CBN restates single-digit inflation target as FG woos investors with tax credits

Olayemi Cardoso, the governor of the Central Bank of Nigeria, on Wednesday, restated the commitment of the apex bank to achieving a single-digit inflation target.

Mr Cardoso spoke on the sidelines of the World Bank/IMF meetings in Bangkok, Thailand.

“The reason why we felt it was important to give ourselves this (Single-digit) as a target is to recognise the fact that inflation is probably the biggest threat to the poor, and so it is critical that we bring it down to levels that are more manageable, rather than the situation where you feel ‘okay, you’re lower double digits, and it’s okay’. It isn’t okay,” the governor said.

“I mean, in this instance, inflation has gone from you know about 34, 35 percent to about to 15, and yes, that’s a significant decrease, very significant. But what we are saying basically is that we are not going to rest.

“And the medium-term target is to bring it down to single digits. Of course, as we embrace inflation targeting, that will obviously be a lot more open and transparent, and people will be able to have a clearer sense of the road of travel.”

Also speaking at the event, Patience Oniha, Director-General, Debt Management Office, explained the volume in the borrowing calendars that were issued for Q4.

She explained that the “calendar is a combination of large refinancing as well as new volume. So again, if that has affected the market, it will be a combination of things: lower rates from the MPR, but the volume is not entirely different from what we have done in Q3. Maybe Q1 and Q2 were a bit slow, but after the budget was passed, really our volumes increased. So those were a combination of refinancing and new borrowing; again, we monitor the markets. That’s why we put their provision; we watch the rates, watch the demand, and take it from there.”

READ ALSO: Targeted support, not subsidies, can best protect people when inflation surges – IMF

Tax Holidays

Speaking on tax holidays and credits, Finance Minister Taiwo Oyedele said the government is clear: there isn’t just a need to create jobs, but a need to create decent jobs.

“Officially, our unemployment rate is around 5 per cent and poverty rate is higher than 50 per cent, so you have a lot of working poor,” he said.

“On tax holidays, we’ve transformed our tax system. We have something that is better than a tax holiday. It’s called Economy Development Incentive, where you get a tax credit. The good thing about it is it’s hard to abuse, so you have to earn it to get the credit.”

Speaking on setting up a factory in Nigeria, Mr Oyedele said it’s part of the investor deal room the government prepared for interested investors on the sidelines of the meetings.

“They will show you, they will handhold you, and make it easy for you to do what you have to do,” he said.