The Centre for the Promotion of Private Enterprises (CPPE) says it is important to incentivise the real sector of the economy to address inflationary pressures and moderate production costs.
Its Founder, Dr Muda Yusuf, said this on Thursday in Lagos in reaction to the January 2024 inflation figure of 29.90 per cent as released by the National Bureau of Statistics (NBS).
The News Agency of Nigeria (NAN) reports that highlights of January inflation include core index of 23.59 per cent, food index at 35.41 per cent as against 23.06 per cent, and 33.93 per cent in December 2023, respectively and among other variables.
Yusuf said that tackling inflation required urgent government intervention to address various challenges affecting production, productivity, foreign exchange, and security in the economy.
He noted that the persistent inflationary pressures in the Nigerian economy continued to be a troubling phenomenon.
He noted that if these pressures were left unchecked, it could lead to adverse effects on poverty levels and the general welfare of citizens.
“Purchasing power has continued slump over the past few months and economic growth may remain subdued, while the risk of stagflation heightens.
“Regrettably, the major inflation drivers are not receding, if anything, they have become even more intense.
“These include the depreciating exchange rate, surging transportation costs, logistics challenges, foreign exchange market illiquidity, astronomical hike in diesel cost, insecurity in farming communities and structural bottlenecks to production.
“Elevated inflationary pressures also aggravate pressure on production costs, weakens profitability, erodes shareholders value and dampens investors confidence.
“Only very few producers or service providers can transfer cost increases to their consumers and the implication is that manufacturers and other investors are currently under tremendous pressure,” he said.
Yusuf called on government to review its tariff policies, by granting concessionary import duty on intermediate products for agro allied industries and other industrialists.
He stated that the same was needed for investors in logistics sector.
The CPPE founder also advocated that exchange rate benchmark for the computation of import duty be pegged at N1,000 per dollar.
“This is necessary to reduce the pressure of escalating costs of cargo clearing and minimise uncertainty in the international trade processes.
“The policy choice of complete floating of the naira requires a rethink in the light of the current inflationary outcomes, volatility and market imperfections.
“Also, the effects of high energy cost on economic activities are profound as it is very difficult to tame inflation if we do not fix power, logistics and foreign exchange issues.
“Regrettably, there are no quick fixes in these areas but it is important to prioritise these issues and ensure stability and recovery,” he said. NAN