 Welcome back, as the breakfast and plus TV Africa, the conversation continues. We look at the fact that the central bank of Niger has increased the interest rate to 13 percent from 11.5 percent. We have Muktak Mohamed and standby, he joins the conversation in no time. But just before then a little bit of a background, the central bank of Niger on Tuesday raised the interest rate to 13 percent for the first time in two years. That's from 11.5 percent to 13 percent, like we mentioned, 13.5 percent. Now, justifying the increase, the CBN governor, Godwin Mepheli, said the MPC is suspicious there might be an aggressive creation of inflation and to prevent the looming inflation, he said the MPC had to increase the monetary policy rate by 150 basis point. Meanwhile, the nation's Apex Bank retained the asymmetric corridor around the MPR at plus 100 slash minus 100 basis point and cash reserve ratio at 27.4 percent and liquidity ratio at 30 percent. Six members actually voted to the increase by the MPR by 150 basis and four members by 100 basis point and one member by 50 basis point. But this is some of the semantics of this monetary policy. We'll just get straight to it now. Muktak Mohamed is on standby. Thank you for joining us this morning. Thank you. Good morning. All right. So let's get to the conversation. What do you make of this increase by the central bank of Nigeria and the justification for this? They are looking at looming inflation. Well, normally interest rate is often increased. I mean, the increase in interest rate is often used to tackle, I mean, used to fight inflation that is driven by demand and not to tackle inflation that is driven by cost of cost and chain disruption. So what do I mean? If you have a high demand of a good and services, then you begin to increase rate to fight good demand to bring down inflation. But in our own course, our inflation is driven by cost of goods and this cost is coming from the area of cost of production. And so you talk about supply chain destruction, which happened to do with international problem that has to do with the pandemic and also now with the Russian Ukraine crisis. So when you look at this, then you are not so much excited about that the civilian have been able to increase rate because humanity does effectiveness of those incrementing rate because we are looking at the inflation is always driven by two major three major segment depending on where you are. We look at the cost of production can drive inflation high. Then you look at the market induced inflation. Then you can also look at the microeconomy induced inflation. Now in Nigeria at the moment we are tackling cost induced inflation, market induced inflation, and then microeconomy induced inflation. So by the time you increase rates, you will not be able to see the effectiveness of this trade because you are not fighting inflation that has to do with demand. You are tackling inflation. So what does this really mean now? What does this translate to Nigerians? I mean for a person who would have to go to the market, a person who would have to transact, we are talking about buying and selling. What does this mean? Well, we are hoping that we have Muktak Mohammed join the conversation. I am sure that he wasn't even done with his thoughts right when he was talking about their measures. You probably have to increase the rate at a certain time, but at this point in time we are looking at does not what should be obtainable. So invariably what is expected is that inflation rate should be increased when you have the law of, I mean it's basic that you have demand and supply on top of the table. But it's not the case that you have inflation that the CBN is trying to control by deliberate action. I mean this is like you have the cost of goods and services on the high. He has mentioned all the factors and it doesn't really seem like it's a brilliant idea, however. Yes, yes indeed. Right now, I mean Thuyi, I guess Dr. Thuyi who was, he had talked about monkeypox, could not help but talk about the economy, to me, of the aim when he sat here, mentioned a few things, a few words about the economy. I do not know if investors and the public generally still has confidence in the government and the operators and the midwifers of the macro economy being the central bank of Nigeria to do a good job. It's the central bank, how have they fed, how has the governor of central bank of Nigeria who is heading this operation, even though they have the MPC being the monetary policy committee that votes, the central bank is seen to be the one in charge of the macro economy of the country. And of course coming up with these monetary policies, to stabilize the economy, to stabilize the Naira, to address inflation, things are in a mess as we speak. And so I mean, if you have things in a mess, you cannot be said to be doing well. The situation is not helped by the fact that the central bank of Nigeria governor is being, you know, distracted with his political campaign or political aspirations, even at the time, in the midst of the economic situation we have in the country, at the time and the audacity to go to court, to try and force INEC to allow him not to resign, stay in office as central bank of Nigeria governor while running a campaign to become the president of Nigeria. It's beyond words, I don't have the words to describe the situation. But Mukta Muhammad is back on Zoom with us. And Mukta, can you hear me please? Mukta, can you hear us please? All right, we seem to still have that collection issue. So it is beyond words that should be said on television to describe and, you know, what's going on. Your house is on fire, literally. Your house is on fire. Some floors have been burnt. You have just a few floors to salvage. And instead of going to carry water, you're carrying water, but you're also going to the fast food restaurant to buy food to eat before coming back. Let's just allow this period pass and let them go with their wahala. Maybe we can salvage economy. It's baffling. And the man who is still in office, he left the court. We drew his case from the court. He went to court to tell the judge to force INEC to allow him run a campaign and vie for the office of the president while remaining in office as central bank governor. Only for President Buhari to say all political appointees who want to vie for these political positions, resign. And then he withdrew his case from court. And he's still in the job, mercy. No, but I thought you said that it was okay for people to have personal interests. You know how the narrows, I'll show you where the narrows in free fall. No, but I thought you said... So, you know, right now, we should just manage ourselves and allow it may feel a go. So we have a guess there. I mean, I was going to take it. Yes, let us manage things, you know. Muqtakh Mohammed, it's good to have you join us back this morning. We apologize, you know, for the back and forth with connection with you. Can you hear us, Muqtakh Mohammed? Yeah, I can hear you clearly. Now, I deduce from your conversation that the reason for this rate increase is not necessarily dependent on demand and supply. And so you went ahead to mention some other factors and... Yes, what I was saying is that inflation, if you want to know how effective your increasing rate could be, is where you are tackling inflation in the area of demand. But our own problem is that we are going to be tackling inflation in the area of cost of production. And if you are tackling cost of production and construction supply, incrementing interest rate does not always give you the desired results. That is exactly what I would say. Now, when you look at what drives negative inflation, you look at cost of production, you look at microeconomy, and then you look at market induce. Now, if you look at these three areas, you realize that we are not going to have any result by incrementing rate. Because when you are talking about cost of production, you are talking about cost of good and services. And when you are talking about cost of production, you also look at whether it's a structure that has the cost of this cost of production, that making cost of production to go high. Now, we look at the price of diesel, because it seems to be no power in existence. So the cost of diesel has worked from 300 to 650. So, and then that means the cost of production and any good transference from the manufacturing sector has to go up to meet up with the price that have been in cost on diesel. Then secondly, when you look at market induce inflation, you are looking at the microeconomy. And when you look at what the city and its saying that the cost of going is going to go high, and what it means that those companies that are going is going to cost them more to pay for the fund that they have borrowed. So they are going to transfer that into the consumers. Then when you look at demand and supply, demand and supply will still be high, because what is causing it is the effects with volatility. And we are not addressing that yet. Even if CDN isn't okay by this, we are going to attract a fixed income investment, which could be good. But look at it this way, the fixed income investment is not going to come, because when you look at the potential between the parallel market and the input export market, no investors want to come into your market, your own market control by 424.30. And when you have the parallel market, there has been a fixed amount. So when you look at all this, it doesn't seem to add up to be able to tackle inflation. Rather, in the short term, we might see inflation go up. Muhtar Mohamed, do you feel that this is also connected or not unconnected with the culture, the four-yearly culture of a lot of money in circulation during political campaigning ahead of the general elections? Do you feel this is also sort of a defensive move to protect the economy in terms of the inflation rate and also to protect the Naira? Because a lot of money is going to be thrown out into the public. We see 100 million Naira in over. Yes. You see, I was listening to the chairman of the change or the president of the change. And he said that you don't have more confidence in the polar than in the Naira. You and I know that most politicians are not stuck in their houses with Naira. They are stuck in it with polar. So when you're looking at that, how much can CBN control the liquidity flow in the area of dollar? So they cannot because they don't even know the amount of dollars as in circulation. Meaning in our own Naira, you cannot be exactly say this is a normal stagnation. So you begin to say, okay, you want to use some other parameters to reduce it. So it's a big challenge for them. I know they are looking at the political area. There will be a lot of liquidity in the system. But what form of liquidity? Is it coming in the form of a currency or is it coming in the form of dollar? Okay. So quickly, what do you think this would mean for an average Nigerian or an Nigerian? What does this translate into? Does it affect or impact on us in any way? Well, we have to let you go at this point, not deliberately, but we're at a time and of course, the network is not in our favor. Thank you so much, Muktak Mohamed for being part of the show this morning. He's an economist and has been trying to make us understand the impact and the dynamics of having that increase from 11.5% to 13.5%. That's much we can take this morning on the breakfast. I am Messia Boko. And I'm Kofi Bartels. We'll return tomorrow with very interesting conversations on the breakfast. We have more programming ahead on Plasti, the Africa's Louise. Keep watching. Good morning.