CBN defends Nigeria’s inflation rate, says its not bad compared to other African countries

The rate of inflation in Nigeria has been defended by the Central Bank of Nigeria (CBN), which insisted that it is better when compared to most African countries.

The acting governor of the CBN, Folashodun Shonubi, stated this on Tuesday at the 2023 Zenith Bank International Trade Seminar.

Represented by the Deputy Governor, Economic Policy, Kingsley Obiorah, Shonubi said there were several contributing factors to the global inflation rise.

Shedding light on the theme, ‘Nigerian Non-Oil Export Industry. The Present, The Future,’ Obiorah lamented the low growth rate in non-oil exports to Gross Domestic Product ratio.

Obiorah, who said that Nigeria’s inflation rate stood at 22.8 per cent, added that the International Monetary Fund expected the country to have a growth moderation of 3.2 per cent in 2023.

He said: “Now, when you come down to Africa and neighbouring Ghana, At the last count inflation there is at 42.5 per cent. We have it at 31 per cent in Ethiopia and 36 per cent in Egypt.

“So, in our dear country, we are at 22.8 per cent. When you hear these figures, it tells you that we’re not doing as badly but all of this has also affected economic growth itself. Today, the IMF has revised growth downwards from 3.5% per cent to three per cent this year and 3 per cent next year.

“For Sub-Saharan Africa, they expect growth to moderate from 4.1 per cent last year to 3.5 per cent this year, but to take back again to just slightly over 4 v next year. In Nigeria they expect us to do 3.2 per cent this year.”

Speaking further, Obiorah argued that the war between Russia and Ukraine, and a shift from goods to services are also significant factors.

“We know that the war between Russia and Ukraine is contributing a lot as the two countries are very important commodity exporters. Both of them account for 30 per cent of sunflower exports in the world. So, when such a region is at war, you know what will happen to food prices worldwide.

“We know too that there’s been a shift in demand from goods to services; services are usually more expensive. There’s also the disruption going on in China today with their zero COVID policy, power cuts as we know, and then the switch from coal to more renewable energy has also meant that power is not as valuable as it used to be,” Obiorah said.

Read also: Nigeria tops global unemployment rating 

The CBN deputy governor further stated that the high rate of investment in property services in China has also led to disruptions in the supply chain.

“We see too in China today some correction in the property market. A lot of Chinese don’t have quite the kind of investment vehicles that say the average American has.

“A lot of them have put their savings into property. But that has meant an oversupply of property in China today. There are 65 million empty apartments in China.

“That’s enough to take the entire population of France. So that correction is also leading to supply chain disruptions”, he submitted

Obiorah said further: “In the decade between 2001 and 2011, the non-oil exports to GDP ratio for Nigeria was 0.8 per cent. And you can imagine that in the next decade, so, from 2012 to 2022, we were still at 1.2 per cent,” showing an increment of 0.4 per cent over 20 years.

”We need to be growing much faster. Countries that are way smaller than us are doing much better.”

Obiorah also compared the land size of some countries to Nigeria’s, citing their non-oil exports to GDP ratio.

He said: “The Netherlands has a land size of 34,000 square kilometres.

“So, if you add water, you go to 42,000. It might interest you to know that non-oil exports from the Netherlands is 29% of their GDP. Most times they do $108 billion in non-oil exports.

“Now keep in mind the Netherlands is smaller than Niger State, actually the size of Niger State. I’ll give you another example. Ireland is a country that sits on just about 70,000 square kilometres, and they routinely do non-oil exports of $170 billion so we can do better.”

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