The Central Bank of Nigeria (CBN) has attributed the rising hunger and shortage of food in the country to factors such as insecurity, climate change, inefficient farming practices, and bottlenecks in the importation of food items.
CBN Governor, Olayemi Michael Cardoso, made these statements during a joint Senate committee meeting on Finance, Banking and other Financial Institutions, and National Planning.
Cardoso explained that the pressure on the nation’s foreign exchange market is contributing to the continuous decline in the value of the naira. He noted that supply shocks caused by insecurity, climate-induced factors like floods and rainfall shortage, inefficient farming practices, and importation bottlenecks have impacted the prices of imported food items, leading to increased food inflation.
Addressing the senators, Cardoso highlighted that the foreign exchange market is facing increased demand pressures, resulting in a continuous decline in the naira’s value. He mentioned speculative forex demand, inadequate forex supply, increased capital outflows, and excess liquidity as contributing factors to the situation.
The CBN Governor emphasized the urgency of addressing these issues, acknowledging the public’s concerns about the rising cost of living and food scarcity. He mentioned the efforts of the emergency committee on food security and the CBN’s monetary policy tightening to curb inflationary pressure.
Cardoso also provided insight into the inflation rates, stating that the economic landscape in December 2023 revealed significant shifts. He acknowledged the challenges in the country’s foreign exchange market and the impact on inflation, particularly in the food sector.
The CBN Governor assured that collaborative efforts with the Fiscal Authorities, such as discontinuing ways and means advances and halting quasi-fiscal measures, have been initiated to address the situation. He expressed optimism that inflationary pressures would decline in 2024, supported by the CBN’s inflation-targeting policy and improved agricultural productivity.
On exchange rate management, Cardoso discussed measures to enhance liquidity in the FX markets, unifying FX market segments, clearing outstanding FX obligations, and introducing operational mechanisms. He stressed the importance of moderating the demand for foreign exchange and emphasized ongoing collaboration between fiscal and monetary authorities.
In conclusion, Cardoso highlighted the importance of actions by corporates and individuals in reducing frequent demand for the dollar for business and personal needs to stabilize the exchange rate. He acknowledged progress in collaboration with the Minister of Finance, Minister of Budget and National Planning, and the Minister of Agriculture to tackle economic challenges.
