I have written that Nigeria must develop a new playbook on how we fight inflation in the country. Yes, our current use of interest rate is suboptimal because it is not working. Some validations on that thesis:

“Under the previous regime of the Central Bank, we have seen a continuous tightening of monetary policy, and the concept of monetary policy tightening is to increase interest rate. Our MPR is at 18.75% if monetary policy tools can tackle inflation, then inflation will have been subdued by now, given all the monetary policy tools and tightening that has taken place over the last two years This economy is not the type of economy where the interest rate can effectively fight inflation” – Director of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf .

“The previous administration of the CBN under the leadership of Godwin Emefiele had consistently increased the interest rate to 18.75% in July as a measure to curb inflation. However, the move seemed counterproductive as inflation rose for the sixth consecutive month in July to 24.08%. As of November, Nigeria’s inflation stands at an 18-year high of 28.2%- marking ten months of consecutive increase.” – Nairametrics

What I have written: “Note that interest rate changes do not affect consumer demand that much in Nigeria since we have a limited consumer lending system. In other words, when we change rates, we are merely affecting companies as they’re really the entities which actually borrow in Nigerian banking. 

“Yes, the irony is that only companies can actually drive production (which boosts Supply) and that is why using the increase of rates to fight inflation in Nigeria has not been effective. Contrast this with say the United States where consumer lending is massive via credit cards, etc. There when rates go up, you influence Demand significantly, making it possible to cool down inflation. Our strategy cannot mirror the US, etc with developed consumer lending because higher rates punish those who are to boost Supply which is vital for us to reduce inflation.”

Simply, I have written that increasing interest rates to fight inflation in Nigeria is a waste of time. Our consumer lending which affects demand is insignificant and that means the interest rate which affects lending is toothless.

The Central Bank of Nigeria must change its strategy. What we do doesn’t make sense. Think of it – we increase the interest rate which is designed to cool down the economy by making capital more expensive,  only for the same apex bank to release trillions of naira to the federal government, via Ways and Means, to flood the economy with cash. At the end, the Ways and Means (like the new N7.3 trillion) will cancel the impact of the interest rate hike. This has been going on for ages!

”BARELY one hour after reading a letter from President Bola Tinubu, requesting for the approval of the the securitisation of the outstanding debit balance of N7.3 trillion Ways and Means from the Central Bank of Nigeria (CBN), the Senate immediately approved it.”

I have written that Nigeria must develop a new playbook on how we fight inflation in the country. Yes, our current use of interest rate is suboptimal because it is not working. Some validations on that thesis:

“Under the previous regime of the Central Bank, we have seen a… pic.twitter.com/THuEYkckbM

— Ndubuisi Ekekwe (@ndekekwe) January 8, 2024

A sad news for the health sector in Nigeria and Africa as a whole: the largest syringe factory in the continent has closed down after only six years of operation. The factory, which was inaugurated in 2018 by Vice President Yemi Osinbajo, had the capacity to produce 400 million syringes per year, making it a vital source of medical supplies for the region.

The factory, located in Akwa Ibom state, was a joint venture between the state government and a Turkish company, Jubilee Syringe Manufacturing Company (JSM). It was hailed as a landmark achievement that would boost the local economy, create jobs and improve health care delivery. The factory also aimed to export its products to other African countries and beyond.

However, according to a report by Premium Times, the factory has been shut down since December 2023 due to a series of challenges that crippled its operations. Some of these challenges include:

Lack of raw materials: The factory relied on imported raw materials, mainly plastic granules, from Turkey and China. However, due to the global supply chain disruptions caused by the COVID-19 pandemic, the factory faced difficulties in sourcing and transporting these materials. The high cost of foreign exchange also made it expensive to import the raw materials.

Lack of patronage: Despite its huge production capacity, the factory struggled to find customers for its products. The Nigerian government, which was expected to be the major buyer of the syringes, did not place any orders with the factory. Instead, it continued to import syringes from other countries, mainly China and India. The factory also failed to secure contracts from other African countries or international organizations.

Lack of power supply: The factory depended on diesel generators to power its machines, as the national grid was unreliable and insufficient. However, the rising cost of diesel and the scarcity of fuel made it difficult for the factory to run its generators. The factory also faced frequent breakdowns of its machines due to power fluctuations.

Lack of skilled workers: The factory employed about 400 workers, most of whom were trained by Turkish experts. However, many of these workers left the factory due to poor working conditions, low wages and lack of incentives. The factory also had difficulties in recruiting and retaining new workers, as there was a shortage of skilled labor in the area.

The closure of the factory has left many workers jobless and many stakeholders disappointed. It has also raised questions about the viability and sustainability of such projects in Nigeria and Africa. The factory’s management has blamed the government for not supporting the factory and not creating an enabling environment for its success. The government has not commented on the matter yet.

The fate of the factory remains uncertain, as there are no clear plans to revive it or sell it to another investor. The factory’s assets are currently lying idle and deteriorating. The factory’s closure is a huge loss for Nigeria and Africa, as it deprives them of a valuable resource that could have improved their health outcomes and reduced their dependence on foreign imports.

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