The Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mining and Agriculture, Sola Obadimu, has said that Nigeria’s current inflation rate poses a serious risk to the survival of businesses across the country.
Obadimu predicted a high likelihood that Nigeria’s inflation rate would further increase in 2023 while the naira would suffer further devaluation.
The NACCIMA DG, who spoke exclusively with The PUNCH in reaction to the slight decrease in headline inflation from 21.47 to 21.34 in December, said such a marginal decrease does not spell good news for the productive sector of the economy.
Obadimu said, “Inflation coming down from 21.47 to 21.34, for me it is not good. Even if those figures are true.
“Liz Truss, what was the principal reason why she stepped down? It was 11 per cent inflation. Anything above a single digit is not good for business.
“We always preach, if possible, single-digit inflation. That is, something that costs N100 in January, should at worst, not cost more than N110 by December. That shows some stability in the economy. Anything beyond that is injurious to business. So, 21 per cent inflation is like six and half a dozen.”
He stated that the target of the organised private sector for ease of doing business should be single-digit inflation.
“If that is impracticable, then it should not be more than 15 per cent, at worst. A lot of work still needs to be done to bring down inflation. Prices should be predictable for planning and budgeting purposes. It has been a very uncertain scenario, given the fact that we have been told that a point in the year fuel subsidy will be removed, which will definitely have an impact on the naira. Inflation will worsen this year. Naira will further weaken.”
On the recent uncertainty surrounding the availability of new naira notes ahead of the CBN’s deadline for withdrawal notes, Obadimu said the apex bank ought to have printed N5,000 naira notes in lieu of redesigning the old notes.
This, he said, would have achieved the primary objective of mopping up hoarded notes.
He further stated that it is not good for a country of Nigeria’s pedigree to have its highest denomination under the $2 threshold.
He added, “Instead of reprinting N200, N500 and N100, all the CBN needed to do was to print N5,000 note.
“That is what he needed to do. If his reason was that some people were stockpiling N1,000 notes, they would have taken it out to exchange for N5,000 notes. It is a higher denomination. It is less heavy to carry, and they would have needed to spend less because it’s like they have a problem funding the printing. By now, no bank should be paying the old notes.
All these people hoarding money would have changed it.
“It is not good for our sovereignty as a nation that our highest denomination is less than $2. It’s not prestigious for us. Our highest denomination, which is N1,000 is less than $2 at the official rate. If you go with the parallel rate, it is less than $2.”