Excessive reliance on cash settlements in Nigeria drives high core inflation, according to the Principal Partner at Dion & Associates Ltd, Charles Iyore.
Speaking on Sunrise Daily on Channels TV on Saturday, Iyore highlighted the challenges of cash-based transactions and inefficiencies at federal and state levels.
Iyore identified excessive cash transactions as a major contributor to Nigeria’s inflation challenges, highlighting the disconnect between monetary policy and real economic activities.
“We have an economy in which very many people are not part of—it’s like they’re spectators. This exclusion creates distortions.
“How much of the capital is converted into currency transactions? How much of that currency is applied in a manner that doesn’t cause inflation? If every settlement is by cash, moderating prices becomes difficult, leading to high core inflation” Iyore stated.
Iyore called for a more robust monetary framework to address the issue, stressing that “a sound monetary system, with effective instrument controls and a treasury that directs growth, is essential. Without these, efforts to stabilize the economy are undermined.”
He also advocated for national planning to create a structured economic blueprint for states, ensuring coordinated development across the country.
“Freedom doesn’t mean there are no boundaries. Each state should operate within a clear playbook aligned with national goals. The absence of a unified framework leads to rogue fiscal behaviour,” Iyore said.
Also speaking during the program, Dr. Gbenga Adeoye, Principal Partner at Gbenga Adeoye & Co Ltd, criticized state governments for their lack of initiative in addressing critical infrastructure needs and inflation.
Despite increased federal allocations exceeding N1 trillion, Adeoye argued that state governments have failed to deliver tangible results.
“Over the years, when economic crises occur, the federal government gets the blame. Yet, 95% of state governments have not done what they ought to do,” he noted. “Some states have resources comparable to U.S. states, but where are the investments in roads, power plants, or industrial hubs? Most state governments are nowhere to be found.”
Adeoye lamented that inflation on essential goods, such as food, which has risen above 40%, remains unchecked due to the lack of proactive state policies.
He also criticized politically motivated spending, stating, “Instead of investing in critical infrastructure, states are buying SUVs for directors. This undermines any effort towards non-inflationary spending.”
While both experts agreed on the need for non-inflationary spending, they offered different solutions. Iyore emphasized the importance of centralized economic planning, urging the presidency to set the tone for fiscal discipline through the 2025 budget.
The presidency must take the lead. He’s the one we’ve entrusted with our mandate,” Iyore asserted.
