Two things government must do to cushion inflation
With inflation at 16.47 percent, the price of most goods and services in Nigeria has doubled. Fuelled by food inflation, most Nigerians have continued to reel under the impact of the spiraling inflation, even as slow growth and job losses currently define the economy.
To cushion the impact of the inflationary pressures, Ayodeji Ebo who heads Retail Investment at Chapel Hill Denham – a leading independent investment banking, securities trading, and investment management firm in Africa – identified two major things that the government must do.
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1. INCREASE FOOD PRODUCTION: “We need to first increase our food production. The government reopened the border. Therefore, we believe that we will begin to see some form of moderation. However, if we do not tackle insecurity, it can lead to food insecurity too,” he stated.
“With the farmers/herders clashes that is now spreading to the south-west, it will affect planting period. If we are unable to plant well now, it means there is nothing to expect. If the government does not tackle that insecurity, then we will not see improvement in food production, which will then affect food prices.
2. STABLE FOREIGN EXCHANGE REGIME: “The second one is on foreign exchange, FX. We believe the increase in crude oil prices should enable the Central Bank of Nigeria, CBN to increase the supply of the greenback. However, we need to see convergence in the exchange rates as that will help create some form of stability.”
He explained, “To bring down inflation, we need to increase production. If we are able to increase production, that will bring down prices, and then we will see inflation coming down. As I mentioned earlier, we expect that inflation should begin to moderate as we come to the third quarter of this year.”