The Chairman, Nestle Nigeria Plc Chief Olusegun Osunkeye has called for an increase in government spending, saying it will help buoy economic activity in the country as well as impact positively and ensure sustained growth of the economy.

Osunkeye, who made the disclosure during the company’s Annual General Meeting (AGM) in Lagos, stated that huge government spending has a strong potentials to impact positively on the general economic and business activity and could help sustain the strong growth.

According to him, a shift in government spending towards capital formation and planned reforms in the power sector could boost growth and development, and the passage of the Petroleum Industry Bill could further unlock additional investments in the oil sector.

Quoting the Economic Intelligence Unit (EIU), he said “Nigeria has a market size of $222 billion, projected to increase by 17 per cent to $259 billion in 2011″.

“The world Bank in its report of the 2010 Article IV consultation with Nigeria  expressed similar optimism for economic expansion for this year. According to IMF Nigeria’s economy is projected to grow by seven per cent in 2011” he said.

Speaking on inflation, he said it is likely that there would be further increase in interest rates, pushing inflation back, that is, going by the high inflation expectation in 2011.

He explained that a likely driver of higher inflation is the election spending which continues to intensify in recent times as the impact of spending hits the market place.  “Another factor that is expected to contribute to higher prices in 2011 is the expected 64 per cent increase in the minimum wage to N18,000 (equivalent to 2.4 per cent of GDP or N567billion ) this is an addition to the soaring prices of raw and packaging materials,” he said.