NECA calls for adoption of backward integration, industrialisation
By Temitope Adebayo
The Nigeria Employers Consultative Association of Nigeria (NECA) has advised employment of backward integration and resource-based industrialisation to tackle econonic hardship in the country.
This is just as it noted that improvement in food and domestic production should be pursued with drastic step by the federal government to prune the daily rise of foreign exchange rate.
NECA director general, Mr Adeyemi-Smatt Oyerinde who gave this advise in Lagos said, the call became imperative following the over dependence on imported products which have been pushing the Dollar upward against Naira.
According to Oyerinde, the move will not only lead to checkmate the inflation but will also stabilise and educe the importation of food-related items and raw-materials items to save up forex for the economy.
“The National Bureau of Statistics (NBS) reported an acceleration in headline inflation to 28.92 per cent in December 2023. This showed 10.18 percentage points increase from 23.75 per cent in December 2022. It also indicated 0.75 per cent increase when compared with 28.20 per cent recorded in the preceding month.
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“Food Inflation contributed the highest to the increase in inflation during the month as it stood at 33.93 per cent,” he stressed.
He reiterated that a moderate inflation rate such as 3-5% is healthy to any economy, but at double digits, as it becomes detrimental to economic activities. The average inflation in the economy from July to December 2023 was 26.84%.
“An inflation rate as high as 26.84% is very harmful to the economy. There is no doubt that households’ real incomes have been grossly eroded within this period while firms’ working capitals have significantly reduced. The high inflation rate has also negatively affected almost all business metrics in terms of capacity utilization, production, sales, profit, and employment,” he pointed out.
In addition, he stated that, the reason for the persisting high inflation rate in the economy is not far-fetched.
“Today, the Naira exchange rate stands at N1300/US$ in the parallel market and N878.55/US$ in the I&E window, which feeds into inflation. The monetary policy is at 18.75% just to maintain an appreciable real interest rate to drive investment. Again, there is the current monetary tightening by the Central Bank through the reduction of the volume of money in circulation, which is also driving prices upward,” he stressed.
