Markets await Nigeria's June inflation figures

Nigeria is eagerly awaiting the release of the June inflation figures by the National Bureau of Statistics (NBS). With May's Consumer Price Index (CPI) inflation already at 11.40%, there is anticipation for a slight increase in the upcoming report. Tilewa Adebajo, the CEO of CFG Advisory, highlighted that the trajectory of inflation is on the rise, primarily driven by food inflation which stood at 22% due to insecurity in the northeast affecting productivity in farming regions such as the breadbasket and Benue. Despite the challenges, other sectors like hospitality, telecoms, and banking have managed to keep inflation below 10%. Adebajo emphasized the need to focus on bringing down food inflation to stimulate sustainable economic growth. Although the technical inflation rate may be in single digits without food prices, the broader goal should be achieving consistent economic growth. The conversation then shifted to the impact of delayed ministerial appointments on the economy. Adebajo emphasized the importance of confidence in the business environment, stating that uncertainty due to the lack of a ministerial list is hindering investment and market stability. While the Central Bank of Nigeria (CBN) has made efforts to lower interest rates, Adebajo pointed out that without robust consumer demand and disposable income, businesses struggle to repay loans, highlighting the need to create a stronger middle class to drive economic growth. Furthermore, the discussion delved into the need for a clear policy direction and the revision of the Economic Recovery Growth Plan (ERGP), which Adebajo believes has not met its targets and requires an update to reflect current economic realities. Adebajo expressed concerns about the rising debt profile and the need for a coherent economic strategy that balances fiscal, monetary, trade, and investment policies to restore confidence both domestically and internationally. The delay in appointing ministers was deemed as an elephant in the room, with Adebajo stressing the urgency of bringing in a cohesive economic management team to set a clear policy direction and restore business confidence. He highlighted the impact of uncertainty on financial markets and the decline in foreign direct investment as indicators of the current economic challenges stemming from policy ambiguity. Adebajo called for a reconsideration of the ERGP and the formulation of a new economic plan to address pressing issues such as the unsustainable debt servicing ratio. As the Senate gears up to go on recess on July 26th, there are calls for senators to postpone their vacation to ensure the prompt screening of ministerial nominees. Adebajo emphasized the need for decisive action to tackle insecurity and economic uncertainty, urging all stakeholders to prioritize the swift resolution of policy gaps and the appointment of competent ministers to drive a much-needed economic turnaround. The overarching message conveyed by Adebajo is the critical importance of restoring confidence in Nigeria's economy through cohesive policy-making and timely governmental actions.