A member of the Central Bank of Nigeria’s Monetary Policy Committee (MPC), Professor Murtala Sabo Sagagi, has said that the reforms and fiscal incentives of the government have failed to attract enough foreign direct investment (FDI) and that inflation may not moderate soon.
Sagagi who is also a CBN director also revealed that the demand for foreign exchange is increasing because of speculative activities.
The professor said these in his statement of the 297th MPC meeting which was released by the apex bank on Thursday.
In the September meeting, the MPC voted to raise the Monetary Policy Rate (MPR) by 50 basis points to 27.5 per cent.
However, inflation defied the raise as the National Bureau of Statistics said the Consumer Price Index (CPI) which measures inflation rose to 32.7 per cent in September.
In his statement, Sagagi pointed out what he described as “imminent threats to inflation and foreign exchange stability.”
The professor gave the threats to include, “Increase in petrol and energy prices in August and September even after the commencement of production by the Dangote refinery.
“Flooding in some food-producing states which may reverse the downward trend in food prices. Insecurity and the ongoing militarily actions to restore peace and security in some key food-producing locations.
“Availability of cash and possible credit lines to mope up food during harvest thereby creating artificial scarcity.
“Excessive money supply growth due to excessive liquidity in the system, massive fiscal injections and the high likelihood of large portion of the liquidity chasing foreign exchange.”
He further revealed how several incentives of the government and policies have failed to yield the desired results.
He said, “Fiscal incentives and investment promotion drives have not attracted significant Foreign Direct Investments into the economy.
“The demand for foreign exchange is increasing rapidly due to speculative activities, importation and seasonal demand.”
The professor’s FDI comment contradicts President Bola Tinubu’s controversial speech that $30bn FDI was attracted into the country following his reforms.
“The economy is undergoing the necessary reforms and retooling to serve us better and more sustainably. If we do not correct the fiscal misalignments that led to the current economic downturn, our country will face an uncertain future and the peril of unimaginable consequences.
“Thanks to the reforms, our country attracted foreign direct investments worth more than $30bn in the last year,” Tinubu said in his Independent Day speech.