Nigeria businesses raise concerns over rising inflation

Business bodies have raised serious concerns over rising inflation in the country, advising the federal government to take appropriate measures before things get out of control.

 A report published by the Nigeria Bureau of Statistics (NBS) Tuesday, April 21, 2020, revealed that consumer price index (CPI), which measures inflation, increased by 0.06 percent points higher than the 12.20 per cent recorded in February 2020.

 In the data, Nigeria’s annual inflation rate jumped to its highest in two years with 12.26 per cent (year-on-year) recorded for March 2020.

 Reacting to the statistics, the Director General of Nigeria Employers’ Consultative Association (NECA), Dr. Timothy Olawale, said the inflation situation was not helped by the ongoing coronavirus pandemic that has infected over 2.6 million people across the world.

 He said many social and economic activities had been disrupted to combat the spread of the virus, with many states across the country already on lockdown.

 Olawale warned that the disruption occasioned by the virus as well as other factors such as the drop in crude oil prices and uncertainty in the financial markets, could land Nigeria in another recession very soon.

 “There are limitations to the successes that can be recorded when demand shocks are combined with supply shocks. It is already apparent from the emergence of the current crisis that there are implications on the economy from both the demand and supply sides,” he said.

 The NECA DG called on the government to design policy measures that would deflate the inflation rate and shield Nigerians from crippling economic consequences.

 In his own opinion, President Association of Small Business Owners of Nigeria (ASBON) Dr. Femi Egbesola also expressed concerns that the rise in inflation would spell more hardship for ordinary Nigerians.

 He called on the government to aggressively develop the agricultural sector and support the Small and Medium Enterprises in the country.

Similarly, Director General Lagos Chamber of Commerce and Industry (LCCI) Dr Muda Yusuf said the bigger worry is about the outlook for inflation in the next few months.

 He said the rising inflation would affect the prices of goods and greatly impact profit margins in the coming months.

“Expectedly, we are already witnessing a sharp depreciation in exchange rate as a consequence of the slump in crude oil price,” he said.

He warned that major adjustments needed to be made in both the private and public sectors of the Nigerian economy, with reviewed economic management models as a pressing need.

Headline crude

 At the weekend, Nigeria’s headline crude, the Bonny Light crude fell below the prices of Brent crude and US headline WTI crude in many years.

 Available information from Oilprice.com disclosed that the Nigerian Bonny light sold for $16.46 per barrel as at 11.56 pm on April 25, 2020, as against the Brent crude which sold for $21.44 per barrel and the WTI crude which sold for $16.94 per barrel within the same period.

 Meanwhile, the huge crash in crude oil prices globally had caused a serious liquidity crisis in the foreign exchange market as about 90 per cent of Nigeria’s foreign exchange earnings and about 70 per cent of the country’s revenue is from oil.

 This had put further pressure on the country’s external reserves which had depleted to about $33.8 billion as of April 22, 2020.

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