KEY POINTS
- Thus, lifting of Petroleum products from the Dangote Refinery will lead to less pressure on the demand for FX and port transportation expenses.
- CBN states that the prospect of the banking sector is still stable even in the face of challenges.
- Speculations about food inflation remain high because of flooding, energy, and insecurity, but the government works on these problems actively.
The CBN Governor, Yemi Cardoso, stated that sourcing petroleum products from Dangote Refinery will reduce the nation’s FX demand pressures. During an interview on Tuesday in Abuja, after the 297th MPC meeting, Cardoso explained how the refinery’s output could ease transportation costs. This, in turn, would help alleviate rising food prices.
“The committee was confident that transporting refined petroleum products from Dangote Refinery will, in the short to medium term, reduce food cost pressures,” Cardoso said. He also highlighted the impact on foreign exchange demand, noting that Nigeria will no longer need to import finished petroleum products. As a result, this shift could enhance external reserves and improve the balance of payments.
Consequences in the financial industry
Cardoso emphasized that Nigeria’s financial sector remains stable despite various challenges. “Members reviewed the progress of the Bank’s financial soundness indicators,” Cardoso explained. He added that despite economic headwinds, the banking industry is still safe, sound, and stable.
The committee stressed the importance of continued supervisory checks to maintain the banking industry’s support for other sectors of the economy. This approach will help sustain overall economic stability.
Inflation risk factors and government action
Cardoso addressed ongoing inflation risks, particularly in food inflation. He pointed to key threats, including flooding, energy price increases, fuel shortages, and insecurity in food-producing areas. “These factors are putting significant pressure on food prices,” Cardoso said, noting that food constitutes a large part of Nigeria’s Consumer Price Index (CPI).
He praised the Federal Government’s efforts to address these issues, particularly measures like the duty-free import window for essential food items. Cardoso emphasized that these actions are crucial in addressing the food supply gap.
However, the committee reiterated the need for continuous supervisory attention on the banking industry to ensure it continues to support the wider economy.
According to Punch, Cardoso acknowledged that flooding, energy price hikes, and insecurity in farming areas remain major inflation risks. These issues are exacerbating food price pressures, especially since food accounts for a significant portion of Nigeria’s CPI.
He lauded the Federal Government’s recent security measures aimed at improving conditions in farming regions. Cardoso also praised initiatives like the duty-free import window, which aims to address food shortages.
“The MPC welcomed the Federal Government’s continued efforts to close the food supply gap through the duty-free importation window for food items,” Cardoso noted.
