Expressing concern, Adetilewa Adebajo, the Chief Executive Officer of CFG Advisory, has warned that Nigeria could face a future similar to that of Zimbabwe and Venezuela if measures to curb inflation are not implemented.
Adebajo underscored the urgency of addressing inflation, highlighting the crucial nature of the current economic situation in the country.
He shared these views during an appearance on the Morning Show program on Arise Television on Wednesday.
Responding to inquiries about the impact of the Central Bank of Nigeria’s (CBN) new interest rate on small enterprises, Adebajo suggested that a short-term increase in interest rates is necessary.
He explained, “Let me simplify it for you. We used to be able to purchase goods with our Naira, but now our Naira doesn’t go as far. The purchasing power has diminished. This has led to what I call the ‘sachet economy.’
“Even alcohol is being sold in sachets in Nigeria now because our Naira doesn’t stretch as much. With every Naira we earn, we can no longer buy the same amount of goods as before.”
“To address this and make the Naira more valuable, we need to tackle inflation. If inflation continues to rise, the Naira’s purchasing power dwindles. One way to combat this is by temporarily raising the interest rates. This strategy has been implemented in Nigeria in the past, particularly in 2011.”
“It’s not a novel concept; we have experienced it in Nigeria before, not in foreign countries. In 2011 and 2014, inflation rates were around 9 to 11 percent, while interest rates were maintained at an optimal level of 10 to 13 percent. We should strive to return our economy to that era.”
“While productivity challenges may arise, failing to control inflation will render productivity ineffective. If inflation remains unchecked, the country could gravitate towards the fate of Zimbabwe and Venezuela, where hyperinflation has taken hold due to ignoring the issue at hand.”
Emphasizing the critical nature of economic management, Adebajo remarked, “It is imperative that we address inflation as it plays a vital role in the current economic landscape of the country. The ongoing focus on the Dangote refinery project could serve as a distraction. The success of this project could contribute significantly to curbing inflation.”