The Nation Newspaper

Tag: Inflation

  • Nigeria targets single digit inflation rate by 2020

    The Federal Government is targeting a single digit inflation rate by 2020, the Minister of Budget and National Planning, Mr. Udoma Udu Udoma, has said.

    The National Bureau of Statistics (NBS) in its Consumer Price Index (CPI) May 2017 report, released in Abuja, during the week, indicated that the country’s inflation dropped to 16.25 per cent in May, from 17.24 per cent in April.

    According to the report, this is the fourth consecutive decline in the rate of inflation since January.

    The Bureau stated that the headline index increased by 1.88 per cent in May 2017, 0.28 per cent points higher than the rate of 1.60 per cent recorded in April 2017.

    But Udoma said government was committed to containing the inflation rate so as to make life more meaningful to the citizens.

    According to him, the Central Bank of Nigeria (CBN) is saddled with the responsibility of achieving the single digit inflation rate by 2020.

    “We are targeting to bring the inflation to single digit by 2020 and it is the role of the CBN to do that,’’ Udoma said.

    He expressed optimism that the single digit inflation rate would be achieved in spite the allegations of policy inconsistencies being leveled against the CBN in some quarters.

    The minister said: “I don’t think there are inconsistencies, you have different objectives and you have to balance, it’s a balancing thing, there are no inconsistencies.’’

    On plans to submit the 2018 budget to the National Assembly by October, the minister said government was determined to return to the January-December Budget Year cycle.

    He said: “We want to move back into a January-December budget year because even though the Act that the National Assembly (NASS) passed and signed into law allows 12 months, which means that this budget just signed has a 12-month lifespan, it is not the best.

    “People need to plan carefully with the January-December budget cycle.

  • CBN eyes single digit inflation

    CBN eyes single digit inflation

    Buoyed by the rate of the economy’s recovery, the Central Bank of Nigeria (CBN) is confident that the country will return to single digit inflation rate.

    CBN Governor Godwin Emefiele, in an interview with Arise Television yesterday, said with the improvement seen in growth from the negative 1.7 per cent in the last quarter of last year to the negative 0.5 per cent in the first quarter of 2017, the inflation target “is achievable in the course of time”.

    Nigeria’s inflation rate fell for a fourth straight month in May, dropping to the lowest in a year as growth in prices of most goods, except food, eased. Inflation slowed to 16.25 per cent from 17.2 percent in April, according to data from the National Bureau of Statistics.

    Emefiele spoke of huge success in exchange rate stability, based on some of the actions the apex bank had took in the last couple of months.

    The CBN boss said: “In 2017, with the improvement we have seen in growth, from the negative 1.7 per cent in the last quarter of last year to the negative 0.5 per cent in the first quarter of this year. We have seen exchange rate stability with some of the actions we have taken in the last couple of months. We do expect that if this trend continues, we should get better. Firstly,  with inflation trending downwards, we are hopeful that in the course of time, we will get back again back to single digit inflation.”

    He said the country had developed homegrown solutions to its economic challenges and that the feedbacks from those decisions are positive.

    “ Why needed to adopt Nigerian option, because of our peculiar reasons. On inflation, the CBN had a target of six to nine per cent, unfortunately, it grew to 18.8 per cent and I am happy it is coming down, and I am hopeful it will continue to get better. We looked at the foreign exchange market, and today we have ensured that forex is not N500/$1. It is now between N360 and N370/$1 and we will ensure it gets even better from where it is right now,” he said.

    On some of the stabilisation steps taken by the regulator, Emefiele said the apex bank had opened the market up for more people to come in. “We want more people to in and invest in the economy, and that was why we introduced the Investors’ & Exporters’ Window. We want forex market that will be determined by demand and supply. It has helped in forex flow and led to the appreciation in the naira we are seeing today,” Emefiele said.

    On the real exchange rate for the naira, he said that despite any method used in determining the value of the local currency, the real effective exchange rate should not be above N325/N330 to dollar.

    On the restriction of forex for 41 items, Emefiele said there was need to take a look at what is being imported. “Why should we import toot pick, palm oil and even rice? At a point in time, Nigeria was the largest producer of palm oil, controlling 40 per cent of the market share. Why should we set aside forex for the importation of products that we can produce in the country. My view is that forex should be devoted to critical segments of the economy and for the importation of items that we cannot produce in the country,” he said.

    The CBN boss’ logic is that when items, such as palm oil, are imported, the local producers are made poorer.

    “When we import rice, we impoverish the rice producers in Abakaliki, Kebbi, Sokoto, Katsina and other parts of the country. We need to look at that very seriously because God has blessed this country, with good climate, good weather, which should be taken advantage of. Since we can produce these things, let’s use them to feed our people so that we can save foreign exchange for the country,” he said

    Emefiele said he grew up seeing the country’s economy thriving in the 60s and 70s, adding that he owed Nigerians an obligation to ensure that the economy rebounds.

    Emefiele also said with the level of commitment shown to agriculture and rice production, many manufacturers were already indicating interest in the supporting government’s efforts.

    “As we continue this plan, we have seen some multinationals coming to say they will join us in rice production, palm oil production among others,” he said, adding that the CBN would continue to support multinational that help in building the economy by supporting government’s efforts at promoting agriculture.

    “If PZ Wilmar Nigeria needs foreign exchange because they have a little shortfall, I will give them because I have seen their contributions to the economy. Coscharis has acquired thousands of hectares of land in Anambra, trying to grow rice. And we were there last year, and this year, we will be there again to see what they have done. Dangote is also investing in rice farming,” he said.

    Emefiele said Kebbi, Jigawa, Sokoto, Anambra and Ebonyi  states were showing lots of interest in rice production, adding that with the sustenance of these efforts, Nigeria’s economy will be on the path of recovery.

  • Declining inflation sign of economic recovery

    Falling inflationary trends, including the National Bureau of Statistics (NBS’) new report indicating an improvement from 17.24 per cent in April to 16.25 per cent in May appears to support the Federal Government’s claims about improvements in the economy.

    In its report yesterday, the NBS noted that the economy is recording the fourth consecutive decline in the rate of inflation since January 2017, thereby justifying recent assertions by Minister of Budget and National Planning, Senator Udoma Udo Udoma that the country’s economic situation is changing for the better as the macroeconomic environment is being stabilized and inflation rate trending downwards.

    “The Consumer Price Index (CPI) which measures inflation increased by 16.25 per cent (year-on-year) in May 2017 .

    “This was 0.99 per cent points lower the rate recorded in April ( 17.24per cent) ; accordingly ,this represents the fourth consecutive decline in the rate of inflation since January 2017.

    “On a month-on-month basis, the headline index increased by 1.88 per cent in May 2017 , 0.28 per cent points higher than the rate of 1.60 per cent recorded in April 2017 indicating the existence of persistent pressure on prices despite the general decline in year on year inflation.

    “Month on Month inflation has cumulatively risen by 7.7 per cent since January 2017 .

    “The food index increased by 19.27 per cent (year-on-year) in May 2017 , down by 0.03 per cent points from the rate recorded in April ( 19.30 per cent) indicating continued pressure on food prices.

    “Price movements recorded by All Items less farm produce or Core sub-index rose by 13.00 per cent (year-on-year) in May , down by 1.80 per cent points from rate recorded in April (14.80 per cent); this represents the seventh straight month of decline in the core index since November 2016 ,” the NBS stated in its report.

    Senator Udo Udoma had said government interventions, particularly in fixing the nation’s broken infrastructure, are making impact. He said there are positive signs that the economy is working its way out of recession unto a path of sustained inclusive growth and development.

    He expressed optimism that the implementation of the Economic Recovery and Growth Plan (ERGP) will boost the economy while the new inflation rate of 16.25 per cent is now just 1.25 points away from the 15 per cent goal of the ERGP.

  • CBN, Money Supply, Inflation and Output

    The Central Bank has the onerous task of formulating and implementing appropriate monetary policy as a major economic policy that must of necessity work in tandem with its twin sister, the fiscal policy which is in the purview of Ministry of Finance. The complementary effects of the two basic economic policies pilot the political economy towards achieving macro-economic objectives of full employment of resources, low and stable price level, increasing economic growth, balance of payments equilibrium, promoting income redistribution towards reducing income inequality and promoting sustainable green economy. Inability of the two government agencies to make these two major policies to complement each other naturally leads to economic disequilibrium on many fronts. But importantly, the foundation of policy formulation of these macroeconomic policies is the existence of data that is clean and reliable.

    In the last 12 months or more, monetary and fiscal policies in the country have not been in harmony with each other such that the Minister of Finance, out of frustration at one point, called on the monetary authority to cooperate with the expansionary fiscal policy stance to bail out the economy from recession! While the fiscal policy authority was trying to finance capital projects, intervene in private sector projects particularly those in the informal micro and small scale enterprises as well as medium scale enterprises, the monetary authority was busy promoting restrictive monetary policy by imposing high interest rates and by implication, credit squeeze within the erroneous believe that high inflationary pressure in the economy was due to high level of liquidity in circulation.

    Given the decline in inflation rate within the last two months, the Central Bank of Nigeria (CBN) managers would have realized that contrary to their opinion that the huge amount of money in the economy had been responsible for the inflationary pressure, it has been the exchange rate. For over 12 months as referred to above, the Monetary Policy Committee (MPC) of the Bank had refused to bring down the Monetary Policy Rate (MPR) even when credit creation was supposedly encouraged through improvements in liquidity ratios. It was a counter-productive policy to raise interest rates and expect investors to demand for credits at such high interest rates, even though the banks might be ready and willing theoretically to supply credit.

    If we check records of interest rates in developed economies and even emerging economies, lending and saving rates rarely rise above five per cent. The low lending rate is to encourage investors to come forward to borrow while the low saving rate may not encourage saving in deposit money banks but direct funds to the capital market which provide long term funds needed for expansion of production activities in agricultural, industrial and other physical product sectors, as well as the service sector. The gap between saving and lending rates in such economies is between one and two percentage points while the difference in Nigeria is between 15 and 20 percentage point!  Investors who borrow funds at such high rate in Nigeria should not be expected to invest in businesses with long term gestation period which is necessary for economic growth but for speculative and round tripping activities that are injurious to the economy. What we have seen over time however is that it is the government that ends up borrowing large proportion of the investible fund making banks to be rich and declare unholy profits when the production or real sector businesses are declaring losses and closing down.

    In many instances, the CBN Governor had come out to defend the retention of high MPR on the ground that inflation in Nigeria was caused by high level of liquidity in the economy. The appreciation of the naira in recent time and concomitant fall in domestic prices should serve to debunk the CBN management notion that the recent persistent inflationary pressure resulted from high stock of money in the economy. Furthermore, the recovery of huge sums of money in stores, unused buildings, water tanks, cemetery, et cetera implies that the CBN calculation of money in circulation is faulty and has resulted in over-estimation.

    Money that sits in banks vaults, though unproductive, can still be regarded as part of money in circulation because such money can be on the move anytime borrowers approach the banks. The money outside banks but hidden in those obnoxious places are not only unproductive but definitely not part of money in circulation. What this means is that the CBN had been building its policy on falsified data base with concomitant negative results. A very difficult part of it is that the CBN cannot get an accurate figure of the total money stock in those hidden places and I suspect there are still many undetected hidden places where billions of naira is idling away until there is opportunity for them to be exchanged into foreign currencies. I can imagine how the Governor of the Bank of England or the Head of Reserve Bank of the United State would feel when they see, on television, crisp dollars or pound sterling uncovered in some locations in Nigeria. Albeit, their currencies are international and they have complex and efficient way of determining and monitoring global/domestic money supply.

    The truth of the matter is that United States of America and Europe, including Great Britain, which own most of the recovered foreign currencies, run cashless economy. Therefore, banks can only issue few thousands cash to individual customers at any point in time while corporate customers operate on online transactions. So, all the millions of foreign currencies that were discovered recently must have come through illicit operations such as exchange of naira for foreign currencies at Bureau de Change, from black market operators and even indirectly through the CBN. If the CBN were to check the numbers on the crisp foreign currencies retrieved from the Ikoyi flats, it would see that they are some of the currencies supplied to a number of the Bureau-de-Change or to some banks in the area for distribution to various types of customers (industrial, commercial and personal end users) but cornered by one or few powerful Nigerians. This is one of the reasons why some of us are against the CBN supply of currency to Bureau-de-Change which are private businesses on their own and should be allowed to source for the funds they need, more so when most private individuals who earn foreign currencies from transactions do patronize these outfits to change their money than go to banks.

    Twice, I was on fact finding mission and visited some banks in the morning to request for withdrawal from my domiciliary account. In each case, the staff gave excuses that no foreign currency was available, even without asking if I have domiciliary account with them. In two instances, the bank staff offered to assist me by calling on some ‘bureau-de-change’ staff to provide whatever amount I needed. It is like the case of looking for new currency notes from the bank, you can hardly obtain but if you go to a party at weekend, you can exchange as much as desired from currency vendors. The need to deal with the messy processes in the foreign exchange market to avoid another round of massive depreciation of the naira is urgently required. The current level of intervention cannot be sustained for long unless the country is able to diversify its sources of foreign exchange earnings and reduce speculative activities on naira in the foreign exchange market. I have been advocating, unsuccessfully, since July last year that change in colour of the high denominations of naira with limited period of conversion of old to new currency will neutralize the nefarious activities of such speculators.

     

    • Tella, Ph.D. Professor of Economics writes from Olabisi Onabanjo University, Ago-Iwoye, Ogun State.
  • Inflation declines but prices remain high

    Inflation declines but prices remain high

    Inflation has been declining in the last few months, indicating a fall in food prices. But some traders lament that the situation is at variance with reality, FECHUKWU ANYANWU reports.

    Things are technically looking up for the economy.

    Data released by the National Bureau of Statistics (NBS)showed that inflation rate has been declining in the last few months, indicating a fall in price. But in realities, it is not so and traders are complaining.

    According to the NBS, the Consumer Price Index (CPI), which measures inflation, dropped from 17.26 per cent in March to 17.24 per cent in last month. It said the 0.02 per cent drop in inflation rate makes it the third consecutive month of decline in the CPI.

    “The CPI, which measures inflation, increased by 17.24 per cent (year-on-year) though at a slower pace in April 2017, 0.02 per cent points lower from the rate recorded in March (17.26) per cent. “This is the third consecutive month of a decline in the headline CPI rate, exhibiting effects of some easing in the already high food and non-food prices, as favourable base effects over 2016 prices,” the NBS report said.

    However, the report though heart-warming, appears to be at variance with reality. Some traders and consumers, who spoke with The Nation, lamented that the drop in inflation has yet to translate into any significant decrease in prices of most food items.

    For instance, at Ikotun Market, Lagos, traders lamented the low patronage caused by high cost of food items. They cited huge transport costs, high shop rents and various market development levies as responsible for the hike in food prices, urging government to come to their aid.

    One of the traders, who identified himself as John, sells rice, beans and other grains. He  said he travels from Lagos to Abakiliki in Ebonyi State to buy goods and that each time he did, he discovered that prices of foodstuffs remained high. He said he had no choice than to transfer the burden to his customers.

    “I have to add a token on each (derica) or ‘paint bucket’ that I sell to customers to cover my expenses,”  John said, adding that traders in Ikotun Market were merely transferring the extra cost of bringing the food items in to buyers.

    John, however, explained that the price of rice and other grains are not constant because they are seasonal. “There are various types of rice and different time of harvest,” John said, noting that a bag of rice, which sold at more than N20, 000 early this year, now sells at about N17, 800.

    He lamented the low customer patronage that had hit him and other traders in the market. According to him, any slight increase in the price of items is usually resisted by customers most of who end up not buying anything after complaining of not having enough money to buy due to the economic downturn.

    “I didn’t make enough sales early this year because of the recession. After paying shop rent and meeting other expenses, what is left as my profit is never enough to enable me go back to the market and re-stock. I hope the economy gets better soon,”John said.

    He is not alone in his frustration. Mrs. Francesca, who sells provision and toiletries, also lamented that profit had been dwindling as a result of low patronage caused by high prices. She said she was considering switching to another line of business in the hope of breaking even.

    Similarly, Mama Chidera, a food item seller, said she is on the verge of quitting the business because of the fluctuating cost of food stuff coupled with the stress of waking up early to go to Liverpool Market in Apapa area of Lagos to get food items for sale.

    She regretted that despite the reported drop in inflation, cost of food items remained high. For instance, a bag of Egusi sells for N65,000, while a bag of Ogbono, which formerly cost about N95,000, now goes for as high as N100, 000.

    She also said a bag of crayfish, which was N26, 000, now costs N32, 000, while a bag of pepper is now 55,000.

    Mama Chidera also lamented that prices of toiletries and beverages, such as Dano Milk, Peak Milk and assorted brands of soap have remained high, despite the drop in inflation.

  • Inflation: Expert says Fed Govt ’ll meet 15.74 target

    An Economist, Prof. Uche Uwaleke, has expressed optimism that the Federal Government would meet its target of 15.74 inflation rate as contained in the 2017 budget.
    Uwaleke, the Head of Banking and Finance, Nasarawa State University, made this known in an interview with the News Agency of Nigeria (NAN) in Abuja.
    He said the government could meet this target if there was absence of any serious shock to the economy either from oil price or output.
    He also expressed optimism that in the coming months, the inflation rate would trend further downwards in the wake of favourable developments in the international oil market.
    The don said: “The drop in headline inflation from 17.78 per cent in February to 17.26 per cent in March is a welcome development.
    “Given the import-dependent nature of the economy, the appreciation of the Naira in recent times came as no surprise due to the CBN’s sustained intervention.
    “The CBN’s sustained intervention in the forex market is moderating inflationary pressure from pass-through effect of high exchange rates.
    “It was also expected that the high food and non-food prices recorded in the corresponding period of 2016 provided a base effect on the inflation rate for March 2017.
    “Be that as it may, the key driving factors; namely electricity, fuel, housing and transportation services remain.
    “This is understandable though as these challenges are fundamentally structural and will take some time to address.”
    NAN recalls that a recent report by the National Bureau of Statistics (NBS) showed the country’s inflation rate dropped by 0.52 per cent in March to close at 17.26 per cent.
    According to the report, the declined rate is the second recorded in two months with the first drop of 0.94 per cent which closed at 17.78 being witnessed in February.
    “It represents the effects of stabilising prices in already high food and non-food prices as well as favourable base effects over 2016 prices.
    “It is also indicative of early effects of a strengthened Naira in the foreign exchange market.

  • Financial experts predict further drop in inflation rate

    Financial experts predict further drop in inflation rate

    Financial experts have expressed optimism that the nation’s inflation figure would continue to slowdown with  enhanced stability in the  foreign exchange market.

    In interviews with the News Agency of Nigeria (NAN), they experts said the inflation figure would continue to witness downward trend with continuous improvement in the nation’s exchange rate.

    Prof. Sheriffadeen Tella, Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, said downward trend in inflation rate would continue as long as exchange rate continue to improve.

    Tella stated that current inflation was fueled by exchange rate variability in the foreign exchange market.

    He added that the country’s import dependent economy contributed to the rise in inflation with many sourcing for foreign exchange at any means to import goods and raw materials.

    Tella said the figure would continue to drop if the Central Bank of Nigeria (CBN) was able to reduce foreign exchange differential in the country.

    Dr Uche Uwaleke, the Head of Banking and Finance Department, Nasarawa State University Keffi, said the drop in headline inflation from 17.78 per cent in Feb. to 17.26 per cent in March was a welcome development.

    Uwaleke said the apex bank’s sustained intervention in the forex market was moderating inflationary pressure from pass-through effect of high exchange rates.

    “Given the import-dependent nature of the economy, it came as no surprise that the appreciation of the Naira in recent times on the back of CBN’s sustained interventions in the forex market is moderating inflationary pressure from pass-through effect of high exchange rates.

    “It was also expected that the high food and non-food prices recorded in the corresponding period of 2016 provided a base effect on the inflation rate for March 2017,’’ he stated.

    Uwaleke, however, stated that the key driving factors of inflation such as electricity, fuel, housing and transportation services challenges were still visible.

    He said that these challenges were fundamentally structural and would take some time to address.

    Uwaleke added that the inflation rate would trend further downwards in the wake of favourable developments in the international oil market in the coming months.

    “In the absence of any serious shock to the economy either from oil price or output, I am optimistic that the inflation target of 15.74 per cent as contained in the 2017 budget proposal will be met,’’ Uwaleke said.

    Uwaleke yesterday told NAN that the Federal Government would meet its target of 15.74 inflation rate as contained in the 2017 budget.

    He said the government could meet this target if there was absence of any serious shock to the economy either from oil price or output.

    He also expressed optimism that in the coming months Nigeria’s inflation rate would trend further downwards in the wake of favourable developments in the international oil market.

    The don said: “The drop in headline inflation from 17.78 per cent in February to 17.26 per cent in March is a welcome development.

    “Given the import-dependent nature of the economy, the appreciation of the Naira in recent times came as no surprise due to the CBN’s sustained intervention.

    “The CBN’s sustained intervention in the forex market is moderating inflationary pressure from pass-through effect of high exchange rates.

    “It was also expected that the high food and non-food prices recorded in the corresponding period of 2016 provided a base effect on the inflation rate for March 2017.

    “Be that as it may, the key driving factors; namely electricity, fuel, housing and transportation services remain.

    “This is understandable though as these challenges are fundamentally structural and will take some time to address.”

    Uwaleke advised the Central Bank of Nigeria (CBN) not to float the naira until the export base of the country would be sufficiently diversified.

    Uwaleke said: “As long as the source of this foreign exchange remains chiefly oil, the apex bank should continue to ignore calls to float the naira.”

    He said the flotation of the nation’s currency with oil as the major source of foreign exchange would not be beneficial.

    He hailed CBN’s recent rules on forex which resulted in improved access to foreign exchange `especially for invisibles’.

    “Sustained interventions lately, made possible by accretion in foreign reserves, have resulted in improved supply to the extent that, in some cases, banks are unable to take up all that is offered to the market by the CBN,” Uwaleke noted.

    He also said that the CBN’s directive regarding opening of offices at airports and the use of dedicated teller points by commercial banks had contributed to improve access to forex.

    The National Bureau of Statistics (NBS), on April 14, said inflation figure dropped to 17.26 per cent in March from 17. 78 per cent in February.

    The NBS said the second consecutive month of a decline in the headline rate represented “the effects of stabilising prices in already high food and non-food prices’’.

    “It is also indicative of early effects of a strengthened Naira in the foreign exchange rate market,’’ said NBS report.

    The first decline was recorded in February when inflation dropped by 0.94 per cent to close at 17.78 per cent.

    “This is the second consecutive month of a decline in the headline CPI on a year-on-year basis. It represents the effects of stabilising prices in already high food and non-food prices as well as favourable base effects over 2016 prices. It is also indicative of early effects of a strengthened Naira in the foreign exchange market.’’

    According to the report, price increases have been recorded in all Classification of Individual Consumption by Purpose (COICOP) divisions that yield the Headline Index.

    It, however, stated that the major divisions responsible for accelerating the pace of the increase in the headline index were Housing, Water, Electricity and Gas.

    Others it said were education, food and alcoholic beverages, clothing and footware and transportation Services.

    On a month-on-month basis, the report stated that the Headline index increased by 1.72 per cent in March, 0.23 per cent points higher from the rate recorded in February.

    The Food Index increased by 18.44 per cent (year-on-year) in March, slightly down 0.09 per cent points from the rate recorded in February, which was 18.53 per cent.

    It stated that the index was driven by increases in the prices of bread, cereals, meat, fish, potatoes, yams and other tubers and wine.

    It also stated that the slowest increase in food prices year-on-year was recorded by Soft Drinks, Fruits, Coffee, Tea and Cocoa.

    In addition, the report stated price movements recorded by All Items less farm produce or Core sub-index rose by 15.40 per cent (year-on-year) in March.

    It stated that it was down by 0.60 per cent points from the rate recorded in February (16.00) per cent.

    “During the month, the highest increases were seen in miscellaneous services relating to dwelling, electricity, solid fuels, clothing materials.

    “Increases were also seen in other articles of clothing, Liquid fuel, Spirits as well as Fuels and lubricants for personal transport equipment.

    “The Urban index rose by 18.27 per cent (year-on-year) in March from 18.57 per cent recorded in February, and the Rural index increased by 16.47 per cent in March from 16.98 per cent in February.’’

    On month-on-month basis, the report stated the urban index rose by 1.76 per cent in March from 1.52 per cent recorded in February.

    It further stated that the rural index rose by 1.69 per cent in March from 1.47 per cent in February.

    The CPI measures the average changeover time in prices of goods and services consumed by people for day to-day living.

    The construction of the CPI combines economic theory, sampling and other statistical techniques using data from other surveys to produce a weighted measure of average price changes in the Nigerian economy.

  • March inflation dips on forex supply, says NBS

    March inflation dips on forex supply, says NBS

    Annual inflation in Nigeria fell for a second straight month in March, showing the early effects of the Central Bank of Nigeria (CBN) intervention on the currency market to meet demand for dollars, the National Bureau of Statistics (NBS) said yesterday.

    Inflation declined to 17.26 per cent in March, NBS said in a report, down from 17.78 per cent in February, which was the first drop in 15 months.

    A Reuters’poll of economists had predicted a decline to 16.70 per cent.

    General price levels in rose for the 12th straight month in January to its highest level in more than 11 years, as the nation battled an economic recession, a currency crisis and dollar shortages, brought on by low oil prices, its economic mainstay.

    The NBS said the second consecutive month of a decline in the headline rate represented “the effects of stabilising prices in already high food and non-food prices”.

    “It is also indicative of early effects of a strengthened naira in the foreign exchange rate market,” it said.

    The CBN has sold over $4 billion on the forward currency market since February in an attempt to improve dollar liquidity and narrow the spread between the official and the black market exchange rates. Black market rates have fallen as a shortage of dollars caused the naira to plummet.

    A separate index showed food inflation at 18.44 per cent in March from 18.53 per cent in February, it said.

  • Boosting liquidity in banks ‘ll curb inflation, says consultant

    To curb rising inflation and save Nigerians the agony of price hike, the Central Bank of Nigeria (CBN) should decrease banks’ Cash Reserve Ratio (CRR). This will make more funds available to banks to lend to the real sector to produce, the Managing Consultant, Nesbet Consulting, a Lagos-based firm of finance and management consultancy, Dr. Alaba Olusemore, has said.
    He spoke in Lagos at the weekend. He said investing more in public works will boost liquidity in the system and create jobs.
    A Fellow, Chartered Institute of Bankers of Nigeria (CIBN), Olusemore attributed the current high inflation rate in the country to the upward swing in naira/dollar exchange rate. He said the higher exchange rate of the dollar to the naira was a major factor pushing up inflation.
    He said with higher exchange rate of the dollar to the naira and the fact that most goods and services consumed in the country are imported meant higher prices for the imported food items as well as other necessary inputs used by manufacturers to produce local staples. He also said because of low oil prices, there has been less accretion to the nation’s foreign reserves.
    According to Olusemore, the crisis in the Northeast where Boko Haram insurgents have created a lot of production problems is another point driving inflation up. He said the insurgency has drastically reduced food supply and resulted to increase in food prices.
    CBN’s decision to tighten its monetary policy, austerity measures and the devaluation of the naira also contributed to inflation. For instance, importation of foreign-produce has been at a higher markup cost, as importers find it increasingly difficult to obtain foreign exchange (forex). Importers and manufacturers had to pay more naira to buy dollars because of devaluation.

    The National Bureau of Statistics (NBS) recently released the Consumer Price Index, which measures inflation, with the index rising by 18.55 per cent in December last year. The Bureau said the 18.55 per cent was an increase of 0.07 percentage points over the 18.48 per cent recorded in November 2016.
    NBS attributed the increase in the inflation rate to rise in the price of electricity, housing, water, clothing, footwear and education. “The Consumer Price Index, which measures inflation, increased by 18.55 per cent (year-on-year) in December 2016, 0.07 per cent points higher from the rate recorded in November (18.48 per cent),” it said.
    But Olusemore said mitigating the effects of the rising inflation required a combination of sound and robust monetary and fiscal policy framework.
    He said, for instance, apart from the need for a right monetary policy that will pay attention to controlling interest rate, inflation, and exchange rate, fiscal policies such as tariff structure or import duty should be looked into.
    “Some of the fiscal policies are not well thought-out,” Olusemore said, pointing out that the recent ban on importation of vehicles through the borders compounded the unemployment problem in the country.

  • ‘Govt should address inflation with palliatives’

    ‘Govt should address inflation with palliatives’

    Comrade Oyinkan Olasanoye is the first woman President of the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI). In this interview with TOBA AGBOOLA, she speaks on workers’ challenges in the financial sector and sundry issues.

    What are your plans for your members in financial institutions across the country?

    This is the first time that a woman would be elected National President of this noble association. I am not unaware of the great challenges ahead of me, but I’m highly confident that I shall not disappoint my followers. The sixth glorious and painstaking years I spent as the First National Deputy President has equipped me for this great assignment, the tutelage has been very thorough and with God Almighty on my side, coupled with the support of all of you, I shall not fail. As we move to the next dispensation, I will work with all my members. We will engender healthy industrial harmony and relationship without compromising any of the principles and core values of ASSBIFI. We will ensure more visibility for the union/members by continuously being a potent voice for sound corporate governance and accountability. We will mobilise members to support corporate growth and avoid labour disputes. We will ensure training, seminars and more enlightenment on their rights, innovative unionism, improvement in welfare plans, legal rights and investment trainings.

    What is your expectation from the Federal Government this year. For instance, on the issue of minimum wage, among others?

    We expect the government to inaugurate the committee on the minimum wage as early as possible. President Muhammadu Buhari must, as a matter of urgency, constitute the tripartite wage review committee, comprising labour, employers and the government to negotiate a new minimum wage that has been long due for another five-year review. We also want palliative measures that will not lead to more inflation to be put in place.

    What is your take on Treasury Single Account (TSA), how is it affecting your sector?

    The Treasury Single Account (TSA) is seriously taking its toll on our members and the sector as a whole. All of a sudden, you said the government fund that is at our disposal, we should take it to Central Bank (CBN). It’s like putting someone in a big house and, suddenly, you withdrew everything that the person needs to survive in that house. Or it’s like you gave me clothes to cover my body and, suddenly, you collect it back, not mindful whether we are in the rainy season. How do you expect the person to survive? The thing is already affecting their (banks) balance sheet. CBN has come up with series of policies and some of them have a great effect on the stability of the banks. There is nobody in this sector that will support TSA. If it were something that was envisaged, that would give the banks the opportunity to plan. But all of a sudden, you came up with it. It’s not fair. And as you know, everywhere, the government is a big spender. So, there is no way it will not affect the banks. The only agent that could kick-start the economy and make it robust is the banking sector, and  if such money is taken from them and given to the government’s banker, the CBN, to keep, such a policy could harm commercial banks. The liquidity of the banks have been seriously affected and anything that can affect the liquidity of banks will also affect their lending ability to power the economy. The  policy on TSA, though with its advantages, is affecting the liquidity of the banks, and the high interest rate set by CBN is hurting the banks and business as access to credit is closed to small scale businesses and individual operators. The policies should be implemented by the government putting in place policies that will stimulate both production and consumption spending. For instance, banks should be allowed to get part of the TSA money from the CBN at an interest rate not higher than the customer deposit interest rate to enable them loan such money to business and individual operators.

    What is your union doing to protect the interest of workers in your sector?

    The union is following all due processes. We are liaising with the employers and the government on the various policies and their implementation. We need to have well- thought out policies that will benefit the average Nigerian and boost investor’s confidence. Without tackling the impact of the various policies, the battles cannot be won.

    It is a fact that we are passing through a serious challenge in the economy. There is downturn as a result of low price of crude oil, and, of course, that seriously affected the revenue of the country. And as you know, the country relies over 90 per cent on crude. We also experience insecurity in the Niger Delta and that makes the output also to decline. For us in the financial sector, it’s a big challenge. We are supposed to be the liquid that will oil the wheel of progress. We are supposed to be the one to lubricate the economic activities of the country. But, the low income generation has affected the purchasing power. As you know, there is high inflation now. The inflation stands at about 18 per cent. This is a big challenge. Notwithstanding, we are still encouraging our members not to give up in the struggle.

    Casualisation and outsourcing are major challenges in your sector. How do you plan to handle them? What is your position on retrenchment in the sector?

    The major issue with casualisation is the dignity of labour and the remuneration. Casualisation is like an ill wind that blows us no good. I have always said it. It is alien to this country. Anybody that encourages casualisation in Africa is satanic. The person should be examined, because in Africa, for instance, for every man that works, there are 10 or 12 or there about to feed.  Casualisation can work in Europe, because of the type of life they live. ‘It is me and my immediate family, nobody else.’ You do not have extended families. You can even decide not to greet your brother, but in Africa because of our communal way of living, for every one that works, no fewer than 10 persons feed from that person. It is discriminatory, demoralising and does not even benefit the institution at the long run. So, if you casualise people and do it the way we do it here, it is satanic. Here, you have two people working in an environment; they have gone to the same school probably, they have the same qualification, and so on because he/she is a permanent staff and the other unfortunate to be a casual staff, the disparity in their salary is so wide. That is bad. Part of the pains casual workers go through is that they never benefit from special packages like others. They don’t have the full entitlements on the job allowances, transportation, leave allowances, medicals, among other things. We will continue to fight it. Casualisation has also been blamed for robbery cases in the banks. Everybody who works in this sector must be employed as a full staff member. This has been the position of ASSBIFI since 2007.

    As for outsourcing, if you look at the Trade Union or Labour Act, you will discover that every sector has two unions – the junior and the senior. Now, when you outsource, even if you have a Phd and you are an outsource person, you cannot be our member because the position they will give you will be lower. They (outsource persons) may be doing greater assignment, the remuneration and the position they are given is that of a junior worker. So, naturally, they will belong to the National Union of Banks, Insurance and Financial Institutions (NUBIFI). But we are together in the fight against casualisation. Outsourcing is okay if it is well- defined and executed. That is why we are partnering the Ministry of Labour on how to come up with a document that will guide the outsourced workers. So that if you are outsourcing staff, you will still enjoy some benefits of a full staff. We will fight to have a voice in our work.

    Is there a link between mass sack in the banking sector and the dwindling economy?

    The banking crisis will lead to a decline in investments and consumer spending and workers will be laid off in all sectors to reduce cost. There is no way the dwindling economy will not affect the employees. One thing is very clear in Africa, especially in Nigeria, once there is a problem in any corporate entity, the employers will resort to retrenchment. You have seen overtime that it has not been the antidote to most of these problems. In fact, if you reduce the workforce, the problem may persist because it is not the antidote. There were years you have been recording huge profits and you have never increased workers’salaries in same proportion. So, when there is a challenge, it is expected that you share it together. It is impatience that leads to job cuts.

    No union or labour leader will support sacking of workers because you are going to decimate the capacity of the union when you reduce its members. The strength of the union is in their membership. When you sack, you make the union irrelevant. Retrenching workers would worsen the economy and engender untold hardships among workers, especially those in the banking sector. Employers should not be in a hurry to cut jobs just because of a single policy. Before the policy, banks were showing fabulous balance sheets.

    How do you see the campaign for decent work to achieve the desired result?

    Workers are yet to have participatory rights in decisions that affect them – no freedom to express their concern and working condition remain bad. There is no social protection for family. No sustainable development can be achieved without secure, productive and decent work. The achievement of decent work is crucial if we are to convince people that globalisation can work to their benefit. The importance of providing social protection for workers in the informal economy by the government in terms of education, health and well-being of the population are exponential.

    What is your advice for the government, especially on the economy?

    The government should put in place policies that that will benefit the average Nigerians and significant foreign investment confidence. All effort should be immediately put in increasing cash flow to the economy. The government should continue in its plan on diversification because that is the best way from this economic challenge. Massive investment is needed in the agriculture and solid mineral. It is obvious that Nigeria still faces difficult challenges in the years ahead to provide adequate infrastructure, to create jobs, and to develop the skills of its young population, but it is also clear to us in the labour movement that the country is also confronted by tremendous opportunity to harness her young population in a manner than can provide unique dividends to its people.

    There is, therefore, an urgent need for our leaders to think big and bold to realise the potential of the country’s human and natural resources to sustain her economic growth.

    I believe, and given that democracy has come to stay in Nigeria, and with the political will and commitment of our leaders, they will take decisions and the right steps, to take the country to greater heights.

    I believe government’s contribution of stable and quality jobs would make a healthy economy and just and equal communities by the implementation of inclusive strategies for full and productive employment, including for those working in the so-called informal economy that need rights and justice to defend their interests. All people have the right to work, to good working conditions and to sufficient income for their basic economic, social and family needs, a right that should be enforced by providing adequate living wages.