An economist, Prof. Bright Eregha, has urged the federal and state governments to adhere to fiscal discipline and support import substitution to combat rising inflation.
Eregha, who lectures at the Economics Department, Pan Atlantic University, expressed this in an interview with the News Agency of Nigeria (NAN) in Lagos on Monday.
He said that over the past year, the allocation of the Federal Accounts Allocation Committee (FAAC) to various subnational governments had surged significantly due to economic reforms implemented by the government.
Eregha said that this increase in allocations had raised the money supply within the economy.
According to him, this can also lead to a rise in the current inflation rate if these funds are not channeled into productive sectors.
He stressed the necessity for the governments to invest in mechanised agriculture as a solution to the prevailing food insecurity.
“An increased budgetary allocation to mechanise our agriculture is essential to boost food production, irrespective of whether it is harvest season or not,” he stated.
Eregha argued that such investments would aid the country in achieving self-sufficiency in food production and help mitigate the food-induced inflation currently being experienced.
Also, Prof. Tunde Adeoye, Senior Lecturer, Economics Department, University of Lagos, advocated import substitution to curb the inflation rate.
He stated, “The government should adopt macroeconomic policies that will encourage indigenous companies to commence the production of some imported items locally and be patronised by our people.
“This will strengthen our local capacity and reduce our volume of imports over time, which is exerting too much pressure on our foreign exchange,” he explained.
According to Adeoye, the surge in inflation rate is more of a structural challenge within the general economy.
He said, “The situation has gone beyond the apex bank’s belief that raising interest rates alone will check the inflation rate.
“Our increase in inflation is more of an economic dislocation which is worsened by the government’s current economic reforms.”
He further emphasised the need for the government to be more innovative in addressing the security headwinds that negate food output in the country.
“The government addressing the herders-farmers disputes over the years in food belt states might ameliorate the situation,” Adeoye said.
According to the National Bureau of Statistics (NBS), Nigeria’s inflation rate increased to 34.6 per cent in November, up from 33.8 per cent in October.
The latest Consumer Price Index (CPI) report, released on Dec.16, highlights a 0.72 per cent rise in inflation within a month.
The NBS reported a significant year-on-year increase of 6.4 per cent, compared to the 28.2 per cent inflation rate recorded in November 2023.
On a month-on-month basis, inflation rose by 2.638 per cent in November, a marginal drop of 0.002 percentage points from October’s 2.64 per cent. (NAN)
