Last week’s speculative position of the Central Bank of Nigeria’s (CBN) Governor, Godwin Emefiele, that he expected the inflation rate to fall at a faster pace and hit high single-digit rates mid-next year has attracted divided attention from financial experts.
Several economists who spoke to our correspondents said the dream is well achievable if right policies are put in place and driven with passion.
According to Dr. Ken Igboanugo, an economist, he said “Achieving single digit inflationary trend is possible if government can ease liquidity by way of injecting fund through massive release of funds for mega government contracts.
“When such huge payments are allowed to penetrate and soak the society, money will be in the hands of Nigerians to raise their purchasing power. Single digit inflation is known for economies where citizens have enough in their pockets to run the economy.
“To me, the main cause of double digit inflation is lack of disposal income for Nigerians and poor injection of projects cash to the economy.
Dr. Igboanugo noted that “In an economy where huge lumps of money are released for debt settlements and or purchase of foreign goods and services, it is always hard to achieve single digit inflation because, there is nothing circulate and reflate the ailing financial system”.
“From my humble investigations, the release and use of allocations from the 2017 budget have failed as it did not add value to reflecting the economy. We kept hearing release of funds for projects, but there is nothing to show for the funds on the economy.
He gave example with the payment of N75bn counterpart funding for the Lagos-Ibadan railway in August by the Ministry of Power, Works and Housing, saying “from all indications, that money so released may have been moved outside the country by the handling Chinese firm who we were told is footing the remaining cost of the project.
“Otherwise, the paid N75bn to CCECC has no impact on the economy, and that is why the economy cannot respond to fund release that are paid to contractors who are foreign because you cannot control how they use or where they use their money after all” Dr. Igboanugo said.
CBN Governor had told Nigerians weekend that he is highly hopeful that the 15.98 per cent inflation may drop to as low as single digit come middle of next year.
According to him, “We are very optimistic that food prices will come down and as they come down, it will help to complement the reduction in core inflation”.
Explaining the chances on the sidelines of an investment conference at the London Stock Exchange on Friday, Emefiele averred that “I expected a more aggressive moderation”.
“We are hoping that by the middle of next year we should begin to approach the high single digits,” he said, adding that around nine percent would be a good target.