The rising cost of diesel and foreign exchange volatility has driven higher levels of domestic inflation in Nigeria. Dr. Muda Yusuf, the CEO of the Centre for the Promotion of Private Enterprise, CPPE, made this point while providing his perspective on "Rising Inflation in Nigeria and the Need for a Productive Economy."

He said urgent steps are needed to address these problems that are significant drivers of domestic inflation. Speaking on concerns raised by the World Bank of one million additional Nigerians sliding into the poverty index, he pointed out it was a no-brainer as the nation is heading towards stagflation. 

According to him, the nominal income of many Nigerians has stagnated, while others do not have any source of income. He believed the country was heading towards stagflation. "The exchange rate is also a major concern as the naira is weakening daily, while insecurity adversely affects production, especially in the agriculture sector."

He cited the example of the federal government's borrowing from the Central Bank of Nigeria (CBN) through Ways and Means, now N19trn, as disturbing and a violation of the CBN act. The CEO of CPPE called on the government to accelerate the refineries' rehabilitation and support the Dangote Petrochemical Refinery complex.

He added, "Nigeria needs to adopt investment-friendly policies to attract more foreign direct investments (FDIs) into the economy. This means the foreign exchange market must be reformed to be market-driven".

He tasked the fiscal policy authorities to review the current tax policy to make it more accommodative and ease the burden on income earners and businesses.  He also made a strong case for reforming the Customs Office to make it an enabler of business activities, not revenue generation.

Nigeria's May 2022 inflation figures, according to the National Bureau of Statistics,  rose to 17.71%, while food inflation is currently 19.5%.

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