Rising inflation: MAN recommends effective taxation, tasks CBN on effective exchange rate policies

COMFORT EKELEME

Following nation’s current inflationary condition, the Manufacturers Association of Nigeria (MAN) has called for collaborative fiscal policy measure through budgeting and effective taxation to complement monetary policy actions taken by the Central Bank of Nigeria (CBN).

This is even as MAN maintained that the CBN should implement effective exchange rate policies that prevent sharp depreciation of the currency, which has continued to lead to imported inflation.

MAN also said that CBN should addressing the problem of free fall of naira in both official and parallel markets by improving liquidity in I&E window.

Director General of MAN, Segun Ajayi-Kadir in a statement made available to Daily Champion said there is the need for employment of collaborative fiscal policy measure through budgeting and effective taxation to complement the monetary policy actions taken by CBN.

He said suggested increased targeted support to the agricultural sector to enhance productivity, reduce reliance on imports and stabilize food prices.

According to him, there is need for formulation of policies that promote a stable and conducive business environment which can attract both local and foreign investments, leading to increased production, job creation, and ultimately, stability in prices.

Speaking further, the MAN DG stated the government should communicate effectively with the public and stakeholders about its commitment to controlling inflation.

He said, this can help manage inflation expectations, which can influence price-setting behavior, adding that there is need to address the challenges of insecurity, deploy fiscal reforms that prioritize productivity and intensify infrastructural development to stimulate economic activity, create jobs and improve living conditions.

“Government should implement structural reforms that enhance transparency, reduce bureaucracy and improve the ease of doing business.

“Elevated inflation serves as a significant sign of underlying macroeconomic weaknesses, and neglecting to tackle the underlying causes will exacerbate constraints on economic expansion and elevate the unemployment rate within the country.

“It’s important to note that addressing inflation is a complex and long-term endeavor that requires a coordinated effort from various stakeholders, including the government, central bank, private sector, and civil society.

“A combination of these recommendations, tailored to Nigeria’s specific economic circumstances, can help mitigate inflationary pressures and promote sustained economic growth,” he said.

In July 2023, Nigeria experienced a surge in inflation, with the rate reaching a new 18-year high of 24.08 per cent. This marks an increase of 1.29 per cent from the previous month’s rate of 22.79 per cent, as reported by the National Bureau of Statistics (NBS).

The rise in inflation was majorly driven by higher prices of food items. Over the course of a year, the inflation rate had risen by 4.44percentage starting from 19.64 per cent in July 2022.

Specifically focusing on food, the 2023 inflation rate increased to 26.98 percent in July from 25.25 recorded in June.

In comparison to July 2022, the year-on-year food inflation rate was 4.97 percentage points higher. The increased food prices were attributed to planting season and logistic costs as impact of fuel subsidy removal took its full course.

Notably, the most substantial price increases were observed in gas, air passenger transport, liquid fuel, vehicle spare parts, and fuels, lubricants for personal transport equipment, medical services, and road passenger transport.

In the same vein, the core inflation also moved up from 20.06 in June to 20.47 percent in July. There was a 4.41 percent increase in the core inflation over the period of one year, from 16.06 percent in July of 2022. The continued surge in sub-indices of inflation show that Nigeria’s inflation is more than transient but structural in nature.

MAN however, maintained that current inflationary condition in Nigeria is adversely affecting the operation of the manufacturing sector, just like most other sectors of the economy.