The president of the Nigeria Economic Society (NES) Professor Adeola Adenikinju, in this interview with DAVID AGBA speaks on some factors fueling food inflation and other economic issues.
What is your take on the inflationary trend in Nigeria today?
You know inflation is a major macroeconomic challenge that we have in the country today. Nigeria’s inflation rate is one of the highest in Africa and the world and the new CBN governor has declared his policy objective as inflation targeting which is aiming to bring down inflation. So when you are very explicit in terms of what you want to do with regards to inflation it puts some constraints on you. Any time you have liquidity overhang what then happens is that you think that the best thing is to tighten your monetary policy either using cash reserve requirement and other monetary policy instruments. For confidence, consistency and credibility anytime there is increase in liquidity that is what he will do because he has constraint himself. So it is now a constraint policy environment. But basically when you look at the inflation in Nigeria it is important to also look at the causes of this inflation, what are the drivers of this trend and many Nigerians are of the opinion that food costs is the major cause of inflation in Nigeria. Food inflation is now about 36 per cent or there about. What that tells you is to look at the factors driving food inflation. You have insecurity; many of our farmers are in IDP camps instead of being in their farms, they are afraid to go to farms. They have to pay some protection fee to be able to go to their farms. We have many farmers in the middle belt, Northwest, North east regions being unable to go to their farms and these are the food producing parts of the country. We also have challenges coming from transportation, the price of fuel has gone up significantly and you have to move food from one point to the other. Our infrastructure are weak, we rely on the roads. But in other parts of the world they use multiple modes of transportation to move food items. Where necessary they use the sea or ocean which is very cheap, the waterways are there, the railway and roads. So you diversify them and look at the relative costs and other sources of transportation available.
Again the government has been talking about dredging the river Niger but that has not happened and water linkage across Nigeria has been extremely difficult and railway is still what the colonialists left with us so a whole lot of things will have to go through the roads which are bad and there are all kinds state agents on the roads collecting all types of fees and taxes all added to increased costs. By the time you add them together they’re cost pushing layers. These are not liquidity factors and fighting them with liquidity factors will be at a heavy cost to the economy.
The policy of the Central Bank in my view is also weakening the system at the end of the day. There should be a hand shake between monetary policy and the fiscal policy both of them can actually work together to tame this inflation.
The Nigerian Economic Society (NES) has come a long way, as the man at the helm of affairs how has it fared?
Well I’m the 44th President of the NSE, we have a very long history, it started in 1957 and standing on the shoulders of very prominent professional economists who has contributed to Nigeria’s economic development. Some have served in government directly some have served as advisers. We’ve had fellows who have served as Governors of Central Bank and others as minister, others in the academia and others have served as economic advisors and those who have headed various economic committees. Some have led the development committees, you know, some have worked on National Development Plans and so on.
So when I came in last year, I’ve been able to bring in some innovations to the society.
One, we have democratize the society now such that we have state branches in the 36 states of the federation; we also have those in the diaspora so that has enabled us increase the number of members.
One thing that we have been doing in Nigeria that I thought needed to change is that many at times our analysis are always focused on what the federal government is doing and all that. We analyse federal government policies, budgets and spending we don’t pay enough attention to the participation of states, we don’t have full understanding of the economies of the states.
So the state chapters have responsibilities to interrogate the economic activities in those states, interrogate government policies, analyse government budgets and so on and so forth. So that they would also be able to provide understanding for people at the grass root.
Also for the first time, we now have the women wing of the Nigeria Economic Society. For various reasons there are not many women in economics, I’m from the Economics Department of the University of Ibadan, we’ve had just one woman as head of department in almost 65 years of its existence in the university and may be three other women as members of the faculty. So the women wing is supposed to encourage women participation in the profession and in the society to also see how they can formally contribute to the society.
With respect to the students, I have a special assistant now who is in-charge of the students, the undergraduate and graduate students associations. The idea is that these students are the ones that will inherit what we are doing now, they are the future and it is very important that we guide them properly; we provide the leadership framework or guidance for them. We are helping in their capacity building. So one of the things we are also doing is to have this regular programme on capacity building that will address issues around methodology in some aspects of the philosophy of economics so that we can also deepen their knowledge and understanding of economics. So this year by the grace of God I’ll be getting some prominent economists who are abroad and some in Nigeria to once in a week have a virtual meeting, training and seminars that will in the capacity of the young academics who are going to be the future leaders of the society.
For now the society does not have a building of our own despite the number of years we’ve existed. But we have a piece of land that has been lying fallow for over 20 years now which we could not develop. One of the things I have done as president is we’ve signed an agreement with a developer and in the next two years we are going to build up the land. Am expecting us to lay the foundation for the multi-billion naira facility that will house a befitting headquarter for the NES.
For this year also we’ve inducted final year economic students as associate members.
Taking a holistic look at the Nigerian economy every sector sick, what do you think can be done to put the country on a developmental stride again?
Most economists will agree that when this government came in the economic situation of Nigeria was in dire strait and most people agreed that there is need for reforms. Some experts have advocated that Nigeria needs to do something about the exchange rate, fuel subsidy and all that.
There was unanimity on that. Reforms was necessary, at some point if you look at the data the amount we used to service our debts was almost equal to our current revenue. So reforms was important but it will be painful. But it is important to know how you manage reforms to ensure that you’re able to sequence it well, you’re able to phrase it appropriately and you’re able to deal with certain sectors and individuals that will be negatively impacted.
As I have said somewhere else, reforms is like you’re doing surgery, if you’re doing surgery there must be anesthesia that will mitigate the impact and the shocks on that reform. Unfortunately we’re doing reforms which are very painful with little palliatives to cushion the effects especially on the vulnerable in the society and when you’re doing that you are going to have a lot of pains and resistance to the reforms.
It actually makes it difficult for you to achieve fully the objectives of those reforms.
