Nigeria’s reliance on cash transactions is at the heart of the nation’s soaring inflation, experts have warned, urging the federal government to implement a more structured economic framework. Charles Iyore, Principal Partner at Dion & Associates Ltd, highlighted the inefficiencies and economic distortions caused by the country’s over-dependence on cash. Speaking on Channels TV’s Sunrise Daily, Iyore argued that cash settlements complicate efforts to control inflation, warning that the disconnect between monetary policies and economic activities has created an environment where inflation remains unchecked.
Iyore pointed out that the continued use of cash for most economic transactions disrupts price moderation, leading to high core inflation. He called for a more robust monetary framework, emphasizing the need for effective fiscal controls that could help stabilize the economy. A sound monetary system is crucial for growth, he said, calling for national economic planning that aligns state and federal goals.
Dr. Gbenga Adeoye, Principal Partner at Gbenga Adeoye & Co Ltd, also weighed in, shifting focus to state governments. He criticized their failure to address infrastructure needs and their lack of accountability despite substantial federal allocations. State governments have the resources to invest in infrastructure, but they are instead focused on politically motivated projects like luxury vehicles for officials, Adeoye said. He pointed out that the lack of investment in critical infrastructure only exacerbates inflation, particularly the 40% increase in food prices.
While both experts agreed on the need for non-inflationary spending, they had differing views on how to implement these changes. Iyore emphasized centralized economic planning, urging the presidency to set the tone for fiscal discipline, especially with the 2025 budget. The presidency must lead the way, Iyore stated. However, Adeoye highlighted the autonomy of state governments, calling for stronger mechanisms to ensure that states implement fiscal policies that effectively combat inflation.
As inflation continues to spiral, President Bola Tinubu has committed to addressing the crisis in the 2025 budget, projecting a significant reduction in the inflation rate from 34.6% to 15% by the end of next year. Tinubu also emphasized a focus on macroeconomic stability and infrastructure development as key drivers for the country’s future growth.
With experts urging for immediate changes to the economic framework and more disciplined fiscal policies, the coming months will be crucial in determining whether Nigeria can curb its inflationary spiral and create a stable, sustainable economy for its citizens.