CBN Laments Worsening Economic Crisis Due To Exchange Rates

The Central Bank of Nigeria, CBN, has lamented the worsening economic crisis in the country.

The apex bank said it’s “concerning” that the purchasing power of many Nigerians have dropped due to various government economic policies.

The concern was expressed by the Deputy Governor in charge of Corporate Services, Bala Bello, in a statement published on the bank’s website on Thursday.

According to Bello, the exchange rates pressures have sparked both inflation and insecurity across the country, stressing that the purchasing power of Nigerians have dropped marginally by over nine percent to 48 percent from 39 percent within one month, between January and February this year.

He explained that the economic problems have lingered for eight months consecutively, despite the efforts of the government to address the situation.

He said the federal government strategic responses to the problem include the release of grains from the strategic reserves, distributing seeds and fertilizers, and supporting dry season farming, amongst others have failed to address the current hardship in the country.

Bello said: “It is concerning to note that the Composite Purchasing Managers’ Index declined sharply to 39.2 index points in February 2024 from 48.5 index points in the previous month.

“Economic activity has been contracting for eight consecutive months, mainly due to exchange rate pressures, rising input prices, security challenges, and other idiosyncratic headwinds. This calls for well-nuanced policy decisions targeted at price stability to forestall stifling economic activities and derailing output performance.

“Of more concern is the rising inflationary trend despite sustained hikes in the monetary policy rate, with forecasts of further price increases in the near term.

“Both food and core inflation rose in February 2024, underpinning an acceleration in headline inflation to 31.70 per cent in February 2024 from 29.90 per cent in the previous month.

“This continued rise in inflation was mainly due to high production costs, lingering security challenges and exchange rate pressures,” he said.

He added that the country’s inflation soared to 33.22 per cent in March, which was unacceptable and required coordinated efforts to curb it.

“Inflation is currently unacceptably high and requires decisive and coordinated efforts to curb it, given its adverse impact on citizens’ purchasing power, investment decisions and broad output performance.

“The Federal Government’s initiatives addressing food insecurity, such as releasing grains from the strategic reserves, distributing seeds and fertilizers, and supporting dry season farming, are important and commendable,” he stated.

The magazine reported that Africa’s Richest Man Aliko Dangote recently criticised the federal government over  its exchange rate policy which he said has crippled many manufacturing businesses in the country.