The Association of Corporate Treasurers of Nigeria (ACTN) has urged the Federal Government to explore alternative approaches to combat inflation without imminent interest rate hikes, highlighting the adverse impacts of escalating inflation on corporate treasurers and the economy as a whole. During a media launch for the upcoming 2024 Treasury360 Conference and Exhibition, ACTN President Adeyinka Ogunnubi emphasized the critical need for innovative solutions that extend beyond the conventional reliance on interest rate regulation. With food inflation soaring to nearly 40%, Ogunnubi called for immediate actions that could alleviate the financial strain on Nigerians, advocating for enhanced systems in food transportation, supply chains, and storage as practical steps to lower food prices, a significant contributor to overall inflation.
Ogunnubi’s remarks painted a stark picture of the uncertainty faced by Nigeria’s economic landscape, where both inflation and interest rate fluctuations have compelled corporate treasurers to develop resilient strategies. He described the theme of the 2024 conference—‘Policy Implications & Building Sustainable Treasury Strategies: Nigerian Perspectives on Tackling Inflation and Interest Rate Uncertainty’—as particularly pertinent, given the ongoing economic difficulties. His address included pointed critiques of what he labeled as “price gouging” within the food supply chain, particularly questioning why local commodities such as beans remain vulnerable to foreign exchange fluctuations. By urging stakeholders to address the discrepancies that inflate costs, Ogunnubi underscored the need for collaborative efforts to create more stable pricing mechanisms for essential goods.
Furthermore, the challenges corporate entities face in managing foreign exchange (FX) and interest rate volatility were spotlighted, indicating a pressing need for government intervention to stabilize these rates. Ogunnubi stressed that a better-controlled economic environment would enable businesses to operate more effectively, promoting a positive atmosphere for investment and growth. ACTN board member Benedict Ologbosera echoed these sentiments, noting that the current high-interest rates—peaking at 27.25%—are stifling productive investments, particularly in critical sectors like agriculture and manufacturing. Ologbosera’s inquiry into the reluctance of potential investors to enter agriculture when relatively safe fixed deposits yield returns of up to 30% paints a compelling narrative about the apathy towards high-risk ventures in such an unstable economic climate.
Moreover, Ologbosera observed a notable shift among organizations towards “cash and carry” business models, aimed at minimizing exposure to inflationary pressures. This operational adjustment reflects an increasing preference for immediate liquidity and risk aversion, as companies reassess their financial strategies to safeguard against the adverse impacts of continuing economic challenges. Businesses are now prioritizing cash reserves instead of relying heavily on trade credit, believing that prudent cash management is essential for navigating the current economic landscape. This trend underscores the need for businesses to optimize their funds amidst inflationary effects, demonstrating a strategic departure from previous credit-dependent models.
The forthcoming Treasury360 Conference and Exhibition, scheduled for November 14 in Lagos, is anticipated to offer a vital platform for discussions centered around sustainable financial strategies to tackle inflation and interest rate volatility in Nigeria. The ACTN has positioned this conference as an opportunity to convene expert voices from across sectors. Noteworthy speakers include the Central Bank of Nigeria Governor Yemi Cardoso, who is expected to provide key insights into monetary policy, as well as Janet Legge, the Deputy Chief Executive of the Association of Corporate Treasurers in the United Kingdom, and Dr. Muda Yusuf, Director of the Centre for Promotion of Private Enterprise. Their contributions are expected to enrich the discussions and provide a comprehensive understanding of how to navigate these turbulent economic waters.
In summary, the ACTN’s call for alternative strategies to address Nigeria’s inflation crisis emphasizes the importance of innovative thinking and collaborative action among government, businesses, and stakeholders. The association’s leadership argues that a multifaceted approach focused on tackling fundamental issues like food supply chain inefficiencies is essential to mitigate the impact of inflation without resorting to higher interest rates. With corporate treasurers grappling with heightened economic pressures, the upcoming Treasury360 Conference promises to be a pivotal event in formulating effective and sustainable treasury strategies that not only address contemporary challenges but also lay the groundwork for a more resilient economic future.
