 Welcome back now to Business Insight to our discussion segment. In March this year, the Monetary Policy Committee, MPC of the Central Bank of Nigeria, raised the benchmark interest rate by 50 basis points in a bid to tackle rising inflation, marking the sixth consecutive rise. Follower in previous efforts of the CBN there was a dip in December 2022. However, inflation rate climbed to 22.04% in March, which led to 10 of the MPC's top members voting in favour of the rise. In April 2023, the headline inflation rate rose to 22.22%. To help me out with all of these numbers, I have joining me right now International Finance and Economic Analyst, Mokhtar Mohamed. Many thanks for joining me on Business Insights, Mokhtar. All right, Mokhtar, if you can hear me now, in March in an aggressive move to contain the nation's inflationary trend, the CBN actually raised the MPR, and it was increased to 18%. However, the headline inflation maintained its upward trend in April, rising by 18 basis points to 22.22%. Why does Nigeria's inflation keeps on surging despite interest rate hike? What's the reason for this disconnect? Well, thank you, Justin. I think the reason for the disconnect is because we are not treating the, we are only treating the symptom, we are not dealing with the re-issues. The re-issue that is causing inflation in Nigeria has to do with our exchange rate volatility because most of our product we imported from outside the shop is nation. That is the main issue that we are coupling with, not whether there is production, inflation in this production, I mean inflation due to production or other for microeconomic factors or other factors, but mainly if we are able to address the effects issue that has to do with liquidity in the system, and making legitimate demands, especially from our manufacturing sector, we will be able to curtail inflation. But as it stands now, I want to thank you again on how you lose your order the other way because of inflation. So, I think the CBN have been dodging from addressing the exchange rate volatility, especially since the CBN got no insight that they will no more be servicing the exchange, so they didn't create a market for those people that normally patronize the exchange, especially the manufacturers. Okay, but I don't know in my head, I'm thinking that aside from some of these issues that you have mentioned, issues like maybe insecurity, maybe the high cost of diesel and maybe some other factors, are there contributory factors to this disconnect that we do have? Yeah, when you look at this security, I think it contributes, that has to do with when you talk of full security, we've not been able to get that, especially from food that comes from the northern part of Nigeria without challenges with that, you could say that also have drive inflation in the area of food. When you talk about the cost of diesel, yes, but again when you look at where we were before now, diesel was selling at an all-time high of about 900 Naira per litre, but today it's selling between 650 to 630 Naira, so definitely if you are looking at that then with the reduction in price of diesel, we are supposed to see cost of production comes down, but like I said, what we gain in terms of bringing down cost of production, we lose in terms of the exchange rate volatility, you can see that play in the area of the energy, especially with diesel. Okay, fine, so I have spoken to some analysts and some of them are anticipating a 25% basis point increase and the MPR, when the NPC concludes today, what are your thoughts really? Okay, my thoughts is that if I were in the issue, I think for now I would tend to hold the rate because that's not really helped, like you said in your production, we see rate hike going up and then inflation is still going above the rate hike even so definitely we are making any progress with that, because like I said, we are not addressing the fundamental issues, and what we do sometime is just copy and paste from what we see other people of nations are doing, we just want to do the same thing, we don't tend to bring our own Nigerian factor into it, our economic challenges. So the incoming administration is coming in, we don't know what their economy will be, we are not sure that they will continue to be current. As I said in the introduction of your report, we are not too sure about the CBN governor because we heard that he will begin on study leave, so it definitely, if I were in the multi-policy issues, I would say look, you know, let's maintain the status quo for now and let's see the direction of the new administration when they take over. Okay so a simple question right now would be what happens if the NPC continues to hike this rate and yet the inflation numbers are also rising, what happens with our economy? Well what happens is that hardship increases on the people, consumer power continue to get low and then that will affect companies, especially the manufacturing sector, because a lot of people will not be able to buy their goods or their patronizing terms of services and when we see that play out there, we see rising unemployment also playing its role there and of course the GDP will continue to decline and we may end up going to resection, that's the longer shot of it if we continue in this direction addressing the key issues. Okay fine, in passing you mentioned the administration coming into board in the next couple of days and you don't know what direction it may want to follow but still on that, with them having the infrastructural deficit on their hands to tackle with, what should be the immediate focus to stem the tide in our monetary policy? I think the immediate focus, like I said, in the hey, the civilian government is still there or we have a new government or I think the first thing we need to do is to see how we can address these fixed challenges that have affected every Nigerian and every business. So once you do that, then you've addressed about 70% of national pressure, then from then you begin to look at the concept of doing business, what have you done and in terms of the direct intervention that's being done in some key sector, what are really the true reflection, are there true reflection in our economy? So for me, the main issue is the addresses effects, let's see how we can attract more effects into the system, are there true following direct investment or full investors? And again, we can always know that by the cabinet of the new administration, we hopefully think this cabinet should hit the ground running. If they do that, then we'll see those positive vibes come into the economy and we could see a game changer in terms of policies that will help govern the economy. All right, good thing you've mentioned them capital inflows that have continued to decline over time, which has remained a key concern for the MPC. You talked about portfolio investment and other avenues that we could actually get this, but how can we attract this needed inflows? For instance, some people believe it are very hopeful that we're going to finally come in on-stream that the pressure for demand for effects might am utterly reduced, but how can we leverage on that? Well, definitely I agree with that. But again, you have to ask yourself when we then go to the refinery and start production. We have to do something from next month. I don't know how feasible that is. Justin, I can tell you that that is going to be very, very tough because we've not done, we've not seen three other processes in terms of that. And remember that even then they've told us that we really have the capacity of 650,000 in Paris per day, but they will be doing, they will only do 50 percent capability at the start. And then that will improve in some time in January 2024, where they will be trying to meet 100 percent. So definitely that will help. But in the short term, we might not see that helping us. I think the best thing is to come up with policies that will attract foreign direct investors. And then one of those policies begin to look at how you can reduce the difference between the parallel market and the import-export market. And the only way that you can do that is to increase flow of effects in the parallel market. And the way, how do you do that then, you need to go through the banks because now are you going to turn the banks to begin to create a foreign dex in their accounts? So when I go in there, I have my DTs, I wanted to transition, I can do a seamless transition. The other way is to empower the bank also to be involved in effects trading, because some of these banks have a large shown of effects in the show of this country. Will they just bring it back into this country and begin to look at it via market demand? But all this can only be achieved if you can reduce the gap between the parallel and the import-export market. If you do that, then investors will have confidence to come to your market, because when the difference is almost 100 percent, no-trude investors want to be investing in such an economy because you must repatriate your money back. And how? If you are bringing it at 400 and something, then you are repatriating at 700 and something, it doesn't make this sense at all. Okay, now, so my other issue is that of economic growth. With all of these issues that we have had, interest them high, inflation surging 22, over 22 percent. With all of these, are you worried that it might affect the nation's economic growth? Yes, I'm very worried. It's already affecting it. Again, for the past eight years, we've not seen the kind of growth we expect from this economy compared to the previous years before this administration came into power. But then every true Nigerian, every economy will be worried about what we're seeing, especially when you look at the dead profile time via revenue. Then you are very, very worried because we are not even attracting investors into our economy. Oh, and then we are pouring so much to the infrastructure decay. And again, we are not even able to meet those demands. And the only way we can meet it is to attract investors through the PPP. And if we do that, then you begin to say, okay, fine, but as a standard, that is not happening. And that will not happen so soon, even if this in compensation have all the magic words. On the final notes, Namukta, just before we let you go, I just want you to just then pass a message across to this incoming administration that should be around in four or five days, specifically Nigerians go to the market each day. And the prices continue to surge and change sometimes almost by 100%. You know, I just am worried because we are actually getting to a place of food insecurity with the CPI rising by the day. And of course, at the issue of food inflation not being sorted out. What should we be doing right now as we got food security so that at least we can have foods in our stomach even in as much as we have in the first structural deficit? Well, you see, that's what they call stomach infrastructure. And that's what we need. We need now. We need stomach infrastructure. And I think you hit the nail on the head. We need to look at our food security. And then we need to address if we want to do that, we need to address this issue in security, especially in the North East and also in some of the full basket of Nigeria, like Niger State and when we state, we need to do that as soon as possible. And if then, if we want to address a larger front of infrastructure, we need to begin to attract foreign direct and portfolio investors into our economy. And we can only do that. We bring right policies that will drive them into our economy. And if you ask me what the new administration will have to do, I think three things I want them to do first as soon as they come in. Address food security through addressing insecurity and coming up with measures that can allow slim less transportation of these goods from one point of Nigeria to another. Secondly, address the effort's volatility, especially the difference between the parallel and the and the import, export market. And I think lastly, see how you can begin to attract foreign direct investors into Nigeria economy and then look at what you gain from that, invest it into social investment like health care and education. If we do that, we're on the path to prosperity. All right. Thank you so much. I have been speaking with Mukta Muhammad, International Finance and Economic Analyst. Thanks for all of the useful insight that you have brought on the show today. My pleasure, Justin. Still have a pleasant day. Thank you. All right. And that's the size of the show for today. Business Insights will return same time on 9.30. You may want to join us again for that. Bye for now.