LCCI URGES GOVT TO ACCELERATE ENERGY REFORMS, TRANSPARENT FX, OTHERS TO COMBAT INFLATION
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The Lagos Chamber of Commerce and Industry (LCCI) has urged the federal government to accelerate its energy reform and more transparent foreign exchange management to reduce speculation, stabilize the naira and curb inflationary pressure on the economy.
Dr. Chinyere Almona, the director-general of LCCI, made the call in a statement on Tuesday following the marginal drop recorded in the inflation rate in the month of August.
According to LCCI, Nigeria’s inflation moderated to 32.15% in August 2024, compared to 33.40% in July.
The statement reads, “The Lagos Chamber of Commerce and Industry (LCCI) acknowledges the many efforts by the government towards a monetary easing regime. The marginal drop in the August headline inflation rate to 32.15%, down from 33.40% in July, is on a good note. While this represents a month-on-month improvement, the broader year-on-year comparison still highlights a troubling 6.35% increase compared to July 2023, and the interest rate raised to 27.25 percent both present a tense business environment.
“The marginal drop in inflation reflects some level of policy impact. Still, it is insufficient to address the deep-rooted challenges contributing to high inflation, particularly in food and core inflation categories. The LCCI remains concerned that food inflation surged to 37.52% year-on-year, with core inflation reaching 27.58%, both of which highlight severe pressure on the purchasing power of Nigerians.
“Beyond the pains of petrol price hikes, a bigger problem is the controversies about the pricing dynamics of both imported and locally refined petroleum products. It is disturbing to note that the Nigerian National Petroleum Corporation Limited (NNPCL) and the Dangote Refinery have not wholly resolved terms of collaboration for the good of our nation, Nigeria. The excuse by the CBN that the monetary policy rate was raised on fears of a petrol price hike is not a sustainable argument. We expect the government to tackle the issues to benefit the Nigerian economy in a timely manner, too.
While arguing that energy and transportation prices have significantly contributed to core inflation, the LCCI urges the FG to “accelerate energy reforms to improve electricity generation, reduce reliance on costly diesel and petrol, and ensure stable power supply for manufacturers and SMEs. The transition to renewable energy sources should be prioritized to reduce production costs.
“Improve transportation infrastructure to cut logistics costs. Investment in rail and road networks will ease the transportation of goods, reducing price volatility in consumer markets. We expect to see quick actions on the adoption of CNG mobility in Nigeria.
“The volatility in the exchange rate market has amplified inflationary pressures by raising the cost of imported goods and services. The LCCI calls for a more transparent foreign exchange management to reduce speculation and stabilize the Naira. A stable exchange rate will help moderate imported inflation, especially in essential commodities and raw materials needed for local production. We reiterate our earlier recommendation that the CBN should work with the Nigeria Customs Service to fix the import duty exchange rate for a certain period to aid business decisions on importation.
“While the marginal decline in the August inflation rate is a welcome development, the upward trend in year-on-year inflation highlights the need for sustained policy responses to keep the pressures down. We urge the government to adopt a holistic approach to address inflation by boosting local production, stabilizing energy and transportation costs, and aligning monetary and fiscal policies.
“We advise that the monetary authorities remain sensitive and focused on these troubling issues because they adversely impact businesses in Nigeria,” it added.
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