The Central Bank of Nigeria (CBN) has expressed deep worries over the ongoing decline in economic activities within the nation.
The disclosure came from the CBN’s Deputy Governor of Corporate Services, Bala Moh’d Bello, who highlighted the grim economic landscape in his personal statement following the recent Monetary Policy Committee (MPC) meeting.
According to Bello, the country’s Composite Purchasing Managers’ Index (PMI) plummeted sharply to 39.2 index points in February 2024 from 48.5 index points recorded in the previous month. This substantial drop underscores the challenging economic environment Nigeria currently faces.
The persistent contraction in economic activity, which has endured for eight consecutive months, has been primarily attributed to various factors including exchange rate pressures, soaring inflation, security challenges, and other significant headwinds.
Bello emphasized the urgent need for well-calibrated policy decisions aimed at ensuring price stability to prevent further stifling of economic activities and avoid derailing output performance. Despite sustained increases in the monetary policy rate, inflationary pressures continue to mount, posing a significant challenge.
Inflation rates surged to 31.70 per cent in February 2024 from 29.90 per cent in the previous month, with both food and core inflation witnessing a notable uptick.
Bello attributed this alarming rise in inflation to elevated production costs, lingering security challenges, and ongoing exchange rate pressures.
The situation further escalated in March, with inflation soaring to an alarming 33.22 per cent, prompting urgent calls for coordinated efforts to address the burgeoning crisis.
The adverse effects of high inflation on citizens’ purchasing power, investment decisions, and overall output performance cannot be overstated.
While acknowledging the commendable efforts of the Federal Government in tackling food insecurity through initiatives such as releasing grains from strategic reserves, distributing seeds and fertilizers, and supporting dry season farming, Bello stressed the need for decisive action to curb the soaring inflation rate.
It’s worth noting that the MPC had recently raised the country’s interest rate to 24.75 per cent in March, reflecting the urgency and seriousness with which the CBN is approaching the economic challenges facing Nigeria.
As the nation grapples with a multitude of economic woes, including inflationary pressures, exchange rate volatility, and security concerns, the CBN’s vigilance and proactive measures become increasingly crucial in navigating these turbulent times and steering the economy towards stability and growth.