The Nation Newspaper

Tag: Inflation

  • Experts suggest options as inflation crosses 34%

    Experts suggest options as inflation crosses 34%

    • Security, food, higher crude oil output, others should get govt priority

    There is need for heightened fiscal policies and more aggressive implementation of government’s food and security programmes in order to ease rising costs of living. 

    Economic and finance experts and think-tanks yesterday said it was time for fiscal tightening, a direct call on the government to reinvigorate its fiscal policies to address the surging inflation, in support of the monetary tightening by the Central Bank of Nigeria (CBN).    

    Ahead of Wednesday’s release of new official inflation report by the National Bureau of Statistics (NBS), economic intelligence reports by many economic and finance firms surveyed yesterday by The Nation indicated that inflation remains unabated.

    Independent consumer surveys and econometric models indicated inflation may rise by between 120 and 140 basis points to cross the 34 per cent in April from 33.20 per cent in March, marking the 18th consecutive price increase and within the highest in almost three decades.

    Average inflation expectation was put at about 34.6 per cent for April, but consumer prices had in the last month overshot average estimate. Most analysts expected inflation rate at 34.45 per cent, but some estimated inflation could reach near 35 per cent.

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    NBS had reported that inflation rose from 31.70 per cent in February 2024 to 33.20 per cent in March 2024. Consumer Price Index (CPI) had risen by 180 basis points from 29.90 per cent in January 2024 to 31.70 per cent in February 2024. Inflation had also risen by 98 basis points from 28.92 per cent in December 2023 to 29.90 per cent in January 2024.

    Experts were unanimous that the government must show a stronger determination and concerted efforts to tame inflation, noting that the apex bank’s monetary tightening tools have neared their useful end in tackling the spiraling inflation.

    Economic and finance think-tanks surveyed yesterday included Financial Derivatives Company (FDC), Afrinvest West Africa, CardinalStone, Cordros Capital Group and Arthur Steven Asset Management among others.

    President, Association of Capital Market Academics, Professor Uche Uwaleke, said the government needs to deal decisively with insecurity to reduce the hemorrhage across all facets of the economy.

    “It’s obvious that monetary policy tools have reached the end of their tether. There is little the CBN can achieve by aggressively increasing the Monetary Policy Rate (MPR). This is so because the major factors driving inflation are non-monetary.

    “I think it is time the fiscal authority took over the driving seat in the journey to tame inflation. The government needs to deal decisively with insecurity including crude oil theft. The efforts to fix refineries and reduce fuel imports need to be prioritised. The hike in electricity tariff should be suspended. In this connection, I commend the President for ordering the suspension of the implementation of the cybersecurity levy.

    “In the meantime the government can import food items in order to crash food prices given that the inflationary pressure point is on food. The number of CNG buses the government plans to roll out needs to increase significantly,” Uwaleke said.

    Bismarck Rewane’s FDC, which projected inflation rate of 34.25 per cent for April, said the expected increase in inflation was adversely affected by the return of petrol scarcity which pushed up prices, and with potential of distorting the estimate in the margin of error.

    While noting that the sustained increase in inflation expectations will continue to be a significant consideration by the CBN in deciding the direction of the MPR, such approach could be a double-edge sword with potential to hurt the economy.

    “As the CBN has limited tools to deliver price stability, the intention will be to keep raising rates. However, this strategy, while potentially beneficial for fixed-income investments, poses challenges for private investors seeking credit for business expansion. This crucial aspect directly impacts productivity growth, as businesses face higher borrowing costs, potentially stifling investment and innovation.

    “Moreover, the looming trade-off becomes evident during inflationary periods, where the burden of servicing high-interest debt exacerbates economic shocks. It becomes paramount to weigh the consequences of persisting with elevated interest rates. To prevent the economy from overheating and mitigate the risk of raising poverty lines and shrinking productivity,” FDC stated.

    Managing Director, Arthur Steven Asset Management, Mr. Olatunde Amolegbe said the pace of inflationary trend could slow down in the next few months if government shows a more assertive policy implementation, that focusses on addressing inflationary flashpoints.

    “It’s clear now that we are getting close to the limit of what monetary policies can do to slow down inflation, we therefore need to tackle the major structural issues.

    “We need to strengthen our security architecture to enable farmers go back to the farm safely as well as incentivising large-scale agricultural production. We also need to increase storage capacity while addressing challenges of transportation in order to improve routes to market for farm products.

    “Improved liquidity will need to come from high crude oil production which will mean higher dollar inflows and higher local refining of locally consumed fuel. These will not only help to stabilize the foreign exchange market,” Amolegbe said.

    Managing Director, HighCap Securities, Mr. David Adonri, said government must step up efforts to close the supply gap.

    “Taming inflation has gone beyond monetary policy tools. Closing the supply gap which is the cause of galloping inflation requires fiscal policy and restoration of farm security,” Adonri said.

    Afrinvest, which projected inflation rate of 34.4 per cent for April, noted that despite cautious optimism for April, fuel scarcity could throw a spanner in the works.

    CardinalStone said the inflation outlook was biased to the upside, a consequence of the recent implementation of a new electricity tariff, although there could be some downside risk from the recent currency sustainability. CardinalStone expected inflation at 34.6 per cent in April.

    Cordros Capital stated that it anticipated that food prices would remain elevated in April despite the off-season harvest primarily due to food shortages induced by heightened insecurity in the food-belt region. Cordros Capital was more bearish, estimating inflation at 34.98 per cent for April.

    The International Monetary Fund (IMF) had however projected 23 per cent inflation rate for Nigeria in 2025 and further drop to 18 per cent in 2026.

    In its Global Economic Outlook released yesterday at the ongoing IMF/World Bank Spring Meetings in Washington D.C, Division Chief, IMF Research Department, Daniel Leigh, said Nigeria is moving in the right direction with economic reforms and including exchange rate reforms,  which contributed to surge in inflation rate in March to 33.2 per cent .

    “We see inflation declining to 23 per cent next year and then 18 per cent in 2026.

    “Growth in Nigeria, steady but actually rising this year, from 2.9 per cent last year to 3.3 per cent this year. We have seen an expansion from the recovery in the oil sector, with a better security situation and also improved agriculture, benefiting from the better weather conditions and the introduction of dry season farming.

    “So, there’s a broad‑based increase also in the financial sector, in the IT sector. Inflation, yes, it has increased. Part of this reflects the reforms, the exchange rate and its pass‑through into other goods from imports to other goods. So, this explains also why we revised up our inflation projection for this year to 26 per cent. But with the tight monetary policies and that interest rate increase, significant interest rate increases during February and March,” Leigh said.

  • Developers  battling multiple charges, inflation

    Developers  battling multiple charges, inflation

    Developers in Lagos State have urged the state government to reverse its charges in the real estate sector. JOSEPH ESHANOKPE reports that they also urged the government to curb inflation by introducing measures similar to those unveiled in other sectors

    •Seek government’s intervention

    Chief Ahmod Sani is a real estate developer based in Mushin Lagos. He asserts never to have had it so bad. With over 10 years of experience, he said business has been good until lately when he said some horrid factors combined to create a lull in the real estate business. The factors that made business so taxing, he said, are excessive charges by the state government and hyperinflation.

    Sani, who is the General Secretary of the Association of Real Estate Developers (AREDOLS) Lagos State chapter, said in the past five years, the business had been dreary, no thanks to the Lagos State Government and its agencies, who, he claimed, are breathing down his and his colleagues’ necks with new and increased charges, using revenue generation drive as subterfuge.

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    On behalf of the association, Sani lamented: “A major concern for AREDOLS is the recent increase in the cost of building plans by the Lagos State Government. Also, the ministries of Physical Planning, environment, and Land Bureau have slammed an over 125 per cent increase in the erection of buildings. Before now, the charge per metre was N120. It has been increased to N400. With this increment, developers have already incurred several millions of naira before the commencement of any building.

    “Apart from the high cost of building materials, there’s the likelihood that houses on rent and properties for lease would witness sharp increases soon. The association is desirous to support the development of quality and comfortable accommodation as part of its contributions to nation-building and commitment to residents of Lagos.

    “We urge the legislators to put the executive and the civil service in check by reviewing the recent increase in the building approval processes and other levies that are usually collected by the ministries of physical planning, housing and the environment, lands and special duties and the Lagos State Material Testing Laboratory (LSMTL) as well as the Special Adviser to the Governor on Central Business District (CBD).’’

    Giving a breakdown of the charges, Sani said the earlier assessment was N100 per metre. There was none on fencing, application form, Local Purchase Order (LPO) and the one by the Lagos State Emergency Management Agency (LASEMA). He said the Babajide Sanwo-Olu-led administration introduced the fees and LASEMA with its “specifications for payment on an advertisement with the size of a sign board. Now, five per cent of the total money is calculated as an assessment of a building.”

    The first-stage approval payable to the Lagos State Physical Planning Permit Authority (LASPPPA) also known as the Planning Permit Authority and Lagos State Building Control Agency (LASBCA) is calculated on each floor of the house as follows: fencing floor, layout fee, application, N50, 000, LPO 50 per cent, 100 per cent Special Enhancement fee, 35 per cent Stage Certification fee, five per cent LASEMA and a charge by the Safety Commission. Also, there is a charge by the Lagos State Waste Management Authority (LAWMA) for refuse disposal.

    To obtain approval for a building permit in Lagos is akin to the proverbial camel passing through a needle-very taxing. Many ministries and agencies such as the Office of the Surveyor-General, the LASPPA under the Ministry of Physical Planning and Urban Development, the Ministry of Environment and LABSCA are involved in permit approval.

    Just to let you know, last year, the government rolled out 27 requirements to be met before one obtains building permits in Lagos. The state Commissioner for Physical Planning and Urban Development, Oluyinka Olumide, advised property owners and developers to get planning permits before building.

    The documents are five original copies of architectural drawings duly stamped and sealed with a stamp endorsed by the Architects Registration Council of Nigeria (ARCON); five original copies of structural drawings duly signed, sealed and dated together with a letter of supervision from an engineer registered with the Council for the Regulation of Engineering in Nigeria (COREN), confirming that the building is constructed according to good standards and under the supervision of the engineer who will be responsible for any failures or defects on the project; calculation sheet for the materials to be used for the project,  okayed by a COREN engineer; payment of assessment fees due on the application; five original copies of the mechanical and electrical drawings (if needed), certified true copy of title documents (that is certificate of occupancy, registered conveyance, governor’s consent or letter of allocation).

    Others are confirmation/clearance letter from the Land Bureau if title documents are being processed by the Bureau; clearance letter from the Land Use Allocation Committee (LUAC); fire safety clearance letter from the state Fire Service (if applicable), metro-line corridor clearance letter from the Ministry of Transportation; traffic impact assessment report from the Lagos State Ministry of Transportation, drainage clearance letter from the Office of Drainage Services, Ministry of Environment; copy of a confirmation letter from New Towns Development Authority.

    A developer or a prospective house builder also needs oil test report, environmental impact assessment report from the Office of Environmental Services, Lagos State Ministry of Environment (if applicable), letter of structural stability/integrity report duly signed by a COREN engineer (in case of a construction/renovation of a building), Physical Planning Technical Report from LASPPPA; clearance letter from the Nigerian Air and Civil Aviation (if applicable), clearance letter from  the Lagos State Urban Renewal Agency (LASURA).

    A developer is also required to provide an original sun-print survey plan, tenement rate or receipt of land use charge, or affidavit as to payment instead of receipts, two passport photographs of the applicant, a copy of tax clearance certificate or evidence of updated personal income tax payment of the applicant(s) or tax clearance certificate of two directors if the applicant is a company. Evidence of Pay As You Earn (PAYE) returns (where the applicant is a company), a copy of the certificate of incorporation (where the applicant is a company), a receipt for development levy and the site photograph.

    These requirements cost a huge sum of money; sometimes up to N5 million. This stance, according to the government, could be why many developers cut corners, albeit to their peril, as doing so attracts heavy sanctions, including the pulling down of a building and loss of the land in the long run.

    However, the Association is not leaving things to chance. It argued that the government had to listen to the yearnings of the people, which they partly represent, especially at this time that the economy is unfavourable to the masses; and for the over 25 per cent deficit in the housing sector to be reduced drastically.

    On his part, the Public Relations Officer (PRO) of the Association, Otunba Quadri also urged the government to review the Tenancy Law which, he claimed, is in favour of the tenants to their and landlords’ detriment. He noted that most tenants, either because of the economic downturn or deliberate act, refuse to pay their rents when they are due, especially after the first bulk payment, which the law frowns at. He added that when tenants pay promptly; they do not have any problems.

    Sani said the government should see developers as partners in progress. Also, he said developers, specifically the association, supported Sanwo-Olu and his team during his first outing and campaigns for the second term. As a result, the administration should not see them as outsiders. It rather should look at the issues which they have been raising over the years with senior government officials who promised to look into the matter but did not.

    Sani contended that rents on houses built by developers are cheaper because his colleagues always feel for the people for whom they reduce their leases. He cited a client who charged N650,000 yearly on his four-year-old two-bedroom flat on the Mainland, whereas he (Sani) charges a mere N250,000 on such a facility.

    Worse still, Sani said he gathered that the government has turned the sector into an ‘’oil well,” even as he added that most officials claimed the government gave them targets to meet. So, they go out many times taking undue advantage of the government’s policies to milk the people dry through a collection of bribes.

    Also, many authorised agents have emerged who claim to be working for the government and are either collecting money that is hardly receipted or where they are, it is found later that they are fake receipts.

    To Dr. Tayo Popoola, a Mass Communication teacher at the University of Lagos, the government should be sympathetic.

    Popoola, an Associate Professor and a researcher in urban development, said charges, no matter how well-intentioned by the government, do have spiral effects on the people, in the long run.

    He said: “Once the tax is increased, rent will also increase and once the rent is increased, it will burden residents of Lagos who will have to look for additional money to make up for the rent. What we have been appealing to the government at all levels in this country in recent times is that it should consider the hardship the people are going through and ameliorate them, rather than aggravate the suffering.

    “There is no money and we are battling with palliatives. The palliatives the government has introduced are yet to go around. Where will the people get the extra money that they are required to pay or augment the increase? It is unfair.

    “The implication is that it will add to the people’s woes and increase the hardship on the people.”

    Curb inflation

    In addition to the aforementioned,  the developers also urged the government to intervene in the industry by bringing down prices of building materials and tackling the menace of land owners who do not stop at land sale but also hold on to the short end of the stick until the house is completed and even thereafter. The developers said the price of a bag of nails has jumped by almost 100 per cent from N22,000 to N40,000; binding wire from N10,500 to about N20,000; a 50-kg bag of cement, from N5,500 to N13,000, until it crashed to N9,500 last week. Also affected are woods, whose prices have risen sharply.

    A 30-ton truck of sharp sand has also moved rapidly from N120,000 in January to the current price of N300,000. Filling sand has followed the same trend. Rods were N470,000 per ton, now it is N1.4 million; trailer load now costs N40 million.

    “The problems in the industry are too many. We pay for security to omo lile (land owners). Before you remove the roofing sheets, assuming you are renovating, you must settle them. If you report them to the police, they won’t do anything,’’ Quadri lamented.

    Continuing, he said: “We appeal to the government for help. Our interface with the government’s officials in the past has been fruitless.” In Ghana, a 50-kg bag of Dangote Cement is N7,000. It is so because it is highly subsidised by the government. Why can’t the government do the same here?”

    AREDOLS wants the state government to introduce measures similar to the ones the Federal Government implemented in the airline sector where interest loans were given to airlines. Also, they said the government could intervene by reducing the charges akin to its Sunday Markets where it heavily subsidised food. It insisted that land matters should not be treated like activities in the petroleum sector.

    Reacting to the issues raised by the developers, the Director of Public Relations of LASBCA, Segun Olaoye said the agency does not charge developers arbitrarily-that is, above what the government asked them to pay.

    On the complaints that the charges were too exorbitant, he said: “I don’t know.”

    He, however, urged developers to go through government officials instead of middlemen.

  • 31.7% inflation: ‘Consider offshore control measures’

    31.7% inflation: ‘Consider offshore control measures’

    There are no instant solutions to curbing inflation, even the deployment of monetary and fiscal measures can never provide quick fixes, financial markets analysts have said.

    With 31.7 per cent inflation rate in February, analysts sought Central Bank of Nigeria’s (CBN) consideration of measures undertaken in three countries with significant inflation surge like Nigeria.

    The Financial Derivatives Company Limited said although there are no quick fixes, inflation can be managed as seen in Kenya, Turkey, and Egypt.

    In emailed report to investors, Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said Kenya, with $74 billion economy, recorded 5.7 per cent inflation rate in March, after pursuing tight monetary policy, getting International Monetary Fund (IMF) assistance, carrying out structural reforms that included upward review of fuel prices.

    Turkey with $907 billion economy, also tightened its monetary policy, sold Eurobonds, did wage review and achieved 68.5 per cent inflation rate in March.

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    In Egypt, inflation in February surged to 36 per cent from 29.8 per cent in January, underpinned by 50 per cent hike in minimum wage and 800 basis point hike in interest rate in one month.

    Rewane explained that not only tight monetary policy was used in these counties to fight inflation,  new money was sourced, institutional intervention was undertaken from multilateral financial institutions,  structural reforms and increase in productivity were also entrenched.

    He insisted that for Nigeria, the rate hike from 600 basis points in two months to 24.75 per cent alone could not address the inflation surge.

    “Rate hike alone may not be a golden bullet that will address inflation. However, new money and intervention from institutions are needed as a backup for a quicker outcome,” he predicted.

    He said money supply grew by 79 per cent to N95.6 trillion in February adding that there is a direct relationship between money supply and inflation. “Money supply is projected to decline in the next quarter underpinned by the CBN’s proactive approach to tightening the Monetary Policy Rate (MPR) and Cash Reserve Ratio (CRR),” he said.

    He said the CBN-led Monetary Policy Committee (MPC) position that it will consistently raise interest rates until inflation numbers begin to rebound.

    Rewane added: “Inflation does not disappear overnight. It takes focused commitment to rein in inflation. It took the US four months to record the first moderation in inflation.  If the exchange rate continues to appreciate, and other measures are employed, inflation numbers are likely going to decline by June.”

    According to him, Nigeria attracted capital inflows of about $2.3 billion in February which were underpinned by increased demand for Nigeria’s securities by foreign investors.

    “CBN data also showed overseas remittances more than quadrupled to $1.3 billion in February compared with $300 million in January. CBN efforts to increase forex liquidity include restricting banks’ foreign exchange speculative activities, prohibiting street trading in foreign exchange  and capping net open positions at 20 per cent of shareholders’ funds,” he said.

  • Inflation hits 31.70% in February, says NBS

    Inflation hits 31.70% in February, says NBS

    The National Bureau of Statistics (NBS) on Friday, March 15, said inflation rate soared from the 29.90% in January 2024 to 31.70% in February 2024.

    This was contained in its document titled “CPI and Inflation Report (February 2024).”

    The report noted: “In February 2024, the headline inflation rate increased to 31.70% relative to the January 2024 headline inflation rate which was 29.90%.”

    NBS said looking at the movement, the February 2024 headline inflation rate showed an increase of 1.80% points when compared to the January 2024 headline inflation rate.

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    On a year-on-year basis, according to NBS, the headline inflation rate was 9.79% points higher compared to the rate recorded in February 2023, which was 21.91%.

    The Bureau explained that this shows that the headline inflation rate (year-on-year basis) increased in the month of February 2024 when compared to the same month in the preceding year (i.e., February 2023).

    NBS added that on a month-on-month basis, the headline inflation rate in February 2024 was 3.12%, which was 0.48% higher than the rate recorded in January 2024 (2.64%).

    The report said this means that in February 2024, the rate of increase in the average price level is more than the rate of increase in the average price level in January 2024.

    Details shortly…

  • Inflation: Ned Nwoko urges FG to prohibit use of dollar, other foreign currencies

    Inflation: Ned Nwoko urges FG to prohibit use of dollar, other foreign currencies

    As Nigeria grapples with soaring inflation and the Naira suffers sharp decline against the US Dollar, Senator Ned Nwoko has urged President Bola Tinubu led Federal Government to immediately prohibit the use of the American Dollar and  other foreign currencies in Nigeria.

    Nwoko, who represents Delta North,made  the call in a statement on state of the nation, said until the naira is  made the only legal tender in Nigeria, Federal Government’s efforts in  tackling the current economic hardship may yield no meaningful results.

    Nwoko lamented the glaring income inequality between foreign workers and their Nigerian counterparts within companies operating in Nigeria as a deeply concerning practice that perpetuates historical injustices rooted in the colonial legacy. 

    According to him: “This practice exacerbates existing economic disparities and reinforces the master-servant dynamic that has plagued the region for centuries.

    “During colonial rule, Africans were often relegated to low-paying labour roles while Europeans enjoyed privileged positions with significantly higher incomes. Of course this disparity was not based on merit or skill but rather on race and colonial power dynamics. 

    “Even after gaining independence, the remnants of this unequal system persist, manifesting in the unequal treatment of foreign workers and local employees in Nigeria. The payment of foreign workers in dollars, while Nigerian colleagues receive wages far below the conversion rate, is a blatant example of this ongoing injustice.

    According  to him, the consequences of this practice extend beyond mere discrimination as they have profound implications for Nigeria’s economy as seen today.

    “The alarming depreciation of the Naira against the dollar is exacerbated by the demand for foreign currency to pay professional services in dollars. This not only erodes confidence in the domestic currency but also widens socio0-economic disparities within the country.

    “The significant capital flight resulting from these unequal salary payments far surpasses most factors contributing to Naira depreciation, such as school fees and medical treatments abroad.

    “Ending the practice of paying foreign workers in dollars is not only a matter of economic justice but also a crucial step towards dismantling neocolonial structures and building a more equitable and prosperous Nigeria for all its citizens.”

    He urged“urgent amendments to these laws are imperative to address this issue effectively and ensure equitable treatment of all workers in Nigeria.”

    On the existing practice of Foreign Reserve, the lawmaker said: “It is time to prioritise the domestication of our reserves, anchoring our economic stability firmly within our borders.

    “The notion of maintaining reserves in foreign lands, dubbed “foreign reserves,” is not only repulsive but also counterintuitive to Nigeria’s economic sovereignty.

    “Contrary to the practices of other nations like the United States, Britain, France, and Japan, which keep their reserves within their own borders, Nigeria’s adherence to this practice raises questions about its colonial legacy.

    “If our early indigenous leaders adopted this approach due to colonial mentality, why should we perpetuate it?”

    He noted that the primary argument often put forward to defend the existence of foreign reserves is the need to balance trade.

     “However, this argument lacks merit when considering the limited number of traders involved in importing goods into Nigeria, which constitutes a negligible fraction of the population.

    “Therefore, the notion that foreign reserves are necessary for trade balance falls short when scrutinized, “he added.

    Nwoko called for the return of foreign reserve to the Central Bank of Nigeria (CBN) and disbursed to manufacturers to boost production.

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    “As we grapple with the free fall of the Naira and the near-collapse of the economy, there is only one short-term, medium-term, and long-term solution, which is captured in my motion and bill before the Senate titled ‘Urgent Call for Immediate Prohibition of the Use of Foreign Currencies in Nigeria’ and ‘Bill for an Act to Alter the Central Bank of Nigeria Act, 2007, to Provide for the Prohibition of Foreign Currency Payment for Remuneration and for Matters Connected Therewith.

    “If we truly desire economic freedom, then reassessing Nigeria’s approach to reserves and currency policy is imperative to pave the way for economic resilience and self-reliance,” he urged.

    Nwoko further suggested that prevalence of Bureau de Change (BDC) facilities in Nigeria must align with currency policies aimed at shunning unfairly fall of the Naira, adding that “BDCs should serve as facilitators of currency exchange for foreigners, promoting the use of the Naira in domestic transactions.”

    The senator, however urged the Federal Government to be resolute and show strong-will in implementing these reforms, as oppositions may arise, particularly from oil companies and other corporations with agreements that could hinder the implementation of the proposed measures and hinder progress.

    “As a nation that sells crude oil and a few other items on the global market, it is crucial that we make it compulsory for every sale of these items to be conducted in Naira. This will prompt buyers to seek out Naira, leading to its appreciation due to increased demand and scarcity.

    “If we don’t get our currency to be needed, valued, known, and quoted, no one is coming to do it for us. Continued acceptance of the dollar as legal tender undermines our economic sovereignty and must be halted. We must stop giving people the confidence to conduct business in Nigeria using foreign currencies.

    “This practice not only undermines our economy but also perpetuates dependency on foreign currencies,” he said.

  • ‘Pension industry resilient against rising inflation’

    ‘Pension industry resilient against rising inflation’

    The participation of the pension industry in macroeconomic activities has been positive with pension fund asset performing against rising inflation rate in the third quarter of last year, the National Pension Commission (PenCom) Third-Quarter 2023 Report, has stated.

    Pension funds and assets witnessed a growth of 3.51 per cent from N16.76 trillion as at second quarter to N17.35 trillion during the period under review. The fund, however, stood at N18.35 trillion as at last December.

    PenCom stated that the rate of inflation during the period under review increased to 26.72 per cent  last September from 22.79 per cent in June 2023.

    The report read: “In response, the Monetary Policy Committee of the Central Bank of Nigeria increased the Monetary Policy Rate (MPR) within the quarter to 18.75 from 18.50 in July 2023 to facilitate the reduction of domestic money supply and moderate exchange rate pressures. Inflationary pressures are, however, expected to continue in tandem with global trends.

    “Meanwhile, participation in the pension industry has continued with an upward trajectory despite the rising rate of inflation that has plagued the domestic economy.”

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    This is even as registration into the Contributory Pension Scheme (CPS) increased by 59.52 per cent to 93,633 in third quarter 2023 from 63,693 in second quarter. However, contributions decreased by 14.15 per cent during the quarter from N520.96 billion in second quarter to N287.57 billion in third quarter.

    PenCom stated that the growth is expected to exhibit signs of recovery from its subdued growth region as its sectors begin to respond to policy initiatives targeted at addressing overhang of weak macroeconomic fundamentals including challenges associated with governments fiscal position, decline in foreign exchange reserves, as well as inflationary and exchange pressures.

    The commission further stated that economic outlook for succeeding quarters of last year remained cautiously optimistic as the expected outcome to ongoing policy changes begins to take effect.

    Based on this, the commission projected that the value of pension assets is expected to increase as the current higher yields on investment in fixed income securities would raise nominal returns.

    The equity market also provides opportunities for Pension Fund Administrators (PFAs) to take strategic position in sound, but undervalued stocks for long term benefit.

  • Food inflation: FG to form commodity board to fight price volatility

    Food inflation: FG to form commodity board to fight price volatility

    To tackle food inflation in Nigeria, the Federal Government has hinted at plans to establish a National Commodity Board. 

    In tackling price volatility, the board will be given the mandate to assess and regulate food prices as well as maintain a strategic food reserve for stabilizing prices of crucial grains and other food items.

    Vice President Kashim Shettima disclosed these during a two-day high-level strategic meeting on climate change, food systems and resource mobilisation at the Banquet Hall of the Presidential Villa, Abuja.

    Delivering his address titled: “Climate resilience and food security: Nigeria’s vision for the future,” Shettima said the two-day event is an attestation of Nigeria’s efforts at mitigating the effects of climate change and ensuring food security for Nigerians.

    Recalling that food security was one of the eight areas of priority declared by President Bola Ahmed Tinubu as part of his Renewed Hope Agenda, which led to the declaration of a state of emergency on food security, the VP highlighted ongoing policy reforms by the administration to ensure food and water availability, as well as affordability.

    In a statement by Senior Special Assistant to the President on Media and Publicity,  Office of the Vice President, Stanley Nkwocha, Shettima said: “Our solution to the potential food crisis has become immediate, medium, and long-term strategies.

    “The short-term strategy entails revitalizing food supply through specific interventions like the distribution of fertilizers and grains to farmers and households to counteract the effects of subsidy removal; fostering collaboration between the Ministry of Agriculture and the Ministry of Water Resources for efficient farmland irrigation, ensuring year-round food production; and addressing price volatility by establishing a National Commodity Board.

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    “This board will continually assess and regulate food prices, maintaining a strategic food reserve for stabilizing prices of crucial grains and other food items,” the Vice President stated.

    He assured that while the Tinubu administration is fully invested in the restoration of degraded land, there are ongoing plans “to restore four million hectares, or nearly 10 million acres, of degraded lands within” the nation’s borders as its contribution to the AFR100 Initiative.

    On how the government is handling the security challenges that have prevented farmers from working on their farms, he said: “I wish to assure you that we will engage our security architecture to protect the farms and the farmers so that farmers can return to the farmlands without fear of attacks.

    “We won’t only make it safe for farmers to return to their farms, but we will also ensure the activation of land banks. There is currently 500,000 hectares of already mapped land that will be used to increase the availability of arable land for farming, which will immediately impact food output.”

  • Rising inflation threat to Nigerians – Northern Elders

    Rising inflation threat to Nigerians – Northern Elders

    The Northern Elders Forum (NEF) has expressed concerns over the rise of inflation, stating it poses a significant threat to the well-being of Nigerians.

    The forum also said the cost of living has been steadily increasing, particularly in terms of food prices, leading to widespread hunger and malnourishment. 

    NEF, in a statement by its Director of Publicity and Advocacy/Spokesperson, Abdul-Azeez Suleiman, said the situation demanded immediate attention and action from the government.

    It said: “It is disheartening to witness the disconnect between the reality on the ground and the actions, or lack thereof, of our leaders. While millions of Nigerians are struggling to put food on the table and make ends meet, those in power seem to be living in isolation or denial. This indifference to the suffering of the people they are meant to serve is deeply troubling.

    “The consequences of this unchecked rise in inflation are devastating for ordinary Nigerians. Families are finding it increasingly difficult to afford necessities, as the prices of essential commodities such as rice, beans, and cooking oil continue to skyrocket. This dire situation has resulted in a rise in malnutrition, particularly among children, as families are forced to prioritize their limited resources.

    “Moreover, the impact of inflation extends beyond the realm of food prices. Small businesses are struggling to survive as the cost of raw materials and transportation continues to rise. Unemployment rates are soaring as companies are unable to sustain their operations amidst mounting expenses. This vicious cycle of inflation and economic decline is pushing our nation further into poverty and despair.

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    “In light of these challenges, we demand urgent measures from the government to address this crisis before it plunges the nation into greater conflict and chaos. The welfare of its citizens must be prioritized, and policies must be implemented to alleviate the burden of inflation. This includes increasing agricultural productivity, investing in infrastructure to reduce transportation costs, and implementing social safety nets to support the most vulnerable members of society.

    “Additionally, it is imperative that the government takes decisive steps to curb corruption and wasteful spending. The mismanagement of public funds only exacerbates the inflationary pressure and erodes the trust of the people. Transparency and accountability must be upheld at all levels of government to restore confidence in our leadership.

    “The unchecked rise in inflation in Nigeria is a pressing issue that demands immediate attention and action. The government must acknowledge the suffering of its citizens and implement effective policies to alleviate the burden of inflation. 

    “By prioritizing the welfare of its people, curbing corruption, and promoting transparency, Nigeria can overcome this crisis and pave the way for a brighter future. It is time for our leaders to rise to the occasion and address the challenges facing our nation”.

  • Tackling the realities of inflation

    Tackling the realities of inflation

    • By Abachi Ungbo

    Sir: Our streets are bristling with anger and frustration as the country grapples with asphyxiating inflationary pressure that is proving largely intractable. Food prices have continued to make an upward trajectory constituting a nightmare that has continue to keep many awake at night. This is in the face of static income. Incomes are now substantially spent on essentials. Proper nutrition is way out of the plan of many. Ironically, the hitherto substitute goods are now luxury. Health care is pricey which of course will be pushing or already is pushing not a few into embracing unorthodox alternatives.

    Businesses are gasping for breath. Cost of production is fast chipping away at profit. For instance, the poultry industry is adrift in the sea of conflation of many factors like the rising cost of energy and essential raw materials for feed production and which has placed many jobs on the line. In fact, the general job market is tepid and constricted making jobs few and far between.

    Government intervention through monetary strategy hasn’t delivered the goods. The well-intentioned idea of pulling the plug on fuel subsidy which was attended by hike in transportation cost conflated with the depreciation of the naira which saw it lose considerable value against major currencies in bolstering inflation.

    The exchange rate remains volatile which of course has a negative consequence on an import dependent economy like ours.  Prices of imported commodities have all ramped up. There is no way inflation will cool when the naira continue to lose its value.

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    Tackling the inflation requires urgent intervention in addressing the challenges of productivity in the economy through ramping up local production and consumption. This means agriculture will need to be given a pride of place through huge investment in techniques and technology to boost value addition; so also, is in the area of insecurity which has continued to undercut the economy.

    There’s urgent need for creating enabling environment for attracting foreign investment and incentivizing exports. It is consequential to strengthen interventions in addressing the high cost of transportation and logistics challenges. So, also is the need to splurge on infrastructure which is so decrepit with negative effect on the economy. The fight against oil theft must be sustained to improve oil revenues.

    Inflation isn’t a peculiar problem but we walked ourselves into it as a result of recklessness in managing the economy. Make no mistake, there’re no quick fixes but with the right leadership and political will the country will march out of the woods.

    •Abachi Ungbo,

    abachi007@yahoo.com

  • Inflation may decline marginally to 21% this year, says PwC

    Inflation may decline marginally to 21% this year, says PwC

    • Fiscal, monetary policy alignment will stabilise prices’

    Professional services firm, PricewaterhouseCoopers (PwC Nigeria), has projected that Nigeria’s headline inflation may decline marginally to 21 per cent in 2024.

    PwC, in its latest Nigeria Economic Outlook, released last week, said headline inflation rose steadily from January to December 2023, reaching an 18-year peak of 28.92 per cent in December, from 28.2 per cent in November 2023.

    On Year-on-Year (Y-o-Y) basis, PwC said the inflation rate increased by 7.58 per cent points when compared to December 2022 inflation rate of 21.34 per cent.

    “The rise in inflation was fueled by food (33.9 per cent) and transportation inflation (26.7per cent).

    “The aggregate drivers of inflation in Nigeria include naira devaluation, increased food prices, high import bill, rising energy and logistic costs,” PwC said.

    The PwC report, which highlights the seven key trends that will shape the nation’s economic trajectory in 2024, however, said “We project that headline inflation may decline marginally to 21 per cent in 2024.”

    The report was authored by PwC Nigeria’s Partner and West Africa Lead, Olusegun Zaccheaus; Lead Economist and Researcher, Omomia Omosomi; and Senior Economist & Researcher, Adesola Borokini.

    The team of experts stated that the inflationary pressure in 2024 may be driven by a combination of the pass-through effect of the rise in international oil price on domestic energy cost and exchange rate pressures.

    The report said, for instance, that while the U.S Energy Information Administration (EIA) forecasts that the average international oil price may be $93.24/b in 2024, Standard & Poors (S&P) forecast that the average official exchange rate may be ₦859.14/$ in 2024.

    PwC, while pointing out that in the short-term of 2024, inflation may reduce marginally, however, said inflation will remain double digit due to food prices, domestic energy costs and exchange rate pressures.

    These factors, according to the report, will weigh further on the purchasing power of consumers and the decisions of investors.

    It, however, said inflation may experience modest reduction in the mid-term and long term of 2024 on the back of marginal gains from the ongoing fiscal reforms.

    “Double digit inflation will persist in 2024 but will be lower than the peak experienced in 2023,” PwC stated.

    The report identified the key drivers of inflation in Nigeria to include exchange rate and food prices, noting, however, that exchange rate pressure will persist as policy authorities implement actions to drive price stability.

    It also said the food inflation rate in November 2023 was 32.84 per cent Y-on-Y, which was 8.72 per cent points higher than the rate recorded in November 2022 (24.13 per cent).

    For instance, in November 2023, average price of 1kg of rice, brown beans, and tomato increased by 73 per cent, 45 per cent and 67 per cent, respectively, compared to November 2022.

    “The Food and Agriculture Organisation (FAO) projects that Nigeria may experience increased prices of staple foods such as rice, maize, cereals, etc. in 2024.

    “The inflationary trend of 2024 is vested on the exchange rates, food prices, import bill, energy and logistic prices,” the report said.

    On a Y-on-Y basis, average transport rose by 64.44 per cent from N637.10 in November 2022 to N1, 047. 63 in November 2023.

    Also, the average retail price per litre of petrol increased by over 200 per cent from N202. 48 in November 2022 to N648. 93 in November 2023.

    “The rise of energy and logistics costs stemmed from the discontinuation of fuel subsidy, higher international oil prices and naira devaluation against US dollar,” PwC said.

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    It stated that the upward inflationary trend in Nigeria persisted despite the Central Bank of Nigeria (CBN) implementing several measures through the year.

    These measures include raising the Monetary Policy Rate (MPR) on four occasions, increasing the Cash Reserve Ratio to 32.5 per cent, issuing Open Market Operation (OMO) bills to mop up excess liquidity, and lifting the cap on the Standing Deposit Facility (SDF) from a daily maximum limit of ₦2 billion.

    The CBN reported that Cash in Circulation (CIC) increased by 92 per cent to ₦3.35 trillion in November 2023 compared to October 2022. This rise is due to the lingering effect of the naira crunch and the resulting impact on businesses and households.

    “The surge in CIC limits the effectiveness of the CBN monetary policy instruments in cooling inflation,” PwC said, noting that apart from money supply, inflation is driven by other factors.

    According to the report, these factors are structural and include rise in energy prices, food insecurity, exchange rate devaluation, among other factors.

    The report, however, said “Finding coherence and alignment between fiscal and monetary policy to stabilise prices may enable the achievement of statutory and policy targets in 2024.No 2