The Centre for the Promotion of Private Enterprise (CPPE) has urged the Federal Government to tame the supply-side pressures to Nigeria’s inflation by granting concessionary import duty on intermediate products for industrialists, especially those in food processing.
This was disclosed by CPPE’s CEO, Dr Muda Yusuf, in a statement seen by Nairametrics. According to him, Nigeria’s high inflation rate is a major macroeconomic concern to many stakeholders in the Nigerian economy.
Recall that Nigeria’s inflation accelerated to 21.09% in October, up from 20.77 in September.
Causes of inflation: He identified some of the factors that caused the rising inflation, including the depreciating exchange rate, rising transportation costs, forex market illiquidity, a hike in diesel cost, and many others.
- “We are yet to see abatement to the key factors fueling inflation. Some of these factors are global, others are domestic. They are a combination of structural and policy issues.
- “These factors include the depreciating exchange rate, rising transportation costs, logistics challenges, forex market illiquidity, hike in diesel cost, climate change, insecurity in many farming communities, and structural bottlenecks to production,” he explained.
He added that These are largely supply-side and policy concerns. Monetary policy tightening in most economies around the world, especially the leading economies, is also driving imported inflation and the depreciation in the exchange rate.
- “Accelerated growth in fiscal deficit financing by the CBN is heightening liquidity in the economy with consequences for soaring inflation, as Mounting inflationary pressures cause Weakening of purchasing power of citizens as real incomes are eroded and Increasing poverty incidence,” he warned.
Other causes of mounting inflation according to CPPE include the escalation of production costs which negatively impacts profitability; Erosion of shareholder value in many businesses; Weakening of investors’ confidence and Declines in manufacturing capacity utilization.
Tackling high inflation: The CPPE boss urged that tackling inflation requires urgent government intervention to address the challenges bedevilling the supply side of the economy, including production and productivity constraints, fixing the dysfunctional forex policy and instituting fiscal reforms to curb escalating deficit spending.
- “To give producers and citizens some relief, the government could tweak the tariff policies by granting concessionary import duty on intermediate products for industrialists, especially those in the food processing segments of the agriculture value chain,” he added.
