Nigeria’s inflation rate is expected to drop in 2021 as the economy recovers from the COVID-19 pandemic and economic activities fully pick up, the Central Bank of Nigeria’s Monetary Policy Committee (MPC) has said.
This is one of the outcomes of the MPC meeting at the headquarters of the CBN in Abuja.
The MPC, in a communique at the end of the meeting read by the CBN Governor, Godwin Emefiele, said the inflation will decrease in the medium term, as domestic production recovers.
Nigeria’s inflation rate rose to 14.23 percent (year-on-year) in October 2020 from 13.71 percent in September 2020 and which the MPC attributed the increase to both food and core inflation, which rose to 17.38 and 11.14 percent in October 2020 from 16.66 and 10.58 percent in September 2020, respectively.
“Other causes of both food and core inflation are the persistence of insecurity across the country as well as lingering structural deficiencies impacting the logistics of moving food items to urban areas such as poor road networks, unstable power supply and a host of other infrastructural deficiencies.
“Other factors include the persisting impact of coronavirus-induced supply disruptions, recent hikes in the price of energy products (PMS and electricity) and weak crude oil prices,” the Committee added.
It maintained that food inflation will moderate as the harvest season sets in, adding that monetary and fiscal policies are to continue their broad-based stimulus support towards full recovery.
“This will involve fiscal measures to reduce unemployment, provide an enabling environment for private sector investment and necessary support to the health sector to cushion the impact of the coronavirus pandemic,” it said.
Addressing a news conference at the end of MPC meeting, the CBN governor assured that the apex bank will sustain its various intervention measures to boost consumer spending and support the recovery.
According to him, the bank has introduced several loan opportunities and fund interventions to support micro, small and medium enterprises in different sectors of the economy to recover from the effect of the coronavirus pandemic.
He disclosed that the CBN had disbursed the sum of N149 billion to 317,000 beneficiaries through its institutions.
“We have been advised by the MPC that we have to increase it not just from N149 billion that it is now but to increase to almost about N250-300 billion to accommodate more people that have not accessed these facilities.
“On healthcare, around N600 million has been disbursed to 60 healthcare projects. They are hospitals or pharmaceutical companies who are into healthcare and drug manufacturing which falls into CBN Healthcare Research And Development Grants.
“On the road sector, we have disbursed N350 billion to over 105 road sectors during this same period.
“For those going into small businesses tailoring, hair making etc we have also disbursed over N92 billion to more than 27,000 people which falls on MSMEDF Loan – Micro, Small and Medium Enterprises Development Fund.
“For youths under the creative funding initiative, we have disbursed over 2.9 billion to our youths in the area of fashion, ICT, movie and music sector which falls on Creative Industry Financing Initiative (CIFI Loan),” Emefiele said.
He noted that the CBN intervention has been very impactful, particularly the targeted credit facility which is made for household and SMEs.
“What we saw during this period is that it has helped to boost consumption spending for our SMEs and if you could recall that consumption constitutes over 70% of output you will know that this has been very impactful in moderating impact of COVID-19 on productivity and output and GDP in our country,” he stated.
The CBN has introduced various fund interventions and loan opportunities such as AGSMEIS Loan For SMEs and Agricultural Businesses Without Collateral, Anchor Borrowers Programme (ABP), Intervention For Agriculture, Accelerated Agricultural Development Scheme (AADS Loan), MSMEDF Loan – Micro, Small and Medium Enterprises Development Fund, Creative Industry Financing Initiative (CIFI Loan), CBN Healthcare Research And Development Grants, CBN maize aggregation scheme (MAS), BOI for women, and N75 billion youths investment fund.
Comments are closed.