The Chief Executive Officer (CEO) of Centre For The Promotion of Private Enterprise(CPPE),Dr.Muda Yussuf,has blamed the current inflation rate in the the country on exchange rate depreciation and liquidity challenges in the foreign exchange market which is impacting adversely on manufacturing output.
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According to him,the development could also be attributed to security concerns affecting agricultural output,climate change effects on agricultural production,structural constraints affecting productivity in the agricultural value chain and high transportation costs affecting distribution costs across the country.
Yussuf,a former Director General of Lagos Chamber of Commerce and Industry,LCCI,said it also reflected in the huge differential between farm gate prices and market prices.
He added:”Monetization of fiscal deficit [CBN financing of deficit] is highly inflationary because of the liquidity injection effects on the economy. This becomes worrisome when statutory thresholds are exceeded.High transactions costs at the nations ports increases production and operating costs of businesses.
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To address the inflationary pressure, Yussuf advised the government to reform the foreign exchange market to stabilize the exchange rate and reduce volatility as well as address foreign liquidity issues through appropriate policy measures.
He also emphasized the need for the government to address the security concerns causing disruption to agricultural activities,fix the challenge of high transportation cost and reduce fiscal deficit monetization to minimize incidence of high-powered money in the economy.
He added that government should manage climate change consequences to reduce flooding and desertification,ensure the restoration of normalcy and good order at the nations ports to reduce transaction costs,reduce import duty on intermediate products and raw materials for industries to reduce production costs, especially in the light of the sharp depreciation in the exchange rate as well as address concerns around high energy cost.
