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The National Bureau of Statistics (NBS) announced last Thursday that inflation surged to 18.17 per cent in March, from 17.33 per cent in February 2021. It was indication that Nigerians’ purchasing power declined; that they spent more on purchasing goods and services in the month of March, compared to February. However, two key members of the Organised Private Sector (OPS), Manufacturers Association of Nigeria (MAN) and National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), have pushed forward some measures to halt the upward trajectory of inflation. Assistant Editor CHIKODI OKEREOCHA reports.
Worried by Nigeria’s unflattering upward trajectory of inflation and determined to halt the trend, the Manufacturers Association of Nigeria (MAN) and the National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) have come out with some measures to push back the trend.
Both members of the Organised Private Sector (OPS), who were reacting to latest inflation figures released by the Nigerian Bureau of Statistics (NBS), which showed a surge from 17.33 per cent recorded in February to 18.17 per cent in March, said rising inflation is not healthy for the well-being of Nigerians and the economy’s growth aspiration.
They were emphatic that there was the need for the implementation of urgent actions to arrest the inflationary trend if the nation is to build on the recent modest gains and achieve the projected 2.5 per cent growth this year.
The NBS last week announced that Nigeria’s inflation rate hit 18.17 per cent in March, up from 17.33 per cent in February. The surged was a 49-month high. The last time Nigeria recorded an inflation rate higher than 18.17 per cent was in January 2017 when headline inflation stood at 18.72 per cent.
The inflation numbers for March, according to the NBS, were 0.82 per cent higher than the February figures. And on a month-on-month basis, the headline index increased by 1.56 per cent in March 2021, which is 0.02 per cent points higher than the rate recorded in February 2021 (1.54 per cent).
But the OPS has weighed on the situation, with MAN Director-General Segun Ajayi-Kadir, describing the 8.17 per cent inflation rate as “unhealthy and worrisome,” more so for the manufacturing sector, which, according to him, remained in recession even after the technical exit of the country’s economy.
“As you are probably aware, the manufacturing sector posted a growth rate of -1.51 per cent in the Q4 2020, from -1.52 per cent in Q3 of the same year,” he said, adding that the inflationary condition adversely affects the manufacturing sector’s profitability and is partly responsible for its low competitiveness.
According to Ajayi-Kadir, the sector’s low competitiveness was a major contributor to the low-export penetration of goods manufactured in the country into the international market. He, therefore, said there is clearly an urgent need for the government to intentionally ensure price stability before the situation becomes deplorable.
The MAN DG in a statement made available to The Nation advised government to pursue consumer price stabilisation measures that will stimulate growth in agricultural output and also deliberately support the manufacturing sector to guarantee improved output that can engender the reduced intensity of too much money chasing after fewer goods.
Apart from further diversifying the country’s revenue sources, the MAN boss also said there is need to action a Central Bank of Nigeria (CBN) sustainable plan to improve the external reserves to a defensive capacity that will raise the months of imports of Nigeria to a dependable level.
“This can be achieved by deliberately and sincerely partnering the productive sector to grow non-oil export,” Ajayi-Kadir said, adding that “The Federal Ministry of Finance and CBN should work more closely when designing policies that affect the real sector of the economy to prevent a situation where policies are working at cross purposes.”
He said, for instance, that while CBN was creating funding windows at single digit interest rate to encourage production, the government increased Value Added Tax (VAT) from five per cent to 7.5 per cent. Similarly, the government, he said, also increased minimum wage and also allowed increase in electricity tariff, and so on.
Ajayi-Kadir also recommended that government, in partnership with manufacturers, should select strategic products, particularly those with high inter-industry linkage, for backward integration support and upscale the drive for the resource-based industrialisation agenda.
He also called for priority allocation of forex to manufacturers to import inputs that are not locally available and for which there are no immediate plan or resources to produce locally. Her said since policies are dynamic, they could change as soon as the nation develops local capacity.
Noting that there are quite a number of moribund industries in the country, Ajayi-Kadir said there should be an industrial clinic to engender their resuscitation in order to boost output and ultimately, achieve price reduction.
“It is evident that there is a strong relationship between manufacturing sector growth and inflation rate, just like exchange and interest rates. Therefore, in the immediate, government should assist manufacturing productivity with credit at competitive price.
“This could be in the form of enhancing existing special credit windows or creating additional ones for this important sector of the economy,” he stated.
The MAN chief added that there was the need to give effect to these measures immediately as the current security situation and the continued incidence of COVID-19 is negatively impacting businesses and lowering their resilience capacity.
For NACCIMA DG, Ambassador Ayo Olukanni, the nation’s soaring inflation, which stood at 18.17 per cent in March, as well as the rising cost of food, is not surprising.
According to him, NACCIMA had on several occasions in recent past warned that the upward trajectory of inflation will happen if action is not taken to address the underlining causes.
Olukanni told The Nation that most significant in this regard is the issue of insecurity which is spreading across the country and its consequences on agricultural production especially by the small farm holders across the food belt of the nation. He said many of the farmers are either not able to engage in active farming or evacuate their farm produce.
Pointing out that business and productive activities only thrive in a safe and secure environment, he said an enduring solution must, therefore, be found to the problems of banditry and other sources of insecurity across the country.
That is not all. The NACCIMA chief also said current low productive capacities in various sectors of the economy have been due to the recent massive power outages and consequential effect on electricity supply to homes and industries, especially Small and Medium Enterprises (SMEs).
He, therefore, recommenced the need to expedite action on the energy component under the Federal Government’s Economic Sustainability Plan (ESP) as part of the strategies designed to address the energy crisis.
Olukanni added that to address food inflation there must be significant improvement in the area of road infrastructure to facilitate movement of farm produce and goods across the country. “This is to strengthen the food supply chain and reduce cost of transportation from the farm to the market,” he said.
He further said more support should also be given to SMEs in the agri-business sector as they are important in the quest to ensure food security and combat food inflation.
“Movement of goods within the country should also not be disrupted by incessant roadblocks across our highways, because this is another cause of the upsurge in inflation and price increases,” he stated.
Noting that the shortage of forex, depreciation in exchange rate and huge import bill also combined to produce the upward inflationary trend Nigeria is witnessing, the NACCIMA boss said s teps must be taken by the government to arrest the trend.
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