Rising inflation: Interest hike way forward – Gwadabe

Naira volatility despite foreign exchange interventions by the Central Bank of Nigeria (CBN) is being compounded by rising inflation, interest rate hike and slow economic growth with consequences for middle and lowincome earners, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji (Dr) Aminu Gwadabe has said.

Gwadabe said the unfolding scenarios raise the risk of stagflation with potentially harmful consequences for the poor within the economy.

He said: “Already, global growth is expected to slump from 5.7 per cent in 2021 to 2.9 per cent in 2022— significantly lower than 4.1 per cent predicted by the International Monetary Fund (IMF) in January.

To keep the Nigerian economy going strong in the face of these challenges, Gwadabe called for improved local production and diversification of the economy from oil.

He said the naira exchanges at N614/$1 at the parallel market, dollar bids continue to rise as inflation rose to11-month high (17.71 per cent) in May.

These occurrences, the ABCON boss said, are eroding the purchasing power of households. “The biggest driver of inflation is the stubborn rise in food inflation. The average price level of the food basket rose by 1.13 per cent to 19.50 per cent in May from 18.37 per cent in April. This can be reversed by increased support for agriculture and government policies that support the sector,” he said.

Gwadabe said Nigeria’s huge population and diaspora market, which attracts an average of $20 billion annually, can be explored to deepen dollar inflows to the economy.

He said expanding the dollar receipt points through over 5,000 Bureaux de Change operators can deepen dollar inflows and significantly raise Nigeria’s forex position.

The ABCON believes the success of BDCs will be boosted by access to multiple streams of forex earnings to deepen the market, keep the naira stable and boost BDC’s operations.