Again, the Lagos Chamber of Commerce and Industry (LCCI), at the weekend, recommended the need for special interventions in critical sectors of the economy and especially focusing on subsidising production to reduce the burden of rising cost of production.
It argued that the reversal of the Central Bank of Nigeria’s (CBN) concessionary interest rate of 5 per cent on its intervention loans to 9 per cent effective July 20, 2022 “could not reduce the burden on businesses at this time when we struggle with sourcing foreign exchange (forex), rising fuel costs and massive disruptions to production lines due to insecurity.
“We urge the CBN to look beyond increasing rates to taking definite and articulated actions that will address the factors driving inflationary pressures.
Director-General of LCCI, Chinyere Almona, made the assertions in a statement issued in Lagos, while reacting to the July 2022 inflation rate.
She said: “There is the need for a good mix of both fiscal and monetary policies to tackle the core drivers of the inflation scourge in Nigeria. There should be targeted financing for critical sectors like agriculture, food processing, aviation fuels, transport and forex availability for manufacturing inputs.
Read Also: NACCIMA tasks Obi on challenges facing businesses, states objectives
“It is obvious that the government’s intervention so far has not impacted the inflationary pressures that keep rising till now. Without concrete and quick steps of intervention, the rising inflation rate may continue into the end of 2022.”
Speaking further, she said: “A major worry is about the inflation scourge constraining production, causing job losses, and courting an imminent recession. The inflation rate may ease in the near term driven by constrained consumer demand, harvests maturing in quarter three and the resumption of wheat exports from Ukraine to Africa. However, there are fears of falling growth due to constrained production in the past months.
“In July, Nigerians paid more for goods and services than they did in July 2021 by a relatively high rate of 19.64 per cent. With this, Nigeria has now had six consecutive months of increased inflation and the rate is at an almost 17-year high.
“This is largely attributable to rises in food and energy prices, forex scarcity for imports of critical raw materials for manufacturing, and constrained production due to insecurity in some agricultural sites across the country.”
She stated that core inflation increased to 16.26 per cent from 15.75 per cent because of increases in the prices of gas, liquid fuel, solid fuel, garments and passenger transport by road and by air.
Almona said it should also be noted that the high cost of aviation fuel or JetA1 drove the cost of air transportation to very high levels and became a major driver of the July inflation rate.
“Looking at the inflation rates of the states, the three lowest rates were recorded in Borno, Jigawa and Kaduna, while the highest rates were witnessed in Akwa Ibom, Ebonyi and Kogi states. These records may reflect the lockdown on food items in the North West and North East since the food items are not brought to the South due to insecurity that is constraining the movement of goods,” she added.
According to her, the development should be a warning signal of massive food waste and shortages in some parts of the country and scarcity in others.
“Government should offer a targeted intervention for the movement of food items from production areas to high-demand areas to cushion inflationary pressures.
“Specifically for manufacturers, input prices have increased astronomically. The price of diesel, which most firms depend on to power their factories have continued to rise causing an unbearable cost of production, which also translates to higher consumer prices.
“Nigeria’s energy crisis is worsened by the poor supply of electricity and a bumpy road to renewable energy deployment,” she maintained.
