Concerns over probable cause of the rising inflation have sparked controversy with some schools of thought accusing the state actors like the CBN and the NBS of playing the ostrich in a manner of speaking.
Prof. Jonathan Adeyemi Aremu, a Professor of International Economic Relations at the Covenant University (CU), Ota, Nigeria, who also raised his voice above the din in the ensuing discourse hold the view and very strongly too that the apex regulating body of banks in the country may not have been clinical in their method let alone offering plausible explanation on the turn of events.
The monetary factor, Aremu said, pales into insignificance when viewed from the prism of both the macro and microeconomic standpoints.
According to the Consultant to the ECOWAS Common Investment Market since 2007 till date, the cause of inflation which the CBN and NBS has narrowed down to just one factor is in fact attributable to a constellation of factors.
Such factors, he said, are the dwindling production and manufacturing of the major commanding heights of the economy, low capacity utilisation, job cuts, to mention just a few.
“Of course, we cannot rule out the effect of the Russian /Ukrainian war on the spike in inflation, especially food inflation. But the question we need to ask ourselves is the quantity of food imports from both countries enough to cause the kind of upset we are witnessing in Nigeria today. The answer is no. It goes beyond that. The real problem is that the production level at all levels has gone down. Jobs are declining. Once the volume of money increases without a commensurate increase in production you are bound to face the kind of problem we are facing.”
Expatiating, the former Principal Director of Research at the CBN said, “Take agricultural value chain for instance. There are at least four components in agriculture namely inputs for agric production, processing, marketing. If any of these components are missing, there is no way you won’t experience a spike in food inflation. That is why I am worried that the CBN only chose to shrink money rather than taking a more holistic approach. That is the cheapest way of looking at the issues. But it goes beyond that.”