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Nigerians should expect more inflation next year, says Emefiele, CBN boss



Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said that Nigeria’s inflation rate is expected to rise for the rest of this year till mid-2019.

According to him, despite this gloomy picture, the short-term outlook of the Nigerian economy remains good.

Emefiele, who disclosed this at the bankers’ dinner in Lagos on Friday in his speech entitled Strengthening the Economic Recovery Process in Nigeria, peered into his crystal ball and told Nigerians what to expect in 2019.


Global growth projections both for 2018 and 2019 have been revised downward to 3.7 percent from the 3.9 percent earlier projected. Growth momentum in US is projected to remain strong as fiscal stimulus continues into 2019. In emerging markets, growth forecasts are revised downward for Argentina, Brazil, Iran, Turkey, and South Africa reflecting country-specific factors, uncertainties in the financial conditions, and rising geopolitical tensions as well as higher oil import bills.

In light of the current developments in both the global and domestic economies, and based on extensive simulations, the Central Bank of Nigeria (CBN) is of the view that the short-term outlook of the Nigerian economy remains good:

“We expect that Monetary policy stance will remain judicious, research-driven, adequate and supportive of the real economy subject to underlying fundamentals. The current tight stance is expected to continue in the near-term, especially in view of rising inflation expectations and exchange market pressures. Though we will act to appropriately adjust the policy rate in line with unfolding conditions and outlooks, CBN will continue to ensure that the policy interest rate is delicately set to balance the objectives of price stability with output stabilisation.


With favourable oil price developments and continued efforts at driving indigenous production in high-impact real sector activities, especially agriculture and manufacturing, the Gross Domestic Product (GDP) is expected to pick-up in the remaining two quarters of 2018. This will be buoyed by the anticipated budgetary and electioneering spending in the near-term. From 1.5 per cent in quarter two (Q2) of 2018, growth is projected to quicken to 1.7 per cent in Q3 and 1.9 per cent by the fourth quarter.


Inflation expectations are rising on the backdrop of anticipated politically-related liquidity injections. For the rest of 2018 and towards mid-2019, Nigeria’s rate of inflation is projected to rise slightly to about 11.4 percent and then moderate thereafter.

Exchange rate

Though CBN has so far managed to maintain exchange rate stability, the current capital flow reversals from emerging markets is expected to continue to exert considerable pressure on market rates. This pressure could be amplified by the forthcoming elections, especially as the political marketplace heats up. Notwithstanding these pressures, CBN is determined to maintain its stable exchange policy stance over the next few months given the relatively high level of reserves. Gross stability is projected in the forex market given increased oil related inflows and contained import bill. I will like to make it categorically clear that ‘sustaining a stable exchange rate is of overriding importance to us even as we continue to put measures in place to shore up reserves’.

Balance of payments

Overall, our balance of payments is expected to remain positive in the short-term. Hoping that oil prices continue to recover, we expect the current account balance to strengthen even further. This will be supported by improved non-oil performance as diversification efforts begin to yield results to reduce undue imports.

Domestic production

Given the remarkable success that has been achieved in stimulating domestic production of goods such as rice, cassava and maize, as a result of the restrictions placed by CBN on access to forex for 41 items, CBN intends to vigorously ensure that this policy remains in place, and additional efforts would be made to block any attempts by unscrupulous parties (both individuals and corporates) that intend to find other avenues of accessing forex in order to import these items into Nigeria. CBN’s Economic Intelligence and Banking Supervision Departments will work very hard with the Economic and Financial Crimes Commission (EFCC) to expose and sanction any bank, company or forex operator that colludes with unscrupulous individuals/companies to undermine the policy on 41 items. Suchsanctions will include, but not limited to, prohibiting the banks from maintaining any bank accounts for such institutions or persons in Nigeria.

Given the global and domestic headwinds we face as a nation, and the volatility that is being experienced in the crude oil market, we have no other option, as leaders interested in the progress of our nation, but to work very hard to spur job creation by reviving agricultural and industrial activities in the country. If we continue to support the growth of smallholder farmers, as well as help to revive palm oil refineries, rice mills, cassava and tomato processing factories, you can only imagine the amount of wealth and jobs that will be created in the country. These could include new set of smallholder farmers that will be engaged in productive activities; new logistics companies that will transport raw materials to factories, and finished goods to the market; new storage centres that will be built to store locally produced goods; additional growth for our banks and financial institutions as they will be able to provide financial services to support these new businesses; and finally, the millions of Nigerians that will be employed in factories to support processing of goods. If we turn a blind eye to the opportunities that are

being created as a result of our policy on 41 items, we will be spelling doom for our nation. We can no longer afford to depend solely on imports given the size of our population, and the need to create jobs for our people. This is precisely the purpose behind our intention to restrict access to forex on 41 items, and I urge all stakeholders to come on board, as we intend to be vigorous in our pursuit of this objective.

Domestic credit

The bank will explore the possibility of leveraging technology to enhance credit to critical sectors of the economy, especially, agriculture and manufacturing. Our recently announced policy to refund portions of CRR to banks that are financing new projects (or expanding existing ones) in agriculture and manufacturing sectors will be intensified and enriched in the coming years. This, we believe, will bolster job creation while supporting our agenda to correct Nigeria’s imbalances and vulnerabilities.


I would like to conclude my remarks today with the story of a revered Mongolian warrior named Genghis Khan, who had a falcon that is exceptionally well-trained for hunting. In the snowy mountains of the countryside, the falcon would sit meekly on the warrior’s arm as he rode his horse; and would do everything that the warrior commands – even when no words were spoken. As hunting progressed, Khan would let the bird off, allowing it to circle a few times in the sky. Whenever the bird spotted a prey, it would dive straight down, capture the prey in its talons, and would remain there until its master’s arrival.

Khan loved this falcon so much and boasted lavishly about the bird’s loyalty and efficacy. According to him, the bird was a better hunting weapon than bows and arrows because it could see things from the skies that humans could not. On a certain day, however, the warrior and his entourage embarked on a hunt. While his party took with them bows and arrows, Khan had his favourite weapon: the falcon. On that day, however, despite the group’s best efforts, they found nothing. Khan was very disappointed and angry as the team returned home.

They had stayed in the forest longer than expected, and Khan was desperately tired and thirsty. Then, to his delight, he saw a thread of water flowing from a rock just in front of him. He took out a cup to fill and drink. Just as he was about to raise it to his lips, the falcon plucked the cup from his hands and spilled it. Once again, he filled the cup and the falcon spilled it a second time. Khan, now enraged by the intolerable disrespect, drew his sword, and for a third time refilled his cup. As the falcon again took flight towards him, Khan, with one thrust, killed it.

The trickling thread of water had, however, dried up by that time. When Khan climbed the rock in search of more water he saw that one of the most poisonous snakes lay dead in the pool.

If he had drunk the water, he too would have died. It was only then that Khan realised that the falcon’s actions had saved his life. Having impetuously and impatiently killed a genuinely loyal ally, a distraught and abjectly regretful Khan returned to camp with the dead falcon in his arms. He ordered a gold figurine of the bird to be fabricated with touching words engraved unto its wings. But it is too late; the falcon is dead. The damage is irreversible. A loyal and genuinely caring bird has been impatiently slayed.

This story culled from Paulo Coelho’s book titled, Like the Flowing River, underscores the folly of intolerance and impatience especially when we hastily judge certain actions or policies as unfavourable in the near-term without due consideration for their long-run merits. As I have reiterated in my earlier addresses, policy making and leadership is not a popularity contest. Many of us in this room understand that as leaders, we have to take seemingly unpopular decisions every now and again for the best outcomes.

Like the falcon, you must note that policymakers usually have a panoramic view of events given the enormous array of information and data at their disposal, some of which could be considered classified.

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