Experts at the Centre for Promotion of Private Enterprise (CPPE) specifically want the government to urgently fix production and productivity constraints, stabilise the exchange rate by ensuring liquidity in the forex market, tackle insecurity, and accelerate efforts to ensure domestic refining of fuel.
Director of the CPPE, Muda Yusuf, in a statement, while reacting to the July inflation report, which rose to 24.08 per cent as against 22.79 per cent in June.
According to him, the mounting inflationary pressures enable the weakening of purchasing power of citizens as real incomes are eroded thus aggravating poverty incidence and escalating production costs which negatively impacts profitability.
Continuing, he said it also leads to erosion of shareholder value in many businesses, weakening of investors’ confidence, declines in manufacturing capacity utilisation as a consequence of weakening sales and erosion of profit margins.
Yusuf further stated that the Federal Government must tackle inflation by addressing the challenges bedevilling the supply side of the economy.
“It is imperative to urgently fix production and productivity constraints, stabilize the exchange rate by ensuring liquidity in the forex market, tackle insecurity, accelerate efforts to ensure domestic refining of petroleum products, and fast-tracking tax and fiscal reforms to curb escalating deficit spending.”
He also noted that for the government to give producers and citizens some relief, the government should tweak the tariff policies by granting concessionary import duty on intermediate products for industrialists, especially those in the food processing segments of the agriculture value chain.
Yusuf further stated that surging inflation has had a devastating effect on citizens’ welfare and the health of small businesses.
He pointed out that while some of the factors affecting inflation are global, others are domestic and include the depreciating exchange rate, a spike in energy prices, rising transportation costs, logistics challenges, forex market illiquidity, hike in diesel cost, insecurity in many farming communities, and structural bottlenecks impeding productivity.
“These are largely supply-side and policy concerns. But the petrol price increase following the fuel subsidy removal and the sharp depreciation in the exchange rate were dominant factors,” Yusuf added.
