The Association of Corporate Treasurers of Nigeria has called on the Federal Government to explore alternative methods of tackling inflation without resorting to further interest rate hikes.
The ACTN President Adeyinka Ogunnubi, at a recent media launch for the 2024 Treasury360 Conference and Exhibition, highlighted the impact of Nigeria’s high inflation on corporate treasurers and the broader economy, stressing the need for innovative solutions.
“The government has to look beyond just regulating interest rates,” Ogunnubi said. “With food inflation nearing 40 per cent, there are low-hanging fruits the government can address to ease the burden on Nigerians without exacerbating borrowing costs.”
He suggested that improving food transportation, supply chains, and storage could immediately reduce food prices, a major driver of headline inflation.
Ogunnubi noted that Nigeria’s inflation and interest rate volatility had forced treasurers to adopt more resilient strategies describing the 2024 conference theme, ‘Policy Implications & Building Sustainable Treasury Strategies: Nigerian Perspectives on Tackling Inflation and Interest Rate Uncertainty,’ as “particularly relevant given the economic challenges we face today.”
The ACTN president also criticised what he described as “price gouging” in the food supply chain, questioning why locally grown items like beans should be affected by foreign exchange rates. He called on stakeholders to address what he argued was a discrepancy driving up costs.
Further, the ACTN president noted that corporate organisations face “headwinds in terms of managing FX and interest rate volatility” as he emphasised the government’s role in stabilising these rates to create a more favourable environment for businesses.
Another member of the ACTN board, Benedict Ologbosera, added that interest rates, currently as high as 27.25 per cent, were discouraging productive investments, particularly in agriculture and manufacturing, querying, “Why would anyone venture into agriculture when they can get up to 30 per cent returns by simply keeping their money in fixed deposits?” as he noted that high borrowing costs are forcing companies to cut costs and downsize.
Ologbosera pointed out that several organisations are prioritising “cash and carry” models over trade credit to minimise their exposure to inflation, noting “Many businesses are optimising their funds to reduce inflation’s impact, as relying on credit in today’s economy can have adverse effects on cash flow.”
According to the ACTN, the Treasury360 Conference and Exhibition will be held on November 14 in Lagos serving as a platform for insights on sustainable financial strategies.
The group disclosed the event speakers included the Central Bank of Nigeria Governor, Yemi Cardoso; Deputy Chief Executive of the Association of Corporate Treasurers in the United Kingdom, Janet Legge and the Director of the Centre for Promotion of Private Enterprise, Dr Muda Yusuf.
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