 This is the breakfast and plus CV Africa, many thanks for staying with us this morning. We had straight to our first major conversation. We look at inflation in Nigeria and what it means for the Nigerian economy. However, the National Bureau of Statistics says Nigeria's inflation rate rose from 20.77% in September 2022 to 21.09% in October 2022 amid soaring food prices. The Bureau also mentioned that the food inflation was 23.72% in October from 23.34% in September 2022, according to the MBS in its Consumer Price Index report for October 2022. The CPI measures the rate of change in prices of goods and services. On a month-on-month basis, the headline inflation rate for October 2022 was 1.24%. This was 0.11% lower than the rates recorded in September 2022. It was also stated that in October 2022, the general price level for the headline inflation rate, that's on month-on-month basis, declined by 0.11%, that's part of the report. Now joining us to make sense of all of this is Moodo Yusuf, CEO-Center for the promotion of private enterprise right here. He's also the former DG Lagos Chamber of Commerce. Thank you so much for joining us, Dr. Yusuf. What could be responsible for the increase in the year-on-year index in terms of inflation? Well, this has been the trend over the last couple of months. We have seen an uptrend in inflation numbers. And this is not only domestic, even globally. I mean, there has been this wave of surging prices. But I mean, coming home, quite a number of factors have been responsible for the high inflation rates, which have been consistent, at least in the past few months. The first is the foreign exchange rate depreciation. There is a very strong correlation between the NARA exchange rates and the rate of inflation. The past-true effect is very strong, and it's because of the level of import dependence of the Nigerian economy. And in any case, across all sectors, even for productions that take place domestically, there are varying degrees of imports, imported inputs that are used. So to that extent, each time there is a major depreciation in the exchange rates, this is often reflected almost on a linear basis, sharp positive correlation in terms of the increase in prices with this inflation. So the exchange rate situation is a major issue, even though we have some stability in the official window, which they call the early window. In the parallel markets, the window is a completely different story. We have been seeing very serious issues within the precession. We have been seeing issues with the liquidity in the foreign exchange markets. We have been seeing issues around the volatility in the foreign exchange markets. So the combination of all these factors in the forex space has been driving inflation significantly. The second factor is the factor of energy. Energy cost has become extremely expensive. There has been rising sharply over the last couple of months, and most of the activities, very starting from production, because of the quality of performance in the public parts supply, a lot of businesses still depend on diesel for production and even for their services, and there we have seen almost 100% or 200% increase in the price of diesel over the last one year. So this has a very serious impact on production costs. Then there is the impact of the diesel cost also on transportation and logistics. Most of the trucks that move things around in the country, and don't forget, almost 90% or more of the movement of goods around the country is done by road. So the sharp increase in the price of diesel has affected the transportation costs, because most of these trucks are running on diesel, except for the smaller ones. So movement of raw materials, finished products, high-cultural products, all of these things have been impacted significantly by the high cost of diesel. So this also has a very strong pastime effect on inflation. Then we have the issue of insecurity, which has been affecting high-cultural production. Most of the agricultural and agricultural producing communities have been severely affected by the problem of insecurity. Many of the farmers have been displaced, many of them are in IDP camps. So production, from the point of view of agricultural activities, has dropped significantly. And close to 50 or 70% of the food that we eat in this country are produced locally. So once you have a shortfall in supply, it normally affects inflation. They will have the challenge of climate change, just the final one. We saw what has happened to flooding, although this may manifest in the November inflation numbers. But before then, we have a serious problem of desertification, not desert encroachment which has been affecting high-cultural productivity as well. So these are some of the factors that have been driving inflation. So I will come back to that particular conversation. But let's also look at what 21.09% means inflation rate for the Nigerian economy. Now what it means is that, when we talk about 21.09%, headline inflation, what it means is that between now and a year ago, prices have increased by 21.09%. That is what it means. In other words, if we bought something, if something cost maybe a million Naira, maybe a year ago, this time around it is costing 1.209 million Naira. So that means there has been an increase of 21.09% over the last one year. That is what it means in layman's language. So but the reality is completely different. The reality is that when you compare prices now with what they were a year ago, it's much more than this 21%, particularly for the average Nigerian. When they look at what they consume, I mean, in many cases, prices have gone up between 50% to 100%. So the computation by the NBS combines a whole number of products within the basket. That is why it's looking not as bad as the reality is. But if we talk to the average Nigerian or to the average SNES to compare the prices of boost today with the price of boost a year ago, certainly the increase is more than 21%. So but let's get to my other question now. The rise in food inflation rate was cost by, according to the report, the prices of bread and cereals and food products, potatoes. You have a yam and other tubers, oil and fat. That's it. But you have also mentioned that we produce whatever it is that we eat. So what we're really experiencing, if we produce what we consume, then why do we have that inflation rate? And secondly, are there interventions in the agricultural sector that government can actually delve into so we can solve the problem? Because I'm almost confused. If we're producing all that we're consuming, then how come we're experiencing all of this because that's the report? Well, bread and some of these noodles and things, they are staple foods. So and because of the import content of these staple foods, you know, for bread, we import a flour. And we all know what is happening with Russia, Ukraine and all of that. That is a bird from where the bulk of the exports of wheat, because it's from wheat that we generate the flour is from flour that you produce bread. So there is a connection between what is happening in Ukraine and Russia. You know, to the price of bread, which is true. But the point I was making is that when you look at the totality of the basket of goods that we consume in this country, close to 80 percent, the 270 to 80 percent are produced. And you know, even in this report that you just mentioned, they mentioned yam, they mentioned tubers and, you know, from all these cassava and things that you produce, you have beans, you have tomatoes, you have maids. You have all sorts of things that are produced locally. And across all the segment of produce, because of the factors that I mentioned, particularly insecurity, cost of transportation, those factors are affecting even locally produced, the locally produced goods. So there are issues of the impact of transportation on the costs. There's also the issue of the impact of insecurity on total output. So that is the connection. There's no contradiction at all. They are very consistent. So when you have these two factors, of course, it creates very serious challenges in terms of prices. And of course, you know what it is. You also go to the market. Even many things that are produced, I mean, over the last one year, many of those prices have doubled. And if there is anything that is hurting the average man the most today, it is inflation. Because it's making people poorer. It's eroding their purchasing power. It's giving to the collapse of what you call the real income of people. And nominal incomes are not increasing. So it is putting a lot of citizens on edge. So inflation is really a very, very serious thing. And I expect that the government should be responding more seriously to this challenge. Although I must admit, only recently, although it's a bit belated, the presidential committee on inflation to look at how we can bring down food prices. But I mean, these things are coming late in the day. The cities have been crying about this for over a year now. So that is the situation. As to what needs to be done, what needs to be done, we have to take it from the causes, the drivers of this thing. If you want to solve a problem, you identify the causes of the problem, then you walk back to see how you can tackle those causes. The first problem I mentioned was the issue of the foreign exchange. We need to look at what you can do to strengthen our exchange rates, to stabilize the currency. And some of the things you can do, first, is to address the policy issue around the foreign exchange environments. You cannot have a foreign exchange environment. We as Ndikuwa are getting foreign exchange at 435. But as I get it at 750 or 800, that's a major distortion in the system. And that's also very peculiar to the agricultural sector. I understand that the economy is encompassing. But we're looking at this now in terms of food production. And so I'd like to get clarity that that's also a major issue for the agriculture sector if we're looking at interventions now. Of course it has. The exchange rate has a systemic effect. When I say systemic, something that affects every sector of the economy, including agriculture. I mean, the equipment you use, the tractors you use, they are imported. The agrochemicals that you use, they are imported. A major portion of the fertilizer that you use on the farms are imported. The transportation cost, which is impacted by the cost of this affects agriculture. So it's a systemic thing. It affects just an economy-wide effect. So stabilizing the exchange rate is key. And just as I was saying, we look at the policy issue around all the distortions in the foreign exchange market. This is within the purview of the central bank to do. We cannot afford this huge disparity between the official window and the pilot market window. It's all good for the economy. The second thing that needs to be done is to address the issue of energy costs. You know, the cost of this route. Two things can be done. First, to see how we can stabilize the public power supply. You know, we have been having issues with this collapse of national grid and all of that. You know, if you can stabilize that, a lot more manufacturers and service providers can be relying more on public power supply and less on diesel. That is one. The second thing that needs to be done with Minobi immediate is to ensure that we get our refineries to work. Because the cost of diesel is so high because we are dependent almost entirely on the partition of petrol and prudence. That's why it's so expensive. But Dr. Yusef, the highest increase in the core basket was recorded in the prices of gas liquefied fuel, passengers' transport, of course, by air solid fuel and vehicle spare parts. So now that you're talking about petrol and my concern is that do you think that we should be revisiting the issue of subsidy and other intervention in the downstream sector? Those ones are important. They are very critical and they are very fundamental issue of subsidy. But what is most important now is to even get our refineries to work. If we have four refineries and for almost four, five years, these refineries are not in production. It has nothing to do with subsidy. It's about discipline in governance to ensure that these things work. The government is paying salaries for people. You know, we have all sorts of directors, deputy directors, general managers. We have seen a lot of turnaround maintenance on these refineries. This has nothing to do with it. This has nothing to do directly with subsidy. It's a management problem. It's a governance problem. So if we are able to do that, that may help us to stabilize the energy environment and even enhance energy security. Then if we are also lucky that at least dangote refineries comes on slim, only enough that we also help to moderate the pressure of importation of these petroleum products. You know, so from the energy point of view, these are some of the steps that can be taken. First, by the normal electricity supply, let's stabilize that and the cost of diesel, also of evasion fuel, kerosene and all of that, if we are able to domesticate production, that will help. Then in security, of course, the government has been doing its best to fix it so that many of our farmers that are in the IDP camps can go back from, you know, that also will help. Then you need to also, you know, adopt a lot more technology in agricultural production. Even many of these farmers, most of them are using costs and contracts for a population of 200 million. That is not sustainable. So we need to see the adoption of technology in agricultural production. We need to see more commercial farming taking place. And for that to happen, we need to address a lot of issues, especially around the land, land reforms. But, I mean, let's just come back to the current dispensation. We have been very great. I mean, you hear this administration bent on improvement in agriculture. Could it be that we have been paying leapsavers, you know, to agriculture and boasting about all of the schemes that we have? The Angkor Borow scheme, which says has empowered a lot of peasants and made so many peasants farmers. I'm almost confused, really, with what exactly is going on and what we get to see on a daily basis. You see, there's a distinction between rhetoric and reality. There's a lot of rhetoric around what the government is doing. That is not to diminish what the government has done so far, particularly in the area of financing, you know. But even if you talk to those who are in that space, they will tell you that even the financing, a significant portion of it, is not getting to the right people. Most of the farmers, they complain that they don't have access to those finances. That is one. Secondly, it is not only funding that we need to fix agriculture. If you give somebody funding and the person cannot go to the farm because of insecurity, what is the essence of the funding? If you give somebody funding and there is the certification that is flooding on the farm, funding cannot solve that problem, you know. So, funding alone cannot deal with the problem. Talking of transportation, if you give the farmer funding, if he has problem transporting the goods from the farm to the city, it's a problem. So, the approach has to be holistic. And that is why people say that the CBN should also work in collaboration with other arms of government. All right. So, that there is an alignment between what the CBN is doing and what the fiscal authorities are doing. Dr. Youssef, we have to go now. So, this has to be holistic. Well, we have to go now. But just in a second, I'd like you to answer, is there a way Nigerians can survive all of this? Is there anything that the individuals can actually do, a household to, you know, survive this entire phase? Well, the household will have to adjust. And many of them are adjusting already. I mean, in fact, it is going to many homes now. Not many homes are taking protein anymore, you know. The budget has to be adjusted. A lot more portion of family income has been spent on food. I think the bigger issue has to do a lot more with government to ensure that we create more environment, a better environment for production of food. We create the most better environment to reduce some of the key drivers of inflation. Most of these things are within the portfolio of government. The individuals are already squeezed. I mean, you can see evidence of poverty everywhere. I mean, if people are able to feed comfortable diseases. So, the individuals have been pushed to the limit. I think the bigger responsibility is on the part of government to fix some of these fundamental drivers of inflation. Thank you so much, Dr. Yusuf. Mouda Yusuf, I beg your pardon. He is the CEO of Santerre for the Promotion of Private Enterprise, CPPE. And it's also a former DG Legos Chamber of Commerce and Industry. Thank you, Dr. Yusuf. We appreciate you. Thank you. And as a size of it, we take a quick break. And when we return, we'll be looking at all the issues. Please, take with us.