Press Releases Archives - Centre for Social Justice

The Need For Agricultural Extension Services Law

Center for Social Justice — Fri, 28 Nov 2025 10:34:34 +0000

By Emmanuel Ngenegbo

Despite several reforms in agriculture, we have not recorded a significant and long-lasting improvement in the agricultural sector. It is unfortunate that food prices remain volatile and Nigeria still counts as one of the largest importers of agricultural product despite her agrarian economy.

It is reported that Nigeria has only been able to use just about 40 -42 percent of its arable land in the past decade – one that continuously drops due to lack of proper intervention despite the humongous annual budget earmarked for tackling insufficiency in the sector. The National Bureau of Statistics revealed in their latest report that crop production contributed 17.47 percent of our gross domestic product in the first quarter of 2025. This was a sharp drop from 23.42 percent which was recorded in the last quarter of 2024 – this performance is largely attributed to the slow activity in crop production.

Previous studies also showed that one of the major problems causing decline in crop production is the inadequate knowledge and poor assessment of land for agricultural production. Rural farming remains prevalent in the country among small holder farmers with little or no knowledge on how to improve their farming techniques and grow harvest yields; many of these farmers still engage in harmful agricultural practices like burning, use of excessive pesticides and poor storage facilities.

Nigeria has invested a lot in agricultural research, several agricultural research institutes have been established by the government, these research institutes all have a mandate to develop improved seedlings for farming, build technologies for easy farming activities and improvement on the overall faming systems in Nigeria. Over its long period of existence, these institutes have developed different improved varieties of our stable crops which are resistant to different conditions and offer more yields per hectare.

Agricultural extension services are used to translate innovations, information and demonstration of technological improvements to farmers. This extension services serve as the linking bridge that connect the activities of the research institutes to the farmers. Through a proper agricultural extension activity, these institutes carry their improved seedlings, developed mechanical and gender friendly farm equipment’s to these smallholder farmers. The institutes also organize and monitor the farmers through trials and demonstrations to ensure full adoption and assimilation of the research works.

Unfortunately, in Nigeria, extension services are often underfunded and poorly coordinated. Many agriculture research institutes and local government areas agriculture department lack functional extension officers. The few who are available often lack the tools, mobility, and training to engage farmers effectively. This has led to a wide disconnect between research output and farm-level practice.

Research institutes continue to develop high-yielding, pest-resistant, and climate-resilient crop varieties but most of these innovations remain in their shelves, as farmers are either unaware of their existence or lack the guidance to adopt them. The result is stagnated yields, persistent poverty among small-scale farmers, and underutilization of Nigeria’s agricultural research investments.

If Nigeria is therefore interested in driving agricultural economic growth and sustainable development there is need to have a legislated National Agricultural Extension Services Act. This legislation will manifestly improve extension services in the country with a better structure, funding and coordination.

Nigeria currently has a National Agricultural Extension Services Policy; this policy was developed with the intention to improve on the subsisting efforts in extension delivery. The problem with policies like this is that no matter how beautifully drafted they are, they still remain an administrative document which does not have legal backing, and this leaves it open to lack of enforcement and abandonment.

In addition, without clear annual budgetary funding, policies like this rests largely on the discretion of its relevant ministries and agency, enforcement is highly unpredictable.

If the bill is passed into law, the attendant result is that extension services will have a strong legal structure which will include professionals whose sole task, in collaboration with the research institutes and other relevant agencies, is to carry agricultural innovation to the end users, such Act will make a provision for a clear budget line to push extension services and drive agricultural revolution. It has been proven that for any dollar spent on extension services, Nigeria is set to make 10 dollars, economically, this will also foster rural development by linking farmers to the value chain directly multiplying income and creating employment in the Agric business. Finally, the law would ensure an accountability structure and public reporting system on extension service performance, ensuring transparency and efficiency in the system.

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Request for Expression of Interest: Consultant to Co-Produce Civil Society Engagement Manual on Anti-Corruption

Center for Social Justice — Tue, 24 Sep 2024 16:15:45 +0000

Centre for Social Justice (CSJ) with the support of the European Union Rule of Law and Anti-Corruption Project RoLAC 2 is implementing a program on “Improving the Effectiveness of Anti-Corruption Processes and Reforms in Nigeria”. The goal of the project is to contribute to increased effectiveness of anti-corruption laws, policies, interventions and strategies for the entrenchment of reforms at national and subnational levels. This would lead to increased compliance with anti-corruption laws. Anti-corruption laws and policies are not an end in themselves but they are expected to lead to systemic change, enhanced compliance and behavioural change in society, making it possible for increased prevention of corruption, corrective action in individual cases, detection and prosecution of offenders and to make more difficult, future breaches of the law.

A key activity in the program is the preparation of a Manual for Civil Society Engagement of Anti-Corruption Mechanisms. CSJ seeks expression of interest from qualified consultants to co-develop an Engagement Manual on Civil Society Anti-Corruption Intervention Strategies. The activity will involve research and deskwork to review and document key facets of anti-corruption work involving different Anti-Corruption Agencies (ACAs), their mandate, enabling law and policy frameworks, to identify niches for civil society intervention to strengthen official measures. It will respond to questions like “what”, “why”, “how”, “when” etc., of the Civil Society interventions.

General Terms of reference include

v Deskwork to review and document major national, regional and international anti-corruption standards and mechanisms and opportunities for Civil Society intervention.

v Consult with Anti-Corruption Agencies, Civil Society Organizations to identify gaps in interventions.

v Deploy a rapid capacity assessment questionnaire and online discussions with prospective cluster members to understand capacity deficits.

v Work with the Project Director to develop an Anti-Corruption engagement and training module for CSOs.

Specific Terms of Reference include

v Develop questionnaires that highlights specific questions on anti-corruption gaps to elicit responses for strengthen capacities in civil society.

v Produce an engagement manual that highlights basic concepts, laws and policies against corruption and provides a framework for CSO engagement in anti-corruption mechanisms in Nigeria

v Produce a draft engagement manual that shows good and fit practices for reducing corruption by the key ACAs and highlight strategies for CSOs intervention across the anti-corruption ecosystem.

v Co-facilitate two-day training of CSOs on the application of the Manual.

Key Deliverable

v Anti-Corruption Engagement Manual

Performance Period

v A total of thirteen working days for manual development and training across the states

Professional Qualification

The consultant must have not less than 10 years’ experience in anti-corruption and governance sector work. The consultant must be able to show proof that he has worked on similar assignments in the past and demonstrate skills, competence and capacity to undertake the assignment.

Academic Qualification

A Bachelor’s or Master’s degree in Law, Social Sciences or any other discipline related to the task is required. Professional certifications in any related discipline would be an added advantage.

Method of Application

Interested Consultants should send their expression of interest to the following e-mail; csjprocurement@gmail.com alongside their CVs. The EOI should include detailed qualifications (including copies of relevant certificates) and a one-page statement of the consultants understanding of the assignment and how s\he intends to proceed with the work.

Timeline

EOIs should reach CSJ within one week from the date of this Request for EOI.

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Press Release: Taming the Soaring Inflation: A Holistic Approach

Center for Social Justice — Tue, 16 Jan 2024 11:35:02 +0000

The Consumer Price Index produced by the National Bureau of Statistics indicates that in December 2023, the headline inflation rate increased to 28.92%, up from the November 2023 headline inflation rate of 28.20%. This is an increase of 0.72% points between November and December 2023. On a year-on-year basis, the headline inflation rate was 7.58% points higher than the December 2022 rate of 21.34%.

The food inflation rate for December 2023 was reported at 33.93% on a year-on-year basis, being 10.18% points higher to the rate recorded in December 2022 (23.75%). The surge in the price of food items is linked to increases in prices of bread and cereals, oil and fat, potatoes, yam and other tubers, fish, meat, fruit, milk, cheese, and egg.

Centre for Social Justice notes that rising prices is a symptom of the overall negative macroeconomic fundamentals and strong headwinds besetting the Nigerian economy. Beyond inflation, the Naira is losing value, poverty and unemployment is increasing; there have been massive factory closures, increasing insecurity and population growth figures that almost outpaced economic growth. Furthermore, the short term and medium-term impact of economic reform measures (fuel subsidy removal and exchange rate unification) have not been properly articulated. The reforms were not accompanied by an evaluation/projection of their impact on the economy as well as countervailing measures necessary to limit their harsh effects on prices and other macroeconomic indicators.

It is therefore imperative that Nigeria’s economic managers adopt a holistic approach to improving the economy/decelerate inflation and this should include the following.

Increased productivity especially in the tradable and export-oriented sectors (including oil and gas as well as removing export trade barriers in the agriculture sector in the short run) can shore up our foreign exchange earnings which will improve the value for the Naira against major international currencies thereby limiting import induced inflation.

Improving security of lives and property through the right political will that guarantee value for money in the provision of security services in Nigeria. It should be recalled that security has been given the highest budgetary allocations at the federal level in the last ten years. This will also improve agriculture’s contribution to the GDP and food production thereby limiting food inflation which has been the major driver of inflation over the last one year. Improved security will further lead to increased oil and gas production for export and local refining.

Limit ways and means funding of the federal budget to the statutory limit of not more than 5 percent of previous years’ actual revenue in accordance with S.38 of the Central Bank of Nigeria’s Act 2007.

Implement a Nigeria First Local Content Policy in Federal and State Public Procurement to ensure that capital budget implementation do not put undue pressure on the Naira. Rather, capital budget implementation should create jobs, enhance local productivity and grow the economy.

Stop denying Nigerians access to their money, vis cash in banks as a means of mopping up what is considered excess liquidity. This is a fundamentally flawed measure for the reduction of inflation.

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Press Release: Aggravated Insecurity: Time to Act Mr. President

Center for Social Justice — Tue, 16 Jan 2024 09:53:49 +0000

Insecurity

Centre for Social Justice (CSJ), a Nigerian Knowledge Institution recalls with regret the recent upsurge of insecurity exemplified by the late December 2023 killings in Plateau State, incessant killings in Katsina State, 45 passengers kidnapped as gunmen attacked transporters along Otukpo-Enugu Road and the ongoing kidnap and murder of innocent Nigerians in Abuja, the Federal Capital Territory.

The security situation has degenerated to the extent that it can be categorically stated that the government has abandoned, failed, refused or neglected to enforce its primary and constitutional duty of guaranteeing the security of Nigerians and residents in Nigeria. In all the foregoing, Nigerians are yet to hear concrete and reassuring words from the president and commander-in-chief of the armed forces or high-level officers of state on the way forward. In FCT, the minister in charge, instead of addressing the challenge seems more interested in continued fueling of a political crisis in his home state, Rivers State

CSJ also recalls that in the last ten years, security has enjoyed the highest allocation in federal budgets to cater for the armada of security agencies maintained at the tax payers expense. Budgetary allocations have been proposed and spent on personnel, arms and ammunition, aircrafts and vessels, vehicles, equipment including intelligence gadgets. We are worried at the seeming cluelessness and inability of the security agencies to deploy intelligence to prevent and nip in the bud the insensitive acts of criminal elements who have no regard for human lives. We are further worried that when these crimes have been committed, the security agencies have been unable to investigate, arrest and bring the perpetrators to justice.

Under Muhammadu Buhari’s administration, GSM SIM card numbers were linked to national identity numbers of Nigerians and the authorities indicated that it would provide a foolproof link and clue to any crimes committed using GSM phones as it will be easy to find the criminals since all identity information is already available with the state. This raises the critical question on why the perpetrators of these high level crimes where GSM phones have been used to make contact are not brought to justice.

There have been several mop-up of light arms in the possession of law-abiding citizens and only very few Nigerians have been licensed to carry weapons. Nigerians are made vulnerable because they do not have access to arms to defend themselves and the state that should legally and legitimately defend them has failed in the discharge of this duty. The critical question is; why take away the arms needed for self-defence if the state is not ready to defend citizens and residents of Nigeria?

The insecurity is heightened at a time Nigeria has launched a global campaign for foreign investors to come and invest in the country. News of crowdfunding for the purpose of meeting the ransom demands of kidnappers is clearly not the way to attract foreign investors.

In the circumstances, CSJ makes the following recommendations:

FGN should expeditiously take steps for the amendment of the 1999 Constitution and enactment of new laws for the establishment and activation of State Police.

Intelligence should be mainstreamed and prioritized in policing and security work. The activation and routine deployment of the SIM GSM database and inventory for investigations and tracking of criminals is long overdue.

Liberalise the processing of gun licenses for responsible law-abiding tax paying citizens for the purpose of self defence.

Reward hard working and result oriented security and police personnel who diligently discharge their duties and impose sanctions on personnel whose negligence, failure or refusal to act contributes to insecurity and general security lapses. The financial resources to implement this could come from more prudent management of existing security resources.

Nigerians need to be reassured through concrete security action on the ability of the state to protect lives and property.

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CSJ Calls for Action on Intercepted Vessel with Stolen Crude Oil Amidst Government Fiscal Pressures

Center for Social Justice — Tue, 11 Jul 2023 14:44:26 +0000

The Nigerian National Petroleum Company Limited (NNPCL) made a significant breakthrough in its ongoing efforts to combat oil theft and protect public revenue. On Monday, it announced the successful interception of a vessel carrying stolen crude oil, with a capacity of 800,000 litres.

According to Mr. Garba Deen Muhammad, the Chief Corporate Communication Officer of NNPCL, this interception was made possible due to credible intelligence received by the company. A private security contractor engaged by NNPCL Limited, Messrs. Tantita Security Services, took swift action and apprehended the suspicious vessel, named MT Tura II (IMO number 6620462), on July 7, 2023. The vessel, owned by HOLAB Maritime Services Limited, a Nigerian registered company with the Registration Number RC813311, was en route to Cameroon with the illicit cargo on board. The captain and crew members were detained along with the vessel. Preliminary investigations have revealed that the crude oil cargo was illegally sourced from an offshore well jacket in Ondo, Nigeria.

Based on the current price of $75 per barrel, the seized 800,000 litres of crude oil amounts to approximately $60 million. When converted at an exchange rate of N750 to $1, the value of the stolen crude oil equates to N45 billion.

The Centre for Social Justice (CSJ) is deeply concerned about this incident, particularly in light of the President Bola Tinubu administration’s commitment to combating corruption and strengthening public finances. For the past two years, Nigeria has been unable to meet its OPEC production quota, largely due to rampant oil theft and pipeline vandalism in the Niger Delta.

Nigeria’s debt burden is already significant, with the World Bank’s Nigeria Development Update of June 2023 reporting that public and publicly guaranteed debt reached 40 percent of GDP in 2022. Additionally, the debt servicing to revenue ratio surpassed 100 percent of general government revenues for the first time, reaching 101.5 percent. The World Bank projects that Nigeria’s debt servicing to revenue ratio will peak at 121 percent in 2023.

In light of this precarious situation, it is imperative to prevent the loss of public revenue to criminal activities while citizens bear the brunt of increased taxes and economic challenges. CSJ strongly recommends that the perpetrators of these crimes be publicly named and brought to trial within a reasonable time to serve as a deterrent to others.

Furthermore, CSJ advises the government against the traditional approach of burning intercepted vessels. Instead, the stolen crude oil should be salvaged to recover the value lost, the vessel sold and the proceeds transferred to the public treasury. These large-scale thefts of crude oil must not be allowed to persist if the government is to achieve its revenue targets and stabilize the economy.

It is important to note that the current economic conditions have already pushed an estimated 4 million Nigerians into poverty between December 2022 and April 2023 and 7 million more may be pushed into poverty before the year ends (if the government fails to act to alleviate poverty) according to the World Bank. Nigeria’s inflation rate is currently one of the highest in Sub-Saharan Africa, severely affecting household purchasing power. Finally, CSJ calls on the government to take immediate action to block revenue leakages and implement measures to improve the economy without further delay. Only by curbing such criminal activities and ensuring accountability can Nigeria overcome its fiscal challenges and create a better future for its citizens

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Press Release: 2022 Budget Implementation Reports

Center for Social Justice — Fri, 05 May 2023 12:24:54 +0000

The Centre for Social Justice (CSJ) Demands Immediate Release of 2022 Budget Implementation Reports in Adherence to the Fiscal Responsibility Act

The Centre for Social Justice (CSJ), a Nigerian knowledge Institution and leading advocate for fiscal transparency and accountability, strongly urges the Minister of Finance, Budget and National Planning through the Budget Office of the Federation to promptly release the third quarter, fourth quarter and consolidated budget implementation reports of the 2022 budget, as well as the first quarter implementation report of the 2023 budget, in strict adherence to Section 30 (1) and (2) of the Fiscal Responsibility Act, 2007.

According to Section 30 (1) of the Fiscal Responsibility Act, it is the duty of the Minister of Finance, through the Budget Office of the Federation, to diligently monitor and evaluate the implementation of the Annual Budget. This includes the crucial task of assessing the attainment of fiscal targets and providing comprehensive quarterly reports to both the Fiscal Responsibility Commission and the Joint Finance Committee of the National Assembly.

Furthermore, Section 30 (2) mandates that the Minister of Finance ensures that the prepared reports, as per subsection (1), are published in mass media, electronic platforms, and on the official Ministry of Finance website no later than 30 days after the end of each quarter.

Regrettably, at present, only the first and second quarter implementation reports of the 2022 budget are accessible on the website of the Budget Office of the Federation. This lack of transparency raises concerns about the government’s commitment to upholding fiscal responsibility and inhibits public scrutiny of budget implementation.

The Centre for Social Justice (CSJ) firmly emphasizes that the release of these implementation reports is not merely a legal obligation but an essential step towards ensuring accountability and transparency in public finance management. Access to timely and comprehensive information allows citizens, civil society organizations, and other stakeholders to assess the government’s performance, hold it accountable, and contribute to the overall improvement of fiscal policies and practices. It will be most inappropriate, illegal and a big dereliction of duty for the Minister of Finance to leave office on May 29 2023 without performing fundamental statutory duties whilst drawing down all her salaries, allowances, emoluments and perks of office.

In the circumstances, CSJ urges the Minister of Finance and the Budget Office of the Federation to fulfill its duty promptly by releasing these overdue budget implementation reports of the 2022 budget, as well as the first quarter implementation report of the 2023 budget, in adherence to the stipulations outlined in the Fiscal Responsibility Act. We call upon the government to prioritize transparency and accountability in public finance management, as these principles are fundamental to fostering trust, promoting good governance, and achieving sustainable development.

Eze Onyekpere

Lead Director

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Press Release: TO THE CENTRAL BANK OF NIGERIA(CBN) AFTER THE EXTENSION OF THE OLD NAIRA NOTES SWAP DEADLINE

Center for Social Justice — Mon, 30 Jan 2023 07:17:08 +0000

Centre for Social Justice (CSJ) welcomes with relief the approval by President Muhammadu Buhari, of the request by Central Bank of Nigeria (CBN), for the extension of the deadline for swapping old naira notes with the redesigned naira notes from January 31 to February 10, 2023. CSJ believes that many hardworking Nigerians, especially in the rural areas would have lost their honest income if the January 31st deadline was not extended.

CSJ recalls that the major challenge necessitating the clamour for extension was the failure, refusal and neglect of CBN to make available the new redesigned notes in sufficient quantity to match the legal and legitimate needs and demands of Nigerians. If the CBN had made available enough new notes from the date it was launched till the end of January 2023, coupled with massive sensitization, there would have been no need for the extension. The money deposit banks were still issuing the old notes to customers as at Friday 27th January 2023 when the deadline had not been shifted from the end of the month.

CBN’s claim that it had issued out sufficient quantity of new notes is unfounded and not supportable by empirical evidence. CBN mandated banks only to pay the new notes from ATMs and to continue to put the old notes in circulation through customers who came to withdraw money across the counter. This is a clear contradictory instruction which guaranteed that old notes continued in circulation. There are no reports that cash limits for individuals and corporate organizations were breached. Moreover, at the public hearing organized by the House of Representatives on this matter, senior bank officials averred that banks got only ten percent of the value of old notes deposited with the CBN. So, how can this percentage be sufficient?

If by any empirical calculation, the percentage stated to have been received by the banks is the usual ratio between deposits and cash releases by CBN to the money deposit banks, then the CBN will be guilty of the failure of supervision and effective regulation. The CBN has wide powers to supervise and sanction errant banks if for any reason their officials were diverting the new notes.

CSJ therefore calls on the CBN to release sufficient quantum of the new notes to meet the demand of Nigerians, to the extent that such demands are in compliance and not above the cash withdrawal limit. But if the CBN continues in its business-as-usual approach, which it manifestly deployed in the last three months, there would be another clamour for extension of the deadline. Finally, the CBN should ensure that every old note that gets into the banking system is automatically withdrawn and not paid back to customers whether from automated teller machines or across the counter.

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RECOMMENDATIONS ON THE 2023-2025 MEDIUM TERM EXPENDITURE FRAMEWORK AND FISCAL STRATEGY PAPER

Center for Social Justice — Thu, 29 Sep 2022 09:48:00 +0000

CSJ in conjunction with ActionAid Budgit and Christian Aid has come up with recommendations towards improving the 2023-2025 MTEF

Download said document below

RECOMMENDATIONS ON THE 2023-2025 MTFE AND FSP Download

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FOR NIGERIAN NATIONAL PETROLEUM COMPANY LIMITED TO BECOME ONE OF THE BEST IN CLASS

Center for Social Justice — Sun, 24 Jul 2022 12:23:36 +0000

July 21 2022

Press Release

Centre for Social Justice (CSJ) welcomes the inauguration of the Nigerian National Petroleum Company (NNPC) as a Limited Liability Company by President Muhammadu Buhari on July 19 2022. This is in line with the provisions of the Petroleum Industry Act especially its S.53. The immediate fiscal implication of this inauguration is that NNPC Limited will continue in the recent tradition of the old NNPC as there will be no monthly revenue remittance from crude oil to share by the Federal and State Governments. It is only at the end of the financial year, when NNPC Limited trades profitably, that dividends would be declared for sharing by the Federating Units.

It appears from the large share capital base and assets to be inherited by NNPC Limited that it has the requisite capital to start business from a position of strength and further financial resources can be raised from the capital market and commercial sources. However, financial resources must be matched with human and managerial resources in terms of the composition of the board of directors and the personnel to lead and work for the company to become one of the best in class comparable to very successful national oil companies.

From the empirical evidence of the background and curriculum vitae of the board of directors of NNPC Limited, CSJ is not convinced that Nigeria has assembled its “first eleven” in the composition of the board. The role of a governing board in piloting the affairs of a company established for profit cannot be overstated. Furthermore, the employees of NNPC who have now been retained by NNPC Limited were not employed on the basis of merit and competence. Rather, the majority were hired through nepotism and inordinate opportuning. The deliverables and results achieved by the old NNPC bear irrefutable testimony to this assertion. As such, these employees cannot be the core human resources expected to turn-around the new NNPC for profitability. The inauguration of NNPC Limited comes at a time Nigeria has not been producing enough crude oil to meet its quota from the Organisation of Petroleum Exporting Countries (OPEC). Other OPEC countries have in the past exceeded their quotas and indeed have spare production capacity to produce beyond the quotas. It is expected and hoped that the launch of NNPC Limited would not just be a change in nomenclature but a radical move to reposition the company to produce enough crude oil to meet and even exceed Nigeria’s OPEC quota as well deliver profits commensurate with the quantum of available natural resources and

financial investments of its shareholder which is the Federation of Nigeria comprising of the Federal and State Governments.

CSJ recalls that the Federal Government has spent much of the nation’s resources and over 35 per cent of our foreign exchange earnings importing refined petroleum products. The existing refineries have become dysfunctional and despite several billions of dollars invested in turn-around-maintenance and refurbishing, no concrete results have emerged. CSJ further recalls that the claim for subsidy has ballooned from 35 million litres a day in the year 2015 to the present 65 million litres. The Federal Government has approval from the National Assembly to spend not less than N4trillion on fuel subsidy in 2022.

On the basis of the foregoing, CSJ therefore recommends:

The immediate review of appointment of members of the board of directors of NNPC Limited to introduce world class Nigerian professionals with the requisite industry and corporate governance experience.

NNPC Limited to do a staff audit and assessment to ensure that dead woods are flushed out of the system to pave way for the recruitment of world class Nigerian experts with deep knowledge and wide experience in the sector.

If NNPC Limited is to make profit and declare dividends, schedule the moribund refineries immediately for privatisation or concession so as to take off loss making arms from the books of NNPC Limited.

FGN to ensure that it delivers value for money in all the refineries it has spent tax payers’ money in their purported turn-around-maintenance.

FGN to come clean and audit the actual fuel consumption in Nigeria so as to reduce the subsidy which is being paid from the proceeds of government borrowing.

Already, the FGN and States are facing severe fiscal constraints; FGN borrows to fund recurrent and capital expenditure as available resources are just enough to service debts. The profits expected from NNPC Limited at the end of the year will still be shared by the Federating Units and if the company is not properly managed, there will be nothing to share

NNPC LIMITED AS ONE OF THE BEST IN CLASS

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MPR HIKE: ATTACKING THE SYMPTOMS WHILE IGNORING THE FUNDAMENTAL CHALLENGES

Center for Social Justice — Fri, 22 Jul 2022 18:02:27 +0000

Centre for Social Justice (CSJ), a Nigerian knowledge Institution, notes with great caution the increase of the Monetary Policy Rate (MPR) from 13.0 to 14.0 percent by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) at its meeting held on July 18^th and 19^th 2022. This increase is coming on the back of a similar increase of the MPR at the May 2022 meeting of the MPC by 150 basis points to 13.0 percent. The MPR had been increased on the two occasions in the CBN’s bid to rein in the current rise in inflation and to maintain price stability.

We acknowledge the fact that the uptick in inflation is not necessarily a Nigeria phenomenon, but one that is predominant in advanced economies, emerging markets and developing economies. We further acknowledge that many Central Banks across advanced economies have adopted an aggressive monetary policy regime and the financial policies of most countries have resorted to a tightening monetary policy stance. This has been done against the background of the Russia-Ukraine War, shocks arising from global trade dislocations and supply chain disruptions.

We recall the assumptions of the May 2022 MPR increase where the MPC indicated that tightening would narrow the negative real interest rate margin, improve market sentiments and restore investor confidence, moderate inflationary pressure pass-through to exchange rate depreciation and moderate the speed of capital flow reversal, provide incentives for foreign capital inflows and sustain remittances. It also suggested that tightening could moderate government domestic borrowing. However, the assumptions did not properly contextualize the overall picture of slow growth, high unemployment and rising inflation.

It appears that the May 2022 MPR increase did not achieve its objectives and there is no empirical evidence to suggest that this second July 2022 MPR hike by 100 basis points will achieve the desired objective. This is premised on the fact that the inflationary push is to a great extent coming from rising insecurity, exchange rate depreciation, rising energy costs – electricity and petroleum, unsustainable debt profile of the Federal and State Governments and the excessive and wasteful spending associated with elections in Nigeria as we move towards the 2023 elections. Furthermore, Nigeria’s continued importation of refined petroleum products and failure to take advantage of the increase in oil price increase – a fallout of the Russia – Ukraine War, has contributed to the pressure.

In the circumstances, continued increase in the MPR may not be the solution to the rising inflation. The rising inflation appears to be a symptom of more fundamental economic and political challenges which if addressed would reasonably moderate the impact of other shocks, especially exogenous shocks on the economy. These challenges are beyond what monetary policy interventions alone can solve. They require a combination of fiscal, labour, monetary and trade policies as well as political action on the part of the Federal Government of Nigeria. It is also imperative to state that the inflation challenge may not likely abate in the near future. Essentially, there should be short term, medium to long term projections for addressing inflation and associated economic challenges.

CSJ therefore recommends the following to prevent the rising inflation from entering into the galloping mode.:

v Take steps to reduce insecurity which has severely impacted on food inflation and eroded local and foreign investors’ confidence in the Nigerian economy. Restoring security will generally improve national productivity beyond the agriculture sector.

v Mainstream policies to improve economic growth through a combination of reform and productivity focused fiscal, monetary, labour and trade policies.

v Take urgent and targeted steps to increase crude oil production through the new NNPC and other investors. Embarrassing excuses and apologies for failure by the Nigeria’s two oil ministers will not solve the low production challenge.

v Hold security agencies accountable for the reduction of industrial scale oil theft. This will provide more resources to governments in the Federation and as such reduce borrowing and indebtedness.

v FGN to account for expenditure on refurbishing and repair of the moribund refineries while allowing the new commercial NNPC to expeditiously privatize or concession the refineries. This will in the near future reduce our demand for foreign exchange for importation of refined petroleum products.

v Control waste and corruption in public expenditure management. Reducing the cost of governance is an irreducible minimum demand.

v Curtail wasteful election related expenditure through the meticulous implementation of the 2022 Electoral Act.

The journey to economic growth, reduction of poverty, unemployment and inflation begins with targeted steps taken with a full understanding of the intricate links between various policies of government and the need for their harmonization.

Download the full document Below

JULY 2022 MPR HIKE

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