The Lagos Chamber of Commerce and Industry (LCCI), a leading private sector advocacy group in Nigeria, has described the retention of the 27.5 per cent Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN) on Tuesday as undesirable for Nigerian businesses, urging the apex bank to consider measures to alleviate the burden of the high interest rate on enterprises.
The apex bank, had yesterday at the end of the two-day meeting of its Monetary Policy Committee (MPC) in Abuja, retained the MPR at 27.5 per cent and maintained the asymmetric corridor around the policy rate at +500 basis points/-100 basis points, with the cash reserve ratio (CRR) steady at 50.0 per cent for deposit money banks and 16.0 per cent for merchant banks while the liquidity rate was held at 30.0 per cent.
The CBN Governor, Olayemi Cardoso, who briefed journalists on the decisions taken at the MPC meeting, maintained that the retention of the rates was to balance economic growth with the need to moderate inflationary pressures as the Federal Government continues its ongoing reforms and structural adjustments.
Reacting to the monetary policy decisions of the apex bank, Director-General of the OPS group, Dr. Chinyere Almona, noted that recent reforms had shown signs of stabilising exchange rates, moderating headline inflation, and boosting government revenue, though small enterprises are struggling with the affordability of credit.
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She maintained that the 27.5 per cent MPR constituted a “depressing burden” on the private sector, crowding out access to funding and stifling growth.
While anticipating that the MPC may opt to hold the MPR steady, the Chamber strongly advocates for a reduction to ease financial pressures on businesses.
One of the major concerns raised by the group is the recent extension of the capital expenditure component of the 2024 federal budget to December 2025, which it pointed out would inject additional liquidity into the economy, thereby potentially intensifying inflationary pressures.
Noting further that headline inflation slightly declined from 22.79 per cent in May to 22.22 per cent in June this year and remains well above the apex bank’s target, the LCCI cautioned that relying solely on rate hikes to curb inflation was insufficient, urging the MPC to recommend targeted interventions in critical sectors such as agriculture, power, and infrastructure.
To address these challenges, the OPS group proposed a series of market-oriented recommendations and sustaining reforms to stimulate production and investment in the real economy, alongside strengthened development finance interventions.
Specifically, the LCCI urged the monetary authorities to provide concessional funding to high-impact sectors like manufacturing, agriculture, renewable energy, and power as well as better resourcing and alignment of development finance institutions, such as the Development Bank of Nigeria, Bank of Agriculture, NEXIM Bank, and the Bank of Industry, with industrial growth priorities.
In addition, the Chamber harped on the need for transparency in lending practices to ensure fair borrowing costs and prevent banks from imposing excessive margins over the MPR, adding that to stabilise the foreign exchange (FX) market, the CBN should close arbitrage windows, improve liquidity, and rebuild investor confidence to curb imported inflation.
It stressed that these measures remained critical to fostering Nigeria’s long-term economic stability.
On the recently enacted tax laws, the LCCI expressed cautious optimism about the enactment of the new tax legislation with updated rates and administration and stressed the imperative of sustaining efforts to moderate inflation through managed rate cuts before the end of the year.
