Economy
Udemezue Gives CBN Tricks to Tackle Nigeria’s High Inflation
By Ahmed Rahma
The Chief Executive Officer (CEO) of Flame Academy & Consulting Limited, Mr Orji Chigozie Udemezue, has advised the Central Bank of Nigeria (CBN) to apply contractionary measures to curb inflation in the country.
According to the National Bureau of Statistics (NBS), inflation in Nigeria rose in December 2020 by 15.75 per cent and for Mr Udemezue, this is very high.
To control this, the economist has told the central bank to reduce government spending by stabilising price, which according to him, is the main duty of central banks across the globe.
Mr Udemezue, while speaking on Channels Business Morning, added that when CBN raises rate, there will be so much rush for money market instruments as banks would not be able to carry out their primary function of lending money to customers because people will not be able to borrow at a higher rate, allowing the apex bank to mop up the excess liquidity in circulation, which will slow down inflation pressure.
“Prices are still going up. Theoretically, we see that inflation today is about 15.75 per cent but actually in the market, most prices have gone more than 50 per cent on the things we buy.
“[The] duty of the central bank is to maintain price stability, that’s everywhere in the world and to do that, looking at the way things are now, we expect that the central bank should be trying to curb inflation by doing what they call monetary policy contraction, trying to apply contractionary measures i.e trying to raise rate. When they raise the rate for example, what will happen is that there is so much rush for money market instruments, banks will not be able to lend out more money and people will not be able to borrow at a higher rate and, therefore, you mopped up the money in circulation and then slow down inflation pressure,” he said.
Commenting on the fact that MPC was confronted with a policy dilemma at the last meeting, he said, “well, it is just the option of sit down dey look, let’s just watch as things go, because the whole essence of monetary policy obviously is to manage the quantity of money in supply in the economy.
“The argument theoretically is that when there is so much money in circulation, there is a lot of money pursuing a few goods, therefore, driving prices up.
“So, the primary duty of central banks all over the world is to maintain monetary stability, ensuring that price increase in the economy does not go at hyper rate i.e. saying inflation like in Nigeria having double-digit and beyond, that’s what damages productivity.
“So, you find that the Central Bank of Nigeria is in a very big dilemma. Ordinarily, if you look at their objective of maintaining price stability, we are losing it.”
Expressing his belief on the measures, he said, “You know, that’s what we should be looking at right now. If they do that, trust me, it is going to be very counterproductive because already, the economy is in deep trouble with COVID-19 and all of that.
“So, at this point, no reasonable central bank will be looking at an increase in rate instead everywhere in the world, we are looking at monetary easing or what they call expansionary monetary policy, whereby rates are brought down to enable the real sense of economy to enable to borrow at a reasonable rate, drive production and be able to reverse as it is now and economy in recession.”
According to him while answering the question of what is driving inflation in Nigeria, the pressure on foreign exchange (FX) is the major cause and the fact that the country depends too much on foreign goods.
“[The] Nigerian economy is a very peculiar economy, many times it tends to work out most established economic theories and even practices.
“Elsewhere in the world, there are no major issues about inflation because domestic demand is at its lowest level, travels are restricted, the COVID-19 lockdown has left people with no jobs.
“Theoretically, people don’t have money to spend.
“Most economy especially western economies, you find that aggregate demand is actually on a decline and, therefore, purchases are not going up as it should be. So, inflation is actually low in those places unlike in Nigeria, the argument is different.
“The factors driving inflation in Nigeria is not demand-pull, it is not about you and I having so much money in our pocket, having greater command for commodities.
“So, what happens here is inflation flows really from FX pressure. We are not self-sustaining and we import practically everything we use. So, the pressure on our FX, input costs is huge.
“Our local manufacturers have to import there input materials which are now at the all-time rate and then the finished goods we also import that we use in domestic things like the furniture and office equipment are also coming at a much higher rate because of the devaluation and depreciation of our currency.
“What is causing this depreciation? Until we address the issue of continuous depreciation of our currency, inflation can never be dealt with.
‘That is why even at the time when all of us are not demanding much when domestic demand is so low, we still see inflation climbing up the roof particularly food inflation and similar factors.
By Adedapo Adesanya
Food Concepts Plc, the parent company of fast food brands like Chicken Republic and PieXpress, has disclosed plans to pay 10 Kobo in interim dividend to new and existing shareholders for the 2026 financial year.
This was disclosed by the company in a notice to the NASD Over-the-Counter (OTC) Securities Exchange, where it trades its securities.
The notice indicated that the proposed interim dividend, which comes with no bonus, will be paid to those who hold the stocks of the company as of the qualification date for the dividend, which was Tuesday, March 24.
This means only those who hold the company’s shares as of the closing session will be eligible to receive the stipulated dividend payment.
The shareholders of the company will be credited with the 10 Kobo dividend on Tuesday, March 31.
The notice noted that the closure of the company’s register will be on Wednesday, March 25, through Friday, March 27, 2026, both days inclusive.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange dropped for the third consecutive session on Wednesday, March 18, by 0.39 per cent due to continued sell-offs.
In what would be the final trading session of the week due to public holidays on Thursday and Friday for Eid-el-Fitr, the NASD Unlisted Security Index (NSI) further dipped by 16.14 points to 4,114.75 points from 4,130.89 points, and the market capitalisation lost N9.66 billion to close at N2.461 trillion versus the previous day’s N2.471 trillion.
FrieslandCampina Wamco Nigeria Plc depreciated by N10.32 to sell at N112.00 per share versus N122.32 per share, NASD Plc dropped N4.50 to finish at N41.50 per unit compared with the previous session’s N46.00 per unit, and Geo-Fluids decreased by 9 Kobo to N3.02 per share from N3.11 per share.
On the flip side, Air Liquide Plc improved by N2.23 to N24.57 per unit from N22.34 per unit, Central Securities Clearing System (CSCS) Plc advanced by 90 Kobo to N76.33 per share from N75.43 per share, Food Concepts Plc rose by 24 Kobo to N3.30 per unit from N3.06 per unit, UBN Property Plc surged by 20 Kobo to N2.18 per share from N1.98 per share, Impresit Bakalori Plc jumped 16 Kobo to N1.83 per unit from N1.67 per unit, and First Trust Mortgage Bank Plc added 14 Kobo to trade at N1.89 per share versus N1.75 per share.
During the trading day, the volume of securities went up by 43,404.4 per cent to 400.8 million units from 921,265 units, the value of securities grew by 2,108.7 per cent to N1.2 billion from N54.7 million, and the number of deals soared by 23.7 per cent to 47 deals from 38 deals.
CSCS Plc ended the day as the most traded stock by value (year-to-date) with 38.7 million units valued at N2.4 billion, followed by Infrastructure Guarantee Credit Plc with 400 million units exchanged for N1.2 billion, and Okitipupa Plc with 6.4 million units traded for N1.2 billion.
Resourcery Plc finished the session as the most traded stock by volume (year-to-date) with 1.1 billion units worth N415.7 million, trailed by Infrastructure Guarantee Credit Plc with 400 million units sold for N1.2 billion, and Geo-Fluids Plc with 131.1 million units valued at N505.6 million.
By Dipo Olowookere
The Nigerian Exchange (NGX) experienced a pullback of 0.69 per cent as a result of profit-taking by investors, with shares in the banking and energy sectors mostly affected.
Data harvested by Business Post showed that the energy index was down by 4.58 per cent during the session, and the banking space lost 2.14 per cent.
They brought down the All-Share Index (ASI) by 1,402.56 points to 201,156.85 points from 202,559.41 points and shrank the market capitalisation by N900 billion to N129.126 trillion from N130.026 trillion.
Customs Street ended in red at midweek despite three of the five key sectors finishing in green. The consumer goods counter expanded by 1.19 per cent, the industrial goods index improved by 0.46 per cent, and the insurance sector grew by 0.43 per cent.
Red Star Express declined by 9.98 per cent to N25.70, Aradel Holdings went down by 9.68 per cent to N1,210.30, Presco lost 9.30 per cent to trade at N1,701.10, Living Trust Mortgage Bank crashed by 8.40 per cent to N4.80, and DAAR Communications dropped 7.50 per cent to end at N1.85.
On the flip side, Secure Electronic Technology gained 10.00 per cent to settle at N1.32, Guinness Nigeria rose by 9.92 per cent to N423.20, John Holt increased by 9.72 per cent to N11.85, Sovereign Trust Insurance surged by 9.57 per cent to N2.06, and Linkage Assurance chalked up 9.33 per cent to trade at N1.64.
Investor sentiment was weak yesterday after the bourse registered 33 price gainers and 38 price losers, indicating a negative market breadth index.
Market participants bought and sold 6.1 billion stocks valued at N130.1 billion in 58,562 deals compared with the 1.8 billion stocks worth N88.1 billion traded in 62,654 deals on Tuesday, representing a shortfall in the number of deals by 6.53 per cent, and a spike in the trading volume and value by 238.89 per cent and 47.67 per cent apiece.
The most active equity on Wednesday was eTranzact with 5.2 billion units sold for N24.3 billion, Wema Bank exchanged 111.4 million units worth N3.1 billion, Coronation Insurance transacted 96.4 million units valued at N303.9 million, Dangote Cement traded 75.2 million units for N56.5 billion, and Access Holdings exchanged 61.5 million units valued at N1.6 billion.
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