LCCI Calls for Emergency Measures to Curb Inflation, Interest Rates

The Lagos Chamber of Commerce and Industry (LCCI) has called for urgent action to address high inflation and interest rate. This call was made in a statement signed by the Director-General of the Chamber, Dr Chinyere Almona, FCA.

According to the statement, LCCI recognizes the government’s ongoing efforts to ease monetary pressures. The marginal drop in the headline inflation rate from 33.40% in July to 32.15% in August is a positive step. However, this month-on-month improvement does not mitigate the broader concerns, as year-on-year inflation has surged by 6.35% compared to July 2023. Additionally, the recent increase in the interest rate to 27.25% exacerbates an already challenging business environment.

While the drop in inflation suggests some policy impact, it is not enough to address the core issues driving inflation, particularly in the areas of food and essential goods. LCCI remains deeply concerned about the sharp rise in food inflation, which has reached 37.52% year-on-year, and core inflation at 27.58%. These figures underscore the intense pressure on the purchasing power of Nigerians.

Beyond fuel price hikes, a more significant issue lies in the unresolved pricing dynamics of both imported and locally refined petroleum products. The ongoing uncertainty between the Nigerian National Petroleum Corporation Limited (NNPCL) and Dangote Refinery is troubling. The Central Bank of Nigeria (CBN)’s justification for raising the monetary policy rate due to fears of further petrol price hikes is not a sustainable solution. We urge the government to swiftly address these critical issues for the betterment of the Nigerian economy.

The Chamber, therefore, many some recommendations to the Federal Government and the Central Bank of Nigeria-

Energy Reforms:
The LCCI calls for accelerated energy sector reforms to increase electricity generation, reduce dependence on expensive diesel and petrol, and provide stable power supply to manufacturers and SMEs. The transition to renewable energy sources must be prioritized to lower production costs and improve business sustainability.

Transportation Infrastructure Improvement:
Investment in transportation infrastructure, particularly in rail and road networks, is essential to reduce logistics costs and minimize price volatility in consumer markets. The government should expedite the adoption of Compressed Natural Gas (CNG) mobility to lower transportation costs and support economic growth.

Foreign Exchange Management:
The volatility in Nigeria’s exchange rate market has significantly driven up the cost of imports, contributing to rising inflation. The LCCI urges the government to implement a transparent foreign exchange management system to reduce speculation and stabilize the Naira. A stable exchange rate is vital for controlling imported inflation, particularly for essential commodities and raw materials. We reiterate our call for the CBN to work closely with the Nigeria Customs Service to fix the import duty exchange rate for a defined period to help businesses plan for imports.

While the slight decline in inflation is a welcome development, the continued year-on-year increase underscores the need for comprehensive policy measures to bring inflation under control. The LCCI calls for a holistic approach that boosts local production, stabilizes energy and transportation costs, and ensures better alignment between monetary and fiscal policies.

We urge the monetary authorities to remain focused on these critical issues, as they have a profound impact on businesses and the broader Nigerian economy.