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Nigerians have expressed displeasure with the management of the country’s inflation. The Central Bank of Nigeria (CBN) admitted this also in what would appear to be acceptance of its inadequacies and self-indictment.
Experts had balked at efforts taken by the monetary authority to stem the inflationary pressure. Many have accused the authorities of artificially manipulating the foreign exchange market leading to the currency crisis said to be responsible for the inflation.
The headline inflation, riding on the spike in prices of food and other essential consumables, has risen consistently for over a year, hitting 14.89 per cent as of November.
The highest inflation rate in close to three years was in November. The composite food inflation, which experts said was driven by weak Naira and insecurity in the north, had escalated to 18.3 per cent in November.
Even before the economy dipped into recession, the Monetary Policy Committee (MPC), which is chaired by Godwin Emefiele, the apex bank governor, had admitted the contradictory escalating inflation and rising unemployment rates had thrown it into a dilemma on the monetary policy direction.
It was reported that economists, including Dr. Ayo Tariba and Dr. Buidun Adedipe, said Nigerians would have to bear with escalating inflation in the meantime until there was a sufficient increase in non-oil exports to ease the pressure in forex.
The CBN had attributed the weakening naira to unbridled demand for foreign commodities. But its critics said its lack-luster management style does not bode well for a stable currency market.
In its December 2020 Business Expectations Survey Report, the CBN confirmed that “respondent firms expressed dissatisfaction with the management of inflation by the government with a negative net satisfaction index of -33.5 in December”.
Said the survey, which also revealed that Nigerians expected inflation to remain between 13 and 15 per cent in the next few months: “The net satisfaction index is the proportion of satisfied less the proportion of dissatisfied respondents”.
The report said the respondent firms expected the Naira to depreciate in January just like December but appreciate in the following six months.
Added the report: “Respondent firms expect borrowing rates to rise in the current month, next month, next two months and the next six months with indices of 19.2, 14.9, 14.7 and 14.3 points respectively”.
The index numbers show the strength of the views of the respondents.
According to the monthly business outlook survey, the employment outlook, which was gloomy throughout the year, looks positive going into the new year. It said agriculture, services and construction had the brightest employment prospects in January.
Noted the report: “Respondent firms’ opinion on the volume of business activities indicated a favourable business outlook for January and February 2021 with indices of 47.7 and 55.0, respectively. Businesses also hope to employ in January and February 2021 as the outlook was positive at 18.5 and 21.5 index points, respectively. The breakdown by sector showed that the agriculture/services sector with (20.5 points) has the highest prospect for employment in the next month, followed by the construction sector with an index of 17.9 points, manufacturing sector (16.7 points) and wholesale/retail trade (13.4 points)”.
The study is reassuring of rising optimism about the volume of business activity and employment outlook in the next six months as all indices are positive.
Stressed the report: “An analysis of businesses with expansion plans in January showed that the agriculture/services sector and construction sector have the highest disposition to expand with 52.9 index points each. Manufacturing and wholesale/retail sectors had an index of 46.6 and 41.2 respectively”.
It, however, lists poor power supply, unfavourable economic climate, competition, high-interest rates, unclear economic laws and financial problems as major factors that would continue to limit growth. In the basket also are unfavourable political climate, access to credit, insufficient demand, lack of equipment, lack of materials input and labour problems.