Press Release: March 2021 Inflation Figures

CENTRE FOR SOCIAL JUSTICE

(Mainstreaming Social Justice in Public Life)

Plot 836, Emmanuel Aguna Crescent, Off Idris Ibrahim Crescent, Off Obafemi Awolowo, Jabi; P.O.Box 11418, Garki, Abuja.

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April 16, 2021

Centre for Social Justice (CSJ), a Nigeria Knowledge Institution, notes with regret the March 2021 Consumer Price Index Report of the National Bureau of Statistics which
indicates that the spiraling inflation has hit a four year high at 18.17%. This has followed the persistent trend over the last six months of an uptick in inflation. We are particularly worried that this is coming at a time all the macroeconomic indicators are headed south. These include the unemployment rate in excess of 33%, a depreciated national currency, unfavourable balance of trade, unsustainable revenue to debt ratio and reduced household consumption expenditure.
The Report indicated the spike in food inflation from 21.79% recorded in the previous month to 22.95% in March. Coming against the background of Nigeria being the poverty capital of the world, food inflation as the major driver of inflation is a major threat to the right to food of the majority, especially in terms of economic accessibility of adequate food. This development, to a great extent, could be traced to the pervading insecurity across the length and breadth of Nigeria. Unfortunately, the President of Nigeria, Muhammad Buhari, has not demonstrated sufficient political will to bring the insecurity to a halt. Under the watch of the President, farmers have been killed, maimed, raped and displaced from their lands by terrorists operating as herders. Also, agro-climatic conditions may have also contributed to the pressure on food prices but this would have been better managed if the insecurity is brought under control. The increasing inflation is not surprising for a nation which to a great extent depends on imports while exporting very little, with a currency that has come under intense pressure
and devaluation in the last couple of years. The imports are bound to be highly priced on the basis of the exchange rate used in importing them.
Furthermore, when a government takes deficit financing through ways and means to a ridiculous extent as witnessed under the current dispensation and continues minting new currency not backed by value, we are bound to witness this meteoric inflationary trend. Contrary to the Central Bank of Nigeria Act which permits the CBN to fund the Federal Government by not more than 5% of the retained revenue of the previous year, the FG and the CBN, in an incestuous relationship, have recently provided ways and means funding in excess of 60% of retained revenue. Nigeria has outstanding and unrepaid ways and means funding in excess of $25billion.
Rising inflation at a time of reduced household consumption expenditure portends grave economic danger to the lives and livelihoods of majority of the population and demands serious governmental action to stem the tide. Happily, the price of our major export, crude oil has regenerated in recent months but the major challenge is on the quantum of OPEC allowed production in millions of barrels per day coupled with our capacity to meet production targets.
In the circumstances, CSJ makes the following recommendations:

• To reduce inflation, achieve accelerated and sustained growth, tackling the
problem of insecurity is fundamental. No reasonable development can be achieved
without an enabling environment for economic activities to thrive; rethinking the
approach to addressing the numerous security challenges bedeviling the country
is of the essence as this will enhance productivity, especially in agriculture and
other economic activities will pick up and thus contribute better to the GDP and
availability of food.
• Articulated local investments in agriculture’s full value chains is imperative. The
enabling environment to attract more investors into the sector would open up the
opportunities therein so that the sector can contribute more to employment,
government revenue and foreign exchange earnings.
• Furthermore, impact evaluation of the various initiatives of the federal government
such as the Anchor Borrowers Programme (ABP) will make for a proper feedback
mechanism to feed into the implementation of agricultural interventions so as to
achieve better results.
• Reduce ways and means financing to the level provided in the CBN Act.
• Set up a task team and a national dialogue for revamping the economy because
beyond inflation, all macroeconomic indicators are heading in the wrong direction.
• Take steps to improve the productive capacity of the economy and to boost exports
so as to create jobs and enhance foreign exchange earnings.
• Reduce the cost of governance through the implementation of relevant aspects of
the Oronsaye Committee report and free up resources to invest in capital
expenditure and human development.
Finally, the President needs to take practical steps to rally Nigerians to a common cause
of national unity as a basis for nation building and economic regeneration.