals.
However, the NESG boss has expressed concern that the prevailing trend may persist unless there is a concerted effort to confront the challenges related to food security.
He further articulated that Nigeria is grappling with the unforeseen repercussions of inadequate governance, advocating for enhanced transparency and accountability throughout the governance ecosystem to address these systemic issues.
In a similar vein, Aduloju has called for a thorough examination of the outstanding foreign exchange liabilities as a strategy to enhance economic confidence and encourage an influx of foreign direct investments.
He posited that the recent policy implemented by the federal government to waive the importation of food was a reactive measure to address the prevalent issue of hunger in the country, yet the response has been deemed insufficient.
He noted that the policy was effectively implemented due to the country’s inability to produce sufficient food domestically, as evidenced by the low rates of local cultivation.
Aduloju emphasized the necessity for the country to revitalize its food system through large-scale agricultural practices, which he believes can be achieved by states capitalizing on their unique advantages.
“We cannot afford not to scale the food system to respond to the demand needs of Nigerians,” he said, adding that the government must equally be ready to scale up cultivation in dry season farming.
He said the NESG saw the food crisis coming and made noise about it, saying it was aggravated by the electioneering, which saw reduced farming activities.
“We have a system problem where we are cultivating far less and the agricultural contribution to the GDP is very low, and the system is not producing enough food,” Adeoju said.
Aduloju, nonetheless, expressed a “cautious optimism” regarding the economic recovery, attributing this outlook to his direct engagements with government officials.
Regarding the monetary aspect, the CEO of the NESG noted that although the CBN persists in combating inflation through the increase of the Marginal Cost of Funds (MPR), which invariably leads to an escalation in lending rates.
Furthermore, he lauded the advancements made in the resolution of foreign exchange forward contracts and advocated for the implementation of forensic audits to validate foreign exchange claims that remain outstanding.
“Is there any respite in terms of policies that might signal productivity? We think the major good news is that there is more transparency on the monetary policy side.
“We went from a period of opacity in monetary policy where nobody could tell us what is in our reserve, nobody could tell you where our Ways and Means were to at least where we are now dealing with the knowns. How many of (fx) forwards have been made? There’s clarity on tha,” he said.
