Muhammad Abdullahi, a member of the Central Bank of Nigeria's Monetary Policy Committee (MPC), has highlighted that imported inflation is a significant challenge to price stability and poses a growing concern for Nigerian small businesses.
This issue comes at a time when the Federal Government is working to import food items in its drive to achieve food sufficiency nationwide.
Abdullahi pointed out that imported food inflation is undermining the government's efforts to control rising inflation, which hit 34.80% in January 2025. The country's reliance on imported goods, particularly essentials like wheat and refined petroleum, makes it vulnerable to global price fluctuations and exchange rate volatility.
In his statement after the 298th MPC meeting, where the committee decided to raise interest rates by 25 basis points to 27.5%, Abdullahi also discussed domestic supply-side constraints that contribute to rising costs.
These include bottlenecks in the agricultural sector due to insecurity in food-producing regions, which limit food supply and push prices higher. Additionally, poor transportation infrastructure and inadequate storage facilities exacerbate food waste and increase costs for small businesses.
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Abdullahi's statement emphasized that despite previous monetary tightening measures, the key drivers of inflation—such as food prices and energy costs—remain persistent.
He noted that Nigeria's dependency on imports leaves the economy vulnerable to external pressures, particularly when global prices for essential imports like fertilizers, petroleum products, and wheat rise. This has a direct impact on small businesses, especially those reliant on transportation and logistics for importing goods.
"To tackle inflation effectively, we need a multifaceted approach that integrates both monetary and structural policy actions," Abdullahi said. He also recommended targeted investments in transportation and storage infrastructure to reduce supply chain bottlenecks and lower the cost of goods, especially food, which will benefit small businesses across the country.
Another member of the MPC, Philip Ikeazor, echoed concerns about Nigeria's import dependency, particularly in the non-productive sector. He pointed to the importation of Premium Motor Spirit (PMS) and gas, which accounted for $2.821 billion of Nigeria's top 10 imports in the second quarter of 2024.
Despite government efforts to reduce these imports and improve the value of the naira, Ikeazor noted that the focus on non-productive imports continues to place pressure on foreign exchange resources, further straining small businesses reliant on stable currency exchange.
The rising costs of energy, particularly the increase in Premium Motor Spirit prices, have significantly impacted transport and logistics costs, which are passed on to small businesses and consumers alike.
Abdullahi stressed that addressing these supply-side constraints and improving domestic refining capacity could reduce Nigeria's reliance on imported refined petroleum products, ultimately stabilizing the economy and reducing inflationary pressures on small businesses.
