With inflation almost uncontrollable and hitting the rooftop, experts and investors are of the opinion that the trend has to change with workable monetary policies and management. Left unchecked many more Nigerians would join the poverty queue. ROLAND OGBONNAYA writes

The signs of what to expect in terms of continuous rise in inflation in 2022 showed up during the week when despite repeated appeals by the Manufacturers Association of Nigeria (MAN), the Federal government has introduced an excise duty of N10/litre on all non-alcoholic, carbonated and sweetened beverages. Currently, a pack of 12 bottles of Coca-Cola goes for N1,500 while Pepsi-Cola is N1,400, while a bottle of each goes for N150. Retailers said the new development might trigger an increase in the retail price of the products.

Zainab Ahmed, minister of finance, budget and national planning announcing during a public presentation of the 2022 Appropriation Act in Abuja on Wednesday, said the excise duty was introduced in line with the Finance Act signed into law by President Muhammadu Buhari on December 31, 2021.Prior to the announcement, according to reports, the Director- General of MAN, Segun Ajayi-Kadir, had appealed to the government to abort the plans to kick-off the introduction of excise duty collection on carbonated and non-alcoholic drinks in the spirit of growing the country’s GDP. He said it will be counterproductive to local manufacturers of Beverages and Non-alcoholic drinks in the country. But he’s not on the same page with Ahmed, who said the duty on the products is to discourage excessive consumption of sugary beverages which contributes to diabetes, obesity among others.“There’s now an excise duty of N10/ per litre imposed on all non-alcoholic and sweetened beverages. We also raise excise duties and revenues for health-related and other critical expenditures. This is in line also with the 2022 budget priorities,” the minister reiterated. Ajayi-Kadir had complained about the excessive duty, tariffs on the country’s manufacturing sector, asking the government to review it this year owing to multiple taxations that the sector currently battles. In addition to this, he said the sector has battled the debilitating disruptive effect of the COVID-19 pandemic, inability to access the government’s relief funds, foreign exchange rate volatility and most importantly, raw materials’ challenges in the country. “We want to see the Federal government halting the plans to introduce new excise duty collection on carbonated and non-alcoholic drinks in the country this year. The burden of multiple taxes has been affecting our businesses and production heavily. Our manufacturing sector is yet to fully stabilise from numerous straits confronting manufacturing, propagated by fiscal and monetary policies of the government,” the DG MAN lamented. Last week, the World Bank expressed concern over Nigeria’s surging inflation, which it stated was undermining the recovery of Africa’s biggest economy, pushing seven million Nigerians into poverty and encouraging criminality as rising prices deplete already meager incomes. In its Nigeria Development Update (NUP) report, the Washington- based lender projects economic growth of 1.8% in 2022, compared with a previous estimate of 1.2%. But warned that without deep reforms, the economy will continue to grow slower than the tempo of population expansion of about 2.6% a year. The report stressed that coupled with rising unemployment and inflation, is leading more Nigerians into criminal enterprises to make up for lost earnings in the continent’s top oil producer. A surge in insecurity over the past two years has further slowed economic activity and left more people unemployed, fueling a vicious cycle of violence and criminality, the world apex financial institution stated. The World Bank’s country director for Nigeria, Shubham Chaudhuri said, “While you have many people going into the informal sector and hustling, criminal activity has become one of the options to get by. In the context of rising inflation, that means a further deterioration of the purchasing power and livelihood of many Nigerians.” He reiterated that the Nigerian government must develop a sustainable economic-recovery plan before the bank can release a $1.5 billion loan initially discussed more than a year ago. While inflation eased slightly for the second straight month to 17.9% in May, it remains at near four-year highs with food-price growth at more than 20% year-on year. The World Bank sees inflation at an average of 16.5% this year and remaining above the 9% top of the target band until at least 2023. Nigeria’s inflation rate drops to 15.99% — seventh consecutive decline in 2021. The consumer price index (CPI), which measures the rate of change in prices of goods and services, declined for the seventh consecutive time to 15.99 percent in October 2021. According to the National Bureau of Statistics (NBS), in the long-term, the Nigeria inflation rate is projected to trend around 7.00 percent in 2022 and 6.50 percent in 2023, according to econometric models. Nigeria’s annual inflation rate fell for the eighth straight month to 15.40% in November of 2021, from 15.99% in October. Nigeria’s annual inflation rate fell for the eighth straight month to 15.40% in November of 2021, from 15.99% in October. It was the lowest rate since November last year, amid the continued deceleration in food inflation (17.21% vs 18.34%). Meanwhile, the annual core inflation rate, which excludes the prices of agricultural produce, rose to 13.85% in November, the highest since April of 2017, from 13.24% in the prior month. On a monthly basis, consumer prices inched up by 1.08%, after a 0.98% increase in the prior month. Dr. Ndu N. Nwokolo, Managing Partner and Chief Executive, Nextier SPD, told Saturday INDEPENDENT that the World Bank report on Nigeria’s rising inflation is a call for concern considering the growing poverty rate, the rising food insecurity as a result of banditry and the nonperformance of the economy in general. He expressed fears that this could lead to more hardship and in turn trigger more socio-political and economic crises, especially as the country goes into an election year for 2023. “The first step will be to curb insecurity especially in the rural areas that serve as our food baskets. Nigerians spend so much on food and if you look critically at the rate of inflation, food and transportation seem to be most affected. We need to stabilise those communities so that farmers can return back to farms and off-takers can be free to go there and distribute food across the country,” he emphasised. An investor in mineral resources in sub-Saharan Africa, Mr. Ebube George agreed with Dr. Nwokolo. He said the concern with “inflation deepening the gulley of Nigeria’s poverty capital status and entrenching real-time inequality is a clear and present danger in 2022 to the largest economic space in Africa. Without a doubt increasing food and commodities prices are diminishing the welfare of Nigerian households.” George said based on projections, had the inflation not been closer to the CBN’s goal of nine per cent in 2021, the average of Nigeria’s consumption would have been 15 percent higher, and eight million Nigerians would have not fallen into poverty. “With double-digit inflation persistently steering economic watchers and the Nigerian government in the face, 2022-2023, will see rising prices distort the holistic spectrum of consumption, investment, and savings capability of the government. Inflation will not only negatively affect incomes, but also economic productivity and job creation, further constraining the recovery. It’s on record that over the past two years, an increase in food prices accounted for about 70 per cent of the annual increase in the rate of inflation.” He explained that the current mix of monetary, fiscal, foreign exchange and trade policies also plays a prominent role as a driver of inflation, as trade and FX restrictions, including the closure of land borders starting in August 2019, have increased prices of food and other consumer goods. These products include many staple foods which are currently ineligible for FX through formal windows. “This has resulted in the rise of parallel rates, which are closely linked to food-price dynamics. Unable to access FX through the official exchange-rate window, businesses seek FX on the parallel market and other alternative sources,” George added. Interestingly, the World Bank has challenged the CBN’s position that high inflation stems primarily from supply constraints, citing tight exchange-rate controls and expansive monetary policy as key drivers of price growth. “Policy decisions related to exchange rate, trade and monetary and fiscal factors are driving inflation, especially during 2021, more so than exogenous factors related to conflict and weather shocks,” Marco Hernandez, who is the World Bank’s chief economist for the country, said. Although the CBN has taken the right step in unifying the official exchange rate with one used by investors and exporters, “the exchange rate is not yet reflective of market forces,” the World Bank added. As the World Bank projects Nigeria to have one of the highest inflation rates globally and the seventh-highest among Sub-Saharan African countries in 2022, George and Nwokolo said there is also a need for strengthening and sustaining programmes and strategic introduction of stimulus packages to reinvigorate the economy. Impact investment in homegrown businesses and technologies to create self-reliance of the economy is germane whilst reducing capital flight.