Minister of Works and Housing, Mr. Babatunde Fashola, shares his thoughts with OKECHUKWU NNODIM on the nation’s housing deficit, roads, and other issues.
The unstable exchange rate has contributed to high inflation in Nigeria. Is this not undermining Nigeria’s ability to finance projects and repay the loans it obtained?
You say forex is the cause of inflation, but it is tough to put one finger on the cause of inflation. It is a combination of many things. And you have to also be able to differentiate between demand inflation and cost inflation. So, where the cost of service delivery is the issue, it may be cost-driven inflation. Every time I open a newspaper, it must not just inform me, it must educate me. So, let’s be careful about this. The other driver of inflation, of course, which economists have also pointed their fingers at, is the amount of money that was pushed into circulation in response to the economic challenges of COVID-19 as understood by different economies.
That was a lot of cash globally; people got money just to prevent social unrest, but that money was not immediately tied to productive activities. Suddenly when you opened back the economy, there was a large sum of global funds chasing goods that were just coming in. So, so there was an excess demand and economists will explain this better to you. We just need to understand that many things are driving inflation. That is why an interest rate hike is only one of the things you can throw at it to reduce the amount of money and the cost of access to funds to slow down that event.
Now, I keep saying that we must be careful also in comprehending what public finance and requirements are. First of all, don’t forget that there are local and global financial markets. What is their job? It is to lend money. If you don’t borrow, those people are going to lose their jobs. And that is why I’m talking about not just informing but also educating. Those people are going to lose their jobs because the major way financial services firms get money is through lending.