 Well, back with the breakfast and plus TV Africa, well, a bit of a background to our conversation this morning. The central bank of Nigeria, that's the CBN, has raised the interest rate to 17.5% from 16.5% to tame rising inflation. The Monetary Policy Committee, that's the MPC of the Apex Bank, announced the decision on, I mean, at the end of its recent monetary policy committee meeting, where the CBN Governor, Godwin Mephili, chaired the meeting. According to him, the MPC noted that although the inflation rate moderated marginally in December, the economy remained confronted with reeks of high inflation with adverse consequence on the general standard of living. Now, one member voted to increase the Monetary Policy Empire by 150 basis point, four members by 50 basis point, and seven members by 100 basis point. Well, in summary, the MPC voted to raise the NPR to 17.5%. In addition, the committee also voted to retain the cash reserve ratio at 32.5% and keep the liquidity ratio at 30%. Joining us this morning to discuss these and make sense is Frank Iliaya, editor of Business Day. It's good to have you join us this morning, Frank. Yes, good morning. It's a pleasure to be here. Thank you so much. All right. So quickly, let me share your thoughts on what you make of this development. I mean, the decision of the MPC Committee increasing this, this is the highest, you know, 21 years now from 2001 when we had 20.5% increase. What are your thoughts? Essentially, what we are seeing is an attempt by the CBN to reining inflation that has affected the economy massively. Every sector of the economy has been affected and for some reason towards the tail end of this administration, the government appears to be aggressive in trying to do something about the inflation. So what we're seeing is it's top balancing act to see how they can bring down the surge in inflation, which is at 21%. Actually, it dropped last month and then maybe what I was expecting it to drop in February, but that's a prediction anyway. And it's based on the policies, the latest policies that the CBN has issued as, for example, they redesigned and other policies, the hospital policies as well. So this is also part of it to ensure that inflation comes down. But on the other hand, what I'm also thinking is that it's not taking into consideration the impact on businesses generally, because if you're raising the interest rate, what you're in essence saying that businesses will have to find other means to get loans, to get credit, because increase means that banks are going to also increase the rate at which they lend to businesses. The actual lending rates right now, from the 16% that it was before, is that 30%. Some banks are lending up at 30%. Now if you're increasing it to 17%, what that means is that some banks are going to increase also the actual lending rate that they give, which might now go to maybe about 30%. And that's not good for businesses. So I think it's a missed signal somehow if you look at it. I would have also expected that if you're increasing the interest rates, you also do something about the Treasury view rates and also the bond rates, which has gone down from about 40% to 80% now. So what that would have done is that if you're taking out money from the system, you're also giving an incentive for people to bring in money to the system. That's how somehow you tend to buy assets. But what are your thoughts on the invest action or the increase in the rates by our business point, despite the dip in the rate of inflation in the country, moving from 21.47%, like you earlier said, to 21.34% in November, according to national bureau of statistics, does this dip in inflation, which is a fest in a long time, maybe in about 11 months, should this have led to maybe a maintenance of the former interest rate or even a reduction? Or you think it maybe should have even been increased to consolidate on the gains recorded in November? So there are two things. First of all, what are analysts were expecting was a hope because of the impact of inflation on the market already. So people were expecting that the CBN will likely host, but they didn't do that. And what that means now is, like I said before, that businesses are going to be a lot, there's going to be a lot more pressure on businesses. And what I think is that inflation dip in last month wasn't necessarily a result of, wasn't 100% the result of the policy that the CBN brought into place. It's also a matter of the market situation, what's happening at the global market space. So oil dip down, and the exchange rate also impacted. So not necessarily that we are addressing the fundamentals. The fundamentals are being the cost of production. You want to address the problem from the roots, and not just from the middle or from the top. You want to go down to the roots and act yourself. What exactly led us to this place where we are? It is a function of not having electricity available for businesses. It is a function of not having adequate infrastructure that businesses can leverage. It is a function of not having sufficient funding for businesses. So it is a function of different things that are brought to the system. It is a function of the high cost of governance that we are running. It is a function of the dysfunction in the political system. It is a function of not having the kind of leadership that is proactive enough to take the kind of steps that create the enabling environment that businesses need to try. The MPC can do all of this. The CBN can bring in their hands. Yes. I like us to also look at the reason why the MPC decided to increase the interest rate. Now, some of it was that they made mention to the factors responsible for inflation. They talked about energy, petrol, scarcity, election-related spending, and what have you. But these are some of the factors that are triggering the increase. For food inflation, we know that that is a different conversation entirely. But my question is, which of this problem will the higher interest rate, that 17.5% address, will it address the issue of energy, election-related spending, which of these issues would this interest rate address? Maybe inflation, marginally inflation, like I said, if you want to bring down inflation drastically, you need to address the fundamentals. You need to address the things that actually led on this. So I'm not sure you got my question. I'm saying that the factors for, I mean the reason why the MPC arrived at this decision of increasing the rate, 17.5%, is because of the triggers that they have identified. They have mentioned some of these factors that are responsible for the increase of inflation, the high rate of inflation, if you like to put. They've mentioned the issue of electricity, petrol, scarcity, I mean all of that, election-spending, all the issues. So my question is now that which of these problems will the interest rate address, or can it address? That's what I'm saying. I don't think this interest rate will address so much of it. It would just like scratch the surface. It's not really dealing directly to the root of the problem. Let's look at oil, for instance. Why are we not meeting the OPEC quota, which is that we're 1.8 million upwards. We have come out, we've got the government tell us that they're going to increase it. But currently what we are producing is at 1.2 million barrels per day, between 1.2 million barrels to 1.3 million barrels. So what exactly is responsible for that? We have been told is oil taxed, and just recently we've seen the government sort of make some effort trying to curb these oil tax, all right? But then you and I know that oil tax is a function of, as an individual ask the most of your oil, this is a systemic problem. This is people that are out there who know what they're doing. So if suddenly they're starting to repent and stop spilling oil and they're no longer collaborating maybe with these big agencies, then maybe somehow we might keep oil production go up, all right? But then interest rates are increasing it. What the CPN is trying to do is try to hit at inflation. They're trying to hit at inflation, bring down inflation. Well, like I said, you cannot bring down inflation just by increasing interest rate. First of all, you have not done anything about the Treasury bill, which is going down. It has fallen down to 8% from 40%. All right? So it would have been interesting if they had said, okay, we are increasing interest rates, and then also we are also increasing the Treasury bills. What that does is that investors will say, okay, the rate for lending is high, but also there is an incentive for us to invest in that economy, which is the Treasury bills. They can go up that route. Many people want to bring in money, but where would they put that money into? There is an election coming in that is on Saturday. So what you could have done, the low-hanging fruit there could have just been give them a higher Treasury bill rate. If you give them a higher Treasury bill rate, immediately you start seeing money coming in, because right now, not a lot of investors are very interested in maybe bringing money into any of the sectors right now because they are seeing uncertainty. You have not addressed issue of security, which is holding farmers from going to their farms. You have not addressed issue of power, which is stopping manufacturers from doing or from producing at the maximum. Okay? So there's a lot of things that are yet to be addressed, and those things are the things I call the fundamentals. If you just increase interest rates, again, you have impacted small businesses, which will now hesitate or which will now even drag their feet more to go to the banks to collect money. So you haven't been to banks a lot of favors right now. There have not been a ton of favors, because they would have loved to lend so that they will make more money. But at the rate where it is now, many people will not easily want to go there. And what you're going to see also is that so many loans will be re-evaluated because there's a high interest rate in town, all right? And that will impact the businesses that collected it. So somehow it is trying to address inflation, but I don't think it has totally done that. There's also the issue of CRR that has the credit ratio, which is still high at 32%. You don't need to bring this down. You need to bring it down so that banks will have a lot more money to lend to businesses. So those are things that I would have, I say this as a mis-signal, because there's a lot of mis-signals and it's still not clear. I think that's it. Investors are looking for clarity. You need to bring in that clarity, even though you're showing like you're giving them a top, as there's a top tightening that is happening. And if you're doing tightening, I was to suggest that you do tighten in governance. Start cutting down the cost of governance. That's part of tightening. It's not just about raising interest rate and mopping up the money in the system, but start tightening up cost of governance. That also will help tremendously. All right. Frank, Elayah, thank you so much for your time and expert analysis. As always, we look forward to having you again on the breakfast. Thank you so much. Interesting. Interesting, Frank. Elayah is an editor with a Business Day Nigeria's leading financial publication. And that's the size of a package. This has been quite an interesting one today, moving from a concessional review or amendment to the economy or the economics of interest rates. We look forward to having our viewers join us tomorrow for another interesting edition of the breakfast. Well, that's the size of it this morning. If you missed out on any part of it, we'll be great to follow us on Facebook, Twitter, and Instagram. And do subscribe to our YouTube channel at Plus TV Africa and Plus TV Africa Lifestyle. My name is Massey Book. We'll have yourself a great morning.