Olayemi Cardoso of CBN

Cardoso, CBN Policies Cannot Unilaterally Tackle Inflation


The recent promise by the Governor of the Central Bank of Nigeria (CBN) Yemi Cardoso to introduce anti-inflation policies sounds like the “usual political talk”, it lacks the sufficient economic substance that is needed to fight Nigeria’s 27-year debilitating 28.9 percent inflation, which is largely driven by food. Nigerians have grown weary of such rhetoric.

Speaking publicly for the first time in 2024 ahead of the first Monetary Policy Committee (MPC) meeting of the year, scheduled for February 26 through 27, the apex bank boss expressed optimism that inflation would be moderated by the ‘CBN’s inflation-targeting policy.’

He also promised that his policies would stimulate investment, fuel growth, and create job opportunities. A similar statement was made at the close of 2023.


How he plans to unilaterally bring down inflation becomes more absurd when considering that farmers in the North, who play a crucial role in feeding the nation, cannot access their farmlands due to the fear of being killed by marauding gunmen or being taxed by criminals before harvesting. This further underscores the challenges underlying Cardoso’s promise.

Statistically, the ruling All Progressives Congress (APC), since taking power in May 2015, does not have a history of successfully reducing inflation. The only instances of a decline were in 2018 and 2019 when inflation decreased by 4.41% and 0.7% in the respective preceding years.

Now led by Bola Tinubu, who took over from Muhammadu Buhari in May 2023, he inherited 22.41 inflation in May 2023.

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Notably, Tinubu, who had previously governed Lagos for eight years and played a pivotal role in Buhari’s ascent to power in May 2015, pushed Nigeria’s inflation rate to 28.9% within six months of assuming office.

This figure marked the highest inflation rate since August 2005, attributed to his subsidy-removal policy, which he announced during his inaugural speech on May 29.

In 2015, Nigeria’s inflation rate was 9.01%, marking a 0.96% increase from the previous year. Subsequently, in 2016, it rose to 15.70%, reflecting a 6.69% increase from 2015. In 2019, the inflation rate was 11.40%, showing a 0.7% decline from 2018.

However, by the end of 2020, Buhari’s policies had contributed to a 1.85% increase in the inflation rate. In 2021, the inflation rate further rose to 16.95%, reaching 18.85% in 2022, and concluding at 22.41% by the end of the administration.

It is indisputable that the apex bank can employ various tools to reduce inflation and stabilize prices.

Common strategies include adjusting interest rates, using open market operations to control money supply, implementing reserve requirements for banks, and employing macroprudential policies to address financial stability risks. These measures aim to influence economic activity, manage inflation expectations, and promote price stability.

However, none of them seems to have yielded the desired economic results to curb hyperinflation in Africa’s biggest economy, as the country is not adequately addressing the fundamental problems that could bring down inflation.

For instance, the government continues to pay lip service to addressing issues of insecurity. In Borno, Yobe, Adamawa, and other northern states, some farmlands remain inaccessible to hardworking farmers because insurgents have taken control. Parts of Niger State are also under the influence of Boko Haram insurgents.

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In Benue, known for large-scale production of yams, farmers face the threat of being killed by gunmen or having their land taken at will.

Plateau state, known for its capacity to “produce over 90 per cent of the fruits and vegetables which Nigerians consume,” according to Mrs. Linda Barau, the state’s former Commissioner for Agriculture and Rural Development, boasts a wonderful climate ideal for cultivating various crops.

The state is renowned for producing fruits and vegetables such as lemon, carrot, cabbage, cucumber, broccoli, strawberry, and many others.

Unfortunately, the region is grappling with the expansion of Islamic extremist attacks, leading to the tragic killing of over 200 people between December 24,  2023, to January 25, 2024, with some people describing it as genocide.

These disruptions exert pressure on the already limited food supply, contributing to food inflation, which is a major issue in Nigeria.

According to Mojeed Iyiola, the Chairman of the Poultry Association of Nigeria (PAN) Lagos State chapter, over 50 percent of poultry farms in the country have been forced to shut down due to the high prices of maize and other raw materials. This has resulted in the cost of a crate of eggs reaching at least N3,000.

It’s worth noting that Nigeria imports maize and poultry feeds because local production has been badly affected by insecurity.

Between August 2019 and August 2023, inflation on imported food surged by 89.23%, as reported by the National Bureau of Statistics (NBS) in the consumer price index reports.

Between January and June 2023, the country spent N1.47 trillion on food and beverages importation, a significant increase from the N815 billion spent on the same imports in the first half of 2019.

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Meanwhile, amid the pervasive issues of kidnapping and insecurity, the power sector remains in a comatose state. Local productions are shutting down due to the inability to cope with maintenance costs, primarily stemming from the high expenses associated with power generation. All these need urgent action from the government.

While central banks play a crucial role in managing inflation and stabilizing prices, achieving these goals often requires coordination with other economic policies and institutions.

Fiscal policies, encompassing government spending and taxation, can complement monetary policies. Additionally, structural reforms addressing issues like labor markets and productivity contribute to overall economic stability

Collaborative efforts between the CBN and the ruling party will enhance the effectiveness of measures to control inflation and maintain price stability.

The Tinubu government needs to tone down its extravagant spending. Cardoso’s monetary policies cannot unilaterally curb the alarming inflation.

Nigerians expect more from a party that promised in 2015 to turn Nigeria into a paradise on earth.

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