The Managing Director of BusinessDay Media Limited, Dr. Ogho Okiti has predicted that inflation rate may hit an unprecedented 20 percent high unless Federal government embarks on urgent economic reforms to strengthen the economy.
He said that no country becomes rich unless they have a value to offer at the international market and lamented that despite the increase at the price of oil at the international market, Nigeria cannot benefit from the high price of crude because its production capacity is getting depleted on daily bases.
Okiti made the disclosure on Wednesday in Abuja during the BusinessDay Breakfast Meeting with the theme: Creating Enabling Environment for Investment on Precious Metal which was sponsored by Dukia Gold and Lagos Commodity and Futures Exchange (LCFE).
The Media mogul in his presentation stated that he foresees economic growth remaining at 3percent for a long time while inflation will hit 20% before the end of the year. “We see an economic growth remaining at 3% because the policies required to drive growth is not happening. You need reforms and if you don’t do those reforms, the growth will not come.
“Inflation growth is 18.6 percent as we speak but we expect that it will reach 20% before the end of the year and the reason is that diesel, energy cost that drives the economy is going up not only in Nigeria but globally”.
According to him, “what is shaping inflation is currency devaluation, increase in PMS prices, rise in money supply. Since the start of this year, energy cost has been very high especially the cost of diesel.
“The exchange rate has been fairly stable in the official market. The central Bank does not give anybody forex anymore. FDI has virtually dried up, Nigerians don’t have confidence in the economy not to talk of foreigners. Even the people that make money here, they are taking it out.
“Investment is drying up in Nigeria and until those number go up, we can’t produce, we can’t consume and we can’t begin to reduce poverty.
“The only metrics every Central Bank governor watch is foreign reserve. Every decision they make on monitory measures whether it is interest rate, interbank, FX intervention, is tied to ensuring that the foreign reserve does not fall below the kind of level that we are seeing today. I can tell you that if it falls below this level, we will have a ‘Sri Lanka’.
He lamented that the economy of Nigeria on the other hand is tied to the price of crude at the international market adding that rise in the price of crude and shortage of supply will continue to weaken the naira.
“Our economy is still tied to the movement of oil prices, when oil prices do well, Nigeria economy do well and when oil prices don’t do well, Nigeria economy cannot really handle the shock of low oil prices. So if you look at the trajectory of oil prices and of course the GDP over the last period, you will see that they move in the same direction”.
He said that there is no consistent economic growth trajectory adding that Nigeria’s economy is very fragile and weak and marked by all kinds of economic diseases and has no buffer to reduce poverty and unemployment with so much economic uncertainty.
“Every disease you can actually think of is actually present in the Nigerian economy. One of the things that is dragging the growth back is oil. It does not really matter whether the price of oil is high or low, Nigeria is not simply producing enough to earn more. Nigeria is no longer the highest producer of oil, Angola has taken over now. Whichever way you want to look at it, someone said that it is stolen or we lack capacity, the bottom line is that Nigeria is not producing enough. We are losing money, we are losing income, unemployment is going up, poverty rising, uncertainty in the economy, insecurity getting worse.
“Until we begin to deal with some of these root causes we shall continue to have divergence of what is happening in the global economy even when it is positive. So in a space of three years, we have seen a dramatic reduction in Nigeria’s oil production” he said.
Okiti explained that even as some economies are already making strong post COVID rebound, Nigeria may not experience significant economic growth because those sectors experiencing growth like telecoms, banking sector, hospitality industry and so on are not tradable.
He said, “With this kind of growth, Nigeria is going nowhere because if you look at all the sectors recording growth, you will observe that they are not tradable. The services they are engaged in, they are not selling it to the world, they are selling it to us. Some of them even require dollar input for them to grow”.
He lamented that those that were supposed to boost the economy like manufacturing, mining, financial insurance, quarry, oil and gas have all contrapted hence the weak growth of the economy and dramatic unemployment in the country.
Also in his address, Minister of Mines and Steel Development, Arc. Olamilekan Adegbite who was represented by Ojeka Patrick, Director Artisanal and Small Scale Mining Department said that the Ministry is proud of the inroads made by Dukia Gold in the mining sector by delving into the arena of precious metal which was remained in doldrums for years.
He said, “Nigeria as a nation, we are disadvantaged by the fact that refining gold globally is run by a ‘cartel group’ whereby if you are not registered or accredited by those organs, then your product no matter how refined, will not be recognized. We are constrained by that and that is why most materials are being taking out of the country.”
Also in his Presentation, the Director General of Securities and Exchange Commission, Lamido Yuguda represented by Dr. Suleiman Mohammed added that solid mineral has the capacity to create millions of jobs in the country. He said that commodity trading can fast track the solid mineral space and ensure transparent exploration, check shoddy practices and become a major revenue earner for the county.
Akin Akeredolu, who is the Managing Director of Lagos Commodities and Futures Exchange who spoke on Investing in SEC Approved Investment Precious Metal in a Regulated Market Space: A case study of Dukia Gold expressed excitement that Dukia Gold was able to surmount all obstacle and became one of the pioneer companies with the requisite license to trade gold at the exchange in accordance with international regulations.
Some of the regulators and financial experts that attend ended the event include: Minister of Power Babatunde Fashola who was represented by Engr. Farouk Yasuf, Mr. Tunde Fagbemi Chairman Dukia Gold, Emomotimi Agama, Managing Director Nigeria Capital Market Institute, Barr. Shehu Kuta who represented the Chairman Investment and Securities Tribunal and many others.
