Economists have urged the Federal Government to tame inflation by intensifying efforts in tackling insecurity in the country.
The experts, who gave the advice in separate interviews with the News Agency of Nigeria (NAN), on Friday in Lagos, noted that the pressure point had consistently been on food.
The National Bureau of Statistics (NBS) on Thursday said the current headline inflation rate increased to 21.47 per cent in November from 21.09 per cent in October.
Uche Uwaleke, a professor of Finance and Capital market at Nasarawa State University, Keffi, said inflationary pressure in Nigeria had always been driven by supply-side factors like insecurity.
“What is not in doubt is that inflationary pressure in Nigeria continues to be driven chiefly by supply-side factors such as scarcity of petroleum products, inadequate transport and power infrastructure as well as insecurity and flooding, which negatively impacted food output in particular.
“There’s equally the demand side caused by election spending and speculative demand for forex, especially in the parallel market resulting in naira depreciation and imported inflation.
“The supply-side factors can only be tackled by the fiscal authorities through decentralising infrastructure provision and involving the private sector more in power and road transport infrastructure provision,” he said.
Uwaleke, therefore, advocated the establishment of state police to tackle the situation.
He also said the increase in inflation rate in November was expected in line with global trends which, according to him, might not have any significant impact on either the equity or fixed income markets.
He said the demand-side factors were within the purview of the Central Bank of Nigeria, which he said the bank could do via effective monetary policy geared towards controlling money supply.
He said, “to this end, the currency redesign and cash withdrawal limits might help.”
Johnson Chukwu, Chief Executive Officer, Cowry Asset Management Ltd., also spoke in the same vein.
“The government needs to address the issue of insecurity in the country. If you look at that inflation figure of 21.47 per cent, the major driver of inflation is food inflation, which came about 23.72 per cent; food inflation has been propelling all items.
“The reason why we are having this is because we have seen a situation where food production has lagged behind demand because of the situation of farmers in the north.
“Government needs to address the issue of insecurity so that farmers can go back to the farm and produce more,” he said.
Chukwu also advised the government to improve on crude production, saying, “if government can address the issue of insecurity in the Niger Delta regions, and crude production increases back to about 2 million barrels a day, Nigeria will earn enough foreign exchange, naira depreciation will be tamed.”
The economist noted that continuous naira depreciation was also responsible for the current inflation rate.
According to him, when importers bring in goods into the country at a depreciated naira rate, they will not have a choice than to pass the higher exchange rates to the consumer in the form of prices.
“So, there is a need to improve on crude production so that Nigeria’s reserves will improve, exchange rates will stabilise and then the naira depreciation will moderate,” he said. (NAN)
