How can Nigeria address inflationary pressure?

Nigeria has been grappling with double-digit inflation, currently standing at 16.63 percent in September. The CEO of the Center for Promotion of Private Enterprise, Mooda Yusuf, sheds light on the challenges and possible solutions to address the inflationary pressure in the country. With no immediate prospect of inflation returning to single digits, the conversation revolves around the policy-related issues and structural drivers contributing to the inflationary trend. One of the key concerns highlighted by Yusuf is the exchange rate challenge. The disparity between the official and parallel market rates has created distortions in the foreign exchange market, leading to rent-seeking and arbitrage opportunities. Harmonizing exchange rates to reflect the market reality is crucial in addressing these challenges. Additionally, structural issues such as poor productivity, power supply constraints, and transaction costs are fundamental factors contributing to inflation. Despite differing opinions within the government, Yusuf emphasizes the need for all economic stakeholders to align their views and work towards a common solution. Promoting a market-driven approach while ensuring stability in exchange rates is essential for curbing inflation. The timeline for implementing these changes is estimated to be within the next six months to a year. Furthermore, the conversation delves into the drivers of inflation, particularly the contrasting trends between rural and urban inflation rates. The security challenges in rural areas have disrupted agricultural activities, leading to supply chain disruptions and fueling food inflation. Inadequate infrastructure and transportation costs add to the inflationary pressure, especially in the food sector. As Nigeria navigates through these economic challenges, the coordination of policy measures, structural reforms, and addressing security concerns are critical in taming inflation and fostering sustainable economic growth. The road ahead may be daunting, but a concerted effort from all stakeholders is essential for steering the Nigerian economy towards stability and prosperity.