The Centre for the Promotion of Private Enterprise (CPPE) has urged a reduction in import costs across sectors, not just reliance on monetary policy, to tackle inflation.
Dr Muda Yusuf, Chief Executive Officer of CPPE, made the call in an interview with the News Agency of Nigeria (NAN) on Monday in Lagos.
He spoke ahead of the Central Bank of Nigeria’s 301st Monetary Policy Committee (MPC) meeting, scheduled for Tuesday and Wednesday in Abuja.
Yusuf said the MPC is expected to maintain current policy rates, holding off on any reduction for now.
In spite of a fall in headline inflation, he said monthly inflation in core and food categories has continued to rise.
He stated that the economy is not ready for rate cuts, making it likely that the committee will keep rates unchanged.
Yusuf said structural challenges such as high energy costs, expensive logistics, high borrowing rates, and import charges are major inflation drivers.
He noted that these issues affect production, supply, and distribution, thus maintaining inflationary pressure in the economy.
Yusuf added that global weakening of the US dollar might also influence inflationary trends.
He advised the government to go beyond interest rate tools in its fight against inflation.
He suggested changes in trade policy to lower the cost of imported inputs in manufacturing, agriculture, and services.
Yusuf said: “There’s likely to be a hold on interest rates, but the government should focus on other areas to tackle inflation.
“One such area is trade policy, which can help reduce imported input costs.”
He said overreliance on monetary tools is insufficient, and a shift in inflation-fighting strategy is essential.
Yusuf emphasised the need to deploy trade policy instruments to help contain inflationary trends.
He also blamed insecurity for disrupting the agricultural supply chain and worsening food inflation.
Yusuf observed that the West African CFA franc has strengthened against the Naira for over two years.
The CFA is used by eight West African nations in the West African Economic and Monetary Union.
These countries are Guinea-Bissau, Benin, Burkina Faso, Togo, Côte d’Ivoire, Mali, Niger, and Senegal.
Yusuf said the stronger CFA is encouraging Nigerian food exports, which increases domestic food inflation.
He explained that this currency shift drives up prices of imported goods and affects local demand and supply.
“So that’s the exchange rate effect of informal cross-border trade, which, though unrecorded, has significant price impact,” he said.
