The Lagos Chamber of Commerce and Industry has advised the government to focus on the factors driving the inflation rates by tackling the supply-side deficiencies instead of focusing too much attention on the demand-side management.
The advice of the LCCI followed the current measures to wage a war against inflation in the country.
The Chamber, in a statement on Wednesday by its Director General, Dr. Chinyere Almona, urged the Central Bank of Nigeria to continue with its FOREX market reforms to a conclusive end as the high exchange rate against the naira is a major culprit in the skyrocketing inflation rates.
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It said: “On the fiscal side, the government needs to subsidise some productive sectors like agriculture, transport and healthcare, while keeping a stern eye on enhancing the country’s security profile.
“Other areas of intervention could be the adoption of a cheaper duty rate for the importation of agricultural inputs for local manufacturing and investment in building agro-industrial hubs across the country.”
The LCCI also urged the government to continue making credit available to MSMEs to support their operations and production lines, advocating for concessionary rates, lower than CBN prevailing Monetary Policy Rate for the MSMEs.
Almona noted that the high lending rates make it challenging for businesses to access credit, especially for SMEs that are the backbone of the economy, warning that the increase in production costs could lead to higher prices for goods and services, potentially affecting the competitiveness of Nigerian products in Africa and global markets respectively.
Almona restated: “As the voice of the business community, the LCCI remains committed to engaging with policymakers to ensure a conducive business environment that fosters growth, investment and sustainability.”
The LCCI said it acknowledged the recent decision of the CBN to raise the benchmark lending rate by 400 basis points to 22.75 percent in what has been described as an aggressive regulatory intervention.
The move, it stated, comes at a crucial time for the Nigerian economy that is facing challenges such as elevated inflation, commodity price hikes, FOREX crisis and rising cost of production.
It noted that while the CBN intends to control inflation, the LCCI observed that the decision, particularly the fifth consecutive hike, raises concerns about its effectiveness in tackling the rising food inflation and the likely impact on businesses and economic growth.
The CBN has increased MPR from 18.75 percent to 22.75 percent, signalling a significant shift in monetary policy.
The LCCI posited that curbing the current rising inflation clearly requires an effective combination of both fiscal and monetary policies to achieve a meaningful result.
According to the latest data, the headline inflation rate for January 2024 rose to 29.90 percent, compared to 28.92 percent in December 2023.
The year-on-year increase is notable, with a rise of 8.08 percent points from January 2023.
Following this, the LCCI declared that the hikes in rates cannot have any significant impact on curbing inflation in Nigeria, especially in recent months.
