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Nigeria awaits latest inflation data
Nigeria’s July inflation figures are due to be released on Wednesday, as some analysts expect we may have a further drop owing to movements in food prices in June Chamberlain Peterside, Managing Director and Chief Executive Officer of Xcellon Capital Advisors joins CNBC Africa for an outlook on inflation and the economy at large.
Tue, 14 Aug 2018 11:48:08 GMT
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AI Generated Summary
- Election spending and the influx of new money during campaign cycles can impact inflation rates in Nigeria.
- Tensions within the government, particularly between the Senate and the executive arm, are contributing to uncertainty around crucial funding allocations for the upcoming elections.
- Investors are monitoring the situation closely, as government decisions and election outcomes have a direct impact on economic stability and investor confidence.
Nigeria is eagerly awaiting the release of the latest inflation figures for July, with analysts speculating a potential drop due to movements in food prices in June. Chamberlain Peterside, Managing Director and Chief Executive Officer of Xcellon Capital Advisors, shared insights on the potential factors influencing the inflation rate in an interview with CNBC Africa.
One of the key factors highlighted by Peterside is the impact of elections on inflation. During election cycles, there is typically an influx of new money as campaigns ramp up, leading to increased spending on materials and advertisements. The upcoming elections in Nigeria raise questions about the level of spending that will occur and its potential effect on inflation.
Peterside noted that while there are policies in place, such as cashless transactions and anti-corruption measures, to curb excessive spending, the allure of using new money for campaign purposes could still have a noticeable impact. Controlling and monitoring the spending around elections is crucial to ensuring a balanced economic environment.
The ongoing tensions within the government, particularly between the Senate and the executive arm, are adding a layer of uncertainty to the situation. Delays in crucial funding allocations, such as those for the Independent National Electoral Commission (INEC), could impact the preparedness and smooth running of the elections. The potential for delays in election dates due to unpreparedness is a concern that could erode confidence in the electoral process.
Investors are wary of the current uncertainty surrounding the elections and government decisions, as it introduces instability into the economic landscape. The Central Bank of Nigeria (CBN) is facing the challenge of navigating these uncertainties while also ensuring financial stability. Peterside commended the efforts of the CBN in stabilizing the economy through various initiatives, such as programs to support lending to small and medium enterprises (SMEs) in key sectors like agriculture and manufacturing.
While Peterside acknowledged the importance of government intervention in certain areas, he also emphasized the need to reduce the dependence of the economy on government influence. Initiatives like Public Private Partnerships (PPP) are examples of collaborative efforts that can help drive economic growth and reduce the burden on the public sector.
As Nigeria awaits the inflation data for July, all eyes are on how the various factors at play, including election spending, government stability, and economic policies, will shape the country's inflation trajectory in the coming months.
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