The Lagos Chamber of Commerce and Industry (LCCI) has expressed concern over the worsening inflation and interest rates in the country, in spite of a marginal drop in August headline inflation rate to 32.15 percent from 33.40 percent in July.
While this represents a month-on-month improvement, the year-on-year comparison reveals a 6.35 percent increase compared to July 2023 just as the interest rate hike to 27.25 percent further exacerbates the already tense business environment.
The LCCI acknowledged government efforts toward monetary easing, but noted that the drop in inflation is insufficient to address deep-rooted challenges, particularly in the food and core inflation categories.
Food inflation rose to 37.52 percent year-on-year, while core inflation settled at 27.58 percent, highlighting severe pressure on the purchasing power of Nigerians.
Citing the Central Bank of Nigeria’s (CBN) excuse for increasing the monetary policy rate as unsustainable, the Chamber criticizes the unresolved collaboration between the Nigerian National Petroleum Corporation Limited (NNPCL) and the Dangote Refinery.
It urged the government to tackle the issues surrounding petroleum pricing dynamics to benefit the Nigerian economy, as well as identify energy and transportation costs as significant contributors to core inflation.
To address this, the Chamber recommends accelerating energy reforms to improve electricity generation, reduce reliance on costly diesel and petrol and ensure stable power supply for manufacturers and Small and Medium Enterprises (SMEs.)
Maintaining that investing in rail and road networks will ease transportation costs and reduce price volatility, it canvassed a more transparent foreign exchange management to stabilize the Naira and moderate imported inflation.
It restated its earlier recommendation that the CBN should work with the Nigeria Customs Service (NCS) to fix the import duty exchange rate for a certain period to aid business decisions on importation.
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In a statement made available to journalists, it also advocated for a holistic approach to address inflation by boosting local production, stabilizing energy and transportation costs, and aligning monetary and fiscal policies and cautioned that high inflation and interest rates distort the economy and challenge business and investment planning.
The unabated inflationary pressures exacerbate social and economic vulnerabilities, particularly for smallholder farmers and vulnerable groups is also a major concern for the LCCI.
The Chamber recommends targeted interventions, such as prioritizing smallholder farmers, promoting agricultural mechanization, and supporting local fertilizer production.
The LCCI emphasizes the need for strong collaboration between government agencies, research institutions, and farmer cooperatives and highlights the urgent need for sustained policy responses to address Nigeria’s inflation and interest rate challenges.
By adopting a holistic approach and implementing targeted interventions, the government can stabilize the economy, boost local production, and alleviate pressure on Nigerians’ purchasing power.
Director-General of LCCI, Dr. Chinyere Almona, stressed the need for swift action to address these economic challenges, adding: “The marginal decline in the August inflation rate is a welcome development, but the upward trend in year-on-year inflation highlights the need for sustained policy responses to keep the pressures down.”
The LCCI’s statement serves as a call to action for policymakers to address the underlying issues driving inflation and interest rates, ensuring a more stable and prosperous economic environment for Nigeria.
