Mixed reactions trail 2022 inflation projection by World Bank

Some experts have warned that the year 2022 might be a year of higher inflation if the government fails to address the factors driving high prices. They feared this would lead to businesses shutting down, job losses and crimes, among others. The financial analysts said the recent report by the World Bank that Nigeria will […]

Some experts have warned that the year 2022 might be a year of higher inflation if the government fails to address the factors driving high prices. They feared this would lead to businesses shutting down, job losses and crimes, among others.

The financial analysts said the recent report by the World Bank that Nigeria will have one of the highest inflation rates in the world in 2022 is based on empirical evidence.

The global financial institution said that rising prices will continue to diminish the welfare of Nigerian households and hamper the country’s attempt to achieve economic recovery.

It noted that a combination of exchange-rate management problems, trade restrictions, expansionary monetary policies, and the monetary funding of the fiscal deficit will continue to generate inflationary pressures.

“Consequently, Nigeria is expected to remain an outlier in Sub-Saharan Africa, with inflation rates only below those of Zimbabwe, Zambia, South Sudan, Angola, Sudan, and Ethiopia,” it said.

The Bank, which warned that there is a risk that a continued accommodative monetary policy stance could entrench inflation at an elevated level, well above the upper limit of Central Bank of Nigeria, CBN’s target band, stressed that mounting pressure on the parallel exchange rate will constrain the  ability of the apex bank to clear the forex backlog and promote growth via higher investment

A former Director-General of Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, said that inflation is the biggest enemy of the poor as it erodes their purchasing power.

The Chief Executive Officer of Centre for the Promotion of Private Enterprise, added that inflation has also affected many manufacturers and business owners as they can’t transfer all the production costs to the consumers. He said this has affected profit margin, led to the closure of some businesses as well as limit the ability to create employment.

He urged the government to address the factors driving inflation such as insecurity, high energy cost, cost of transportation, monetization of fiscal deficit and exchange rate depreciation.

The immediate past president of the Nigerian Association of Small and Medium Enterprises, NASME, Prince Degun Agboade, who concurred with the projection, said SMEs would be the worst hit by the rising inflation, adding that despite its potentials, Nigeria is a consuming nation as it imports most items.

“I am in the pharmaceutical sector and we import all the things we use to produce; what we don’t import is water. If we import all that we use, what will be the cost on our output? It will be higher,” he said.

He urged the government to prioritise forex allocation to the manufacturing sector by making the purchase seamless for manufacturers. He said there should also be intentional attention to develop infrastructure, create manufacturing hubs as well as reduction of importation of unwanted goods.

Another economic analyst who pleaded for confidentiality due to a sensitive position he is holding said that stakeholders are wary of the inflation rates by the National Bureau of Statistics, which he said keep going down while exchange rate and food prices are on the rise.

“I align with the World Bank because there is nothing that suggests that Nigeria will get out of scarcity of forex, that our farmers would be able to return to farms as a result of insecurity while the government has also announced plans to deregulate the petroleum sector. So, I think that 2022 is a year of higher prices, higher inflation, not minding any numbers coming out from the government’s bureau,” he said

However, a former Director-General of Manufacturers Association of Nigeria, MAN, Remi Ogunmefun, said Nigeria will witness a drop in inflation in 2022 as the government is investing in infrastructure and also boosting the capacity of local production.

He said the challenge with a high cost of energy would soon be addressed as some refineries are expected to come up in the country. He said the appointment of Dr. Doyin Salami as Chief Economic Adviser to the president is a demonstration of the commitment of the government to improve the economy.

The Special Adviser to Ogun State Governor on Industry, Trade and Investment, also said Nigerians need to change their attitude by not importing products produced in the country.

“Have we died since we started eating local rice? Our people need to change their attitude toward smuggling products that we are producing in the country. In some instances, some would go and import products that we are producing here, thereby creating competition,” he said.