 Now the Monetary Policy Committee NPC could bite the bullet next week when it reconvins and adjusts the policy rate for the full style since September 2020 as resurgent inflation concerns an interest rate hike across the world put Nigeria in a difficult position. According to the Consumer Prize Index for April released by the National Bureau of Statistics, the headline inflation rate has climbed to 16.8% the highest in eight months. Now the soaring inflation rate driven by fuel price increases and accelerating costs for food including bread and cereals rose to 18.4% from 17.2% in March. The jump in fuel and food items is driven by global supply disruptions following Russia's invasion of Ukraine analysts have equally pointed out. Now the state of the economy in the wake of high inflation and aviation fuel hike is our focus for today. Welcome to Business Insight and Plus TV Africa. I am Justin Akadone. Aside from the rise in inflation in the country, here is a highlight of other stories which made headlines in business Nigeria this week. The umbrella body of local carriers, airline operators of Nigeria AON said biting aviation fuel scarcity would trigger disruptions to shadow travels resulting in rescheduling, delays and cancellations. The association and its members are working and in alliance with product marketers, government and relevant stakeholders to ensure availability and proper pricing of aviation fuel. The operators also promise to do all that is necessary and within their powers to restore normal flight shuttles as soon as possible. The Nigerian Port Authority, NPA says it is dissatisfied with the operations of the barge operators operating on the nation's inland waterways. In an interactive session with journalists, the Authorities Managing Director Mohammed Belokoko said NPA will be introducing new requirements for the shipping service providers, saying those who fail to meet the new requirements may have their licenses revoked. Belokoko said the authority had noticed some of the barges sinking, containers falling off at birth, some bruising versus discharging at birth, a development he said was not acceptable. The Nigerian Electricity Regulatory Commission has clarified that reviews do not automatically translate into an increase in electricity tariffs. The electricity market regulator made this known in a statement titled, Notes of Compliance in Respect of the By-Annual Review of the Revenue Requirement of Linesenses Published. According to the NERC, where the impact of improved efficiency in operating parameters for individual licenses exceeded the impact of changes in macroeconomic parameters, end users might be reduced as exhibited in some tariff classes under the multi-year tariff order, MYTO 2022. The clarification came following backlashes that greeted recent reports of an increase in tariffs by the electricity distribution company's discourse. The Nigeria Custom Service has concluded plans to redeploy the suspended electronic valuation policy for imported vehicles. The policy, also known as vehicle inspection number, has been generating controversy since its introduction some months back. Clearing agents and other maritime stakeholders had staged protests in the wake of the introduction of the evaluation policy, a development that forced the government to suspend its implementation. Among other things, clearing agents claimed that the evaluation system came with a sharp increase in duty paid on imported vehicles. Welcome back. Food inflation rose to 18.37% in the review month, an increase compared to 17.2%, recorded in the preceding month. This rise in the food index was caused by the increases in the price of bread and cereals, food products, potatoes, yam and other tubers, wine, fish, meat and ores. Also domestic airlines under the age of airline operators of Nigeria are saying that rising operational costs occasioned by aviation fuel price hikes for an exchange shortage, among others, may push the base economy flight ticket to 100,000 Naira. Now financial analyst Shago Shobritur joins us now to make some sense out of all of this. Thank you, Shago, for joining us on the show. Thank you for having me, Joplin. It was a pleasure. All right, Shago, what do we have in our hands? This increase in inflation rate, the highest in eight months, what do we see happening in the next coming weeks and months? Unfortunately, for the foreseeable future going into the next few months, probably heading towards the end of the year, the direction of inflation is likely to be upwards. And this is because there are a number of factors that will be driving inflation, cost-push side, as well as money supply side. So for what has happened, what has driven us to this point so far has almost singularly been, I say almost, because it's not just that, but that's a major part of it. It's the crisis between Russia and Ukraine, and as you have already said, and the disruption to the supply chain, supply and logistic chain across the world, the delays in supply that this and therefore which create supply gaps that will drive this upwards. This is not going to go away anytime soon from, if we're to read from what has been happening between Russia and Ukraine and the direction that that crisis seems to be in. If anything, it looks at it, we're in this for the long haul. So now, bearing in mind that Russia and Ukraine are two of the largest suppliers of some of the basic grain that a lot of the world depends on, it is not surprising that you've seen food prices really, really escalating. And it's also important to say that this is not just a Nigeria thing. Inflation is at the highest level in 14 years in the UK, and the highest in the very, the highest in the very long time, even in the US. Because the entire world relies on that for a lot of the components of our food, food basket. And then when you combine that with the fact that in Nigeria, we're currently heading into the political electionary campaign season, where we're going to see a lot of money flowing around, you know, in the system, where there's going to be a lot of services being purchased by these politicians, and a lot of demand for some basic services, printing services, food, you know, logistic services will be in high demand. Privates will also go up. So it looks as if, you know, this is when may now this inflationary cost is for the month of April. By the time you get the inflationary cost for the month of May and June and July, the impact of Ukraine and Russia will still be there. And then as you head towards the end of the year, regardless of what happens with Russia and Ukraine, the political electionary measure factor will then kick in. So the badness is prices are going to keep going up, unfortunately. All right, Shagoud, the Monetary Policy Committee should be meeting sometime next week. What do you see happening in terms of the MPR? Do you think it will actually be increased just like interest rates? Unfortunately, I don't think they will increase. I don't think they have the courage. I don't think they have the courage to take that decision. It's a difficult decision because, you know, the basic, the fundamental support behind the MPR is to increase the MPR. We are going to stifle money supply, which is stifle access to credit, which is stifle growth. Now we have gotten to a point since we met from the most recent recession where we can say that the economy is beginning to grow. You know, so we had some very high, well relatively high levels of growth. Last quarter, I think the Q2, Q3 last year and Q4. But by Q4, what we were seeing in the growth numbers were, in my view, more reflective of the reality, which is that, yes, the economy is growing, but it hasn't been growing as fast as the Q2 and Q3 numbers that have indicated. So now, that growth that we're beginning to see, that is still modest, the sale of the central bank and the monetary policy committee, will be that if they increase the MPR, that growth might impede us. And we may either split back into recession or that the growth will stifle significantly. So I don't think they're going to do anything. I think they're going to hold. But, you know, for me, I think that if you want to strike a good balance between growth and inflation, knowing that the damage that inflation itself can also do, even to the prospect of growth, right now, I would advise, you know, the monetary policy committee to actually increase MPR, maybe slightly, just to try and temper the effect of inflation in the system. But if you don't, then you continue to see a situation where the disposable income of Nigerians is going to keep getting eroded. And of course, where disposable income is getting eroded, then capacity to spend is reducing, which would then have said the manufacturing and productive sector. And therefore, you will still push them into a lack of growth anyway. So it's almost a pattern to do. If you increase MPR, the stifle growth. If you don't increase MPR, inflation will help the stifle growth. So it's a difficult question, but I would say increase it. All right. It is actually a dicey one for the MPC that is. But let's talk about the implication of all of this now, the volatility of price on essential commodities. What would it really tell or translate to the household real income and, of course, expenditure at this particular time? Sorry, I didn't get your question. Looking at the price volatility of essential commodities over time with all that is going on in Russia and indeed the world, what would it really translate to the household real income and expenditure? Yes. So the way to the average man on the street, to the average Nigerian, and you talk about inflation, it's a monetary policy statistic. Let me call it a policy statistic. They're just trying to track what is happening with prices and all that, and then they will guide the decision making of the policy makers and what are the, but to the average man on the street, inflation is simply about how much the money in his pocket can buy per time. And what we have experienced in the last year have been nothing short of catastrophic, you know, to the average man on the street. So when you talk about the disposable income, family income, so expenditure capacity to spend money, majority of the items that the average family survives on, majority, if not all, have either doubled in price or put in double the price that they were a year ago. And so you can pick any item, this bread you want to talk about, these are basic things that people eat every day. This bread, this garlic, you know, this rice, milk, eggs, you know, just a year ago you were buying one single egg at 30 naira, 40 naira, you know, then it became 50. Now it's 100 naira, egg, one egg, 100 naira. You know, so it's getting to a point where we may be approaching a breaking point where you hit in the elasticity, you know, of the consumer and of their capacity, and something might just break. You know, I hope we will not get to a point where you have bread dryers. I don't know, you know, Nigerians are not very simple, but they have bread rise in Nigeria. Yeah, actually, given the recent experiences we have had with protest and all that, but you know, you never can say if things get really bad, people might hit the streets because it's getting really difficult for people to survive. All right, Tegu, before we leave this issue of commodity, let's talk about the energy sector. Internationally now, you know, the price of crude and translated down to the nation's economy, how do we play in all of this in the next couple of months? In which, in which aspect? Energy oil, yeah. Ah, good. So that presents another, how would you put it, paradox, you know, because here we are as an oil producing nation that should be benefited from the recent increase in the international price of food. For this stage, what we are witnessing is, first of all, because of this increase in the international price of food driven by the instability created by Russia and Ukraine again, the price, the price of refined petroleum products have either gone up for the ones that are not regulated or the sources they were paying have increased for the ones that are regulated, that's PMS. So aviation gets here, has gone up, diesel has doubled, aviation gets well also doubled, you know, so if you say aviation gets well, it's used by the rich and all that, but you know what, there's a trickle down effect, because the people that are using this service also provide services to the people that you may not call rich. So if, you know, they are paying double what they used to pay for airfare now, they're going to transfer those costs somehow to the consumer and, you know, the same for people that use diesel to power their factories and all of that. So, meanwhile, the benefits of the increase in the price of food internationally that should accrue to the country because of our same mono products based for the economy, we're not getting that benefit. Our foreign reserves have not increased, the government revenues, we have not seen any increase, we have not seen increase in factory locations, for example, so you begin to wonder where is this money? What exactly is going on? On the one hand, we're suffering an increase in prices, we're suffering inflation because oil prices have gone up. On the other hand, revenues are not going up. So there's some sort of very strange economics going on right now in this country that somebody needs to explain to the average Nigerian, you know, so it's all a very strange situation we find ourselves. And for me, you can only put it down at the two steps of a policy failure, a failure in government. All right, Shagu, just before we just leave off on this conversation, let's talk about one thing that you mentioned in person, which is the aviation sector. And from what we here operators are actually saying that it may get to, as well as passing just paying 100,000 for domestic flight. How did we get here? What can we do to just a swim out of this troubled waters? Well, I mean, very clearly, like a lot of the other sectors of the Nigerian economy, there's a lot of imbalance within the aviation sector. But obviously, the fundamental driving factor for this increase and the cost of airfare is the price of, you know, one of their most fundamental increase, which is to fuel the planes themselves, you know. So with this continuing increase, the airlines who in any case have been a sector that has trouble traditionally in this country, the aviation sector has never really been stable. And you can look at the very checkered history over the last 20, maybe 25 years, and you find that attrition rate is very high. If you take a stock of the airlines we had in, let's say, 1999, and take a stock of the airlines we have now, very, very few have survived, very few. Majority of the airlines you have to be are new. So I guess because this is a TV show, I don't want to mention specific brands, but you look at those airlines that you had almost none exist to be with the exception of the few. So this is a sector that has struggled with a lot of internal structural problems within that sector, you know, lack of transparency, lack of capacity, lack of adequate funding, lack of availability of revenue, the market, because the fundamentals within the economy do not encourage, you know, the flying habit. It's not something that is available to the majority of the people. So this sector is struggling from these things. They're not making enough money. Most of them run in losses. And then we now add this new variable of the cost of their primary inputs, doubling and almost approaching the position of where my people chip. The signs are very clear. It's either they go under or they increase their airfare. So the price for now is probably going to go higher and get worse. And only the high party to probably be able to afford it. Just suppose that with the situation in the country, then we get to wonder what impact this will have on the economy. All right. So maybe the only bright, the only lining in the air might be the fact that well, the remote work culture has been enhanced significantly as a result of recent lockdowns. And maybe that will mitigate some of the economic impact of all of this to a certain degree. But you know, it means to be seen how, how severe it is for the economy. All right. Thank you so much. I'm Shagwon. We've been speaking with Shagwon, Shagwon Shugbeto, a financial analyst. Thanks for all the thoughts that you have shared on business insights for today. Thank you. Have a good day. You too, Shagwon. As we round off, Chief Executive Officers of Businesses in Nigeria have been encouraged to engage and commit to grow a sense of thin innovation in Africa. These came up on the sidelines of CEO's breakfast round table hosted by the United Nations Global Impact Network, Nigeria, in Lagos. We'll bring you details in the next reports. But that's the size of the show for this week. I am Justin Kadone. See you again next time. Although it was a breakfast round table for the Assistant Secretary General of the United Nations Global Compact, CEO's from the private sector in Lagos converged this whole to collaborate on the sustainability of the continent. The United Nations Global Africa Strategy 2021-2023 is a proposed roadmap to accelerate corporate sustainability and champions the business sector's contribution to sustainable development in the continent. In this panel session, the narrative of the sustainable development goals takes centre stage, including gender equity, decent work and economic growth and climate action, among others. By adopting sustainability, we were able to bring a very attractive value proposition to the oil and gas sector. Essentially, we halved the cost for logistic support and we enabled projects which have never been done in Nigeria before to be done in Nigeria. I think that within the business community there's a very clear understanding that this is not just perhaps the right thing to do, but it is the absolutely commercial thing to do. We believe that empowering women is pivotal to the shared success that we all strive to achieve because the role women play in the empowerment of the family, the homes and even the individuals cannot be wished away. Resident coordinator of the United Nations as well as other top echelon of the Global Compact throw more light on the essence of the sessions as they affect the private sector and even young people. Opportunities for young people to have to work with companies. So the idea is by giving them exposure to to working in the private sector they become more attractive as part of the future labour force. It's more about how can private sectors speak as one voice, you know, to and bring all the businesses together, partnerships. It's going to be very important what the brilliant organisations and bodies here that are already delivering on the SDG. We want to unite the Africa and indeed Nigeria private sector to be able to help to work with governments in ensuring that the sustainable development goals have impact. Oh, the take home message is sustainable business is the future. It's no longer business as usual. CEOs now understand that they need to operate responsibly, embed the 10 principles of the UN Global Compact, take actions to promote human rights in their business, ensure decent work in their operations, protect the environment where they live in. The discussion also focused on identifying prevalent barriers and key actions to achieve the ambitions of the Africa strategy.