Two leading organized private sector (OPS) groups, namely the Lagos Chamber of Commerce and Industry (LCCI) and the Manufacturers Association of Nigeria (MAN) have flawed the latest 27.5% monetary policy rate, the benchmark lending rate, describing the policy measure as not supporting private sector in the country,
In a statement issued by the Director-General of the LCCI, Dr. Chinyere Almona, in reaction to the apex bank’s monetary policy rates announced after its Monetary Policy Committee’s (MPC’s) meeting on Tuesday, the Chamber described the rate as too high, pointing out that monetary policy alone cannot address the issue of inflation in Nigeria.
The Chamber pointed out that with the current rate, MSMEs, which remain the hub of the nation’s industrial growth and largest employer of labour in the country, would be further burdened by higher cost of credit with the attendant negative implications for their survival.
The OPS group maintained that without affordable financing, the capacity of the MSMEs to grow, compete, and contribute to the nation’s economic growth would be greatly undermined.
The LCCI charged the apex bank’s authority to have a rethink on its hawkish policy stance, stressing that it is becoming increasingly obvious that monetary policy alone cannot solely curb the nation’s surging inflation being induced by structural and supply-side inefficiencies.
In addition, it advised the CBN to collaborate with the fiscal authorities to address insecurity, infrastructure deficits, and food supply disruptions, which it described as the root causes of inflation.
In addition, the Chamber noted that while the recent marginal decline in headline inflation offered some relief, the CBN must adopt a cautious stance and provide a clear signal of possible future easing, subject to sustained economic improvements.
It clarified that despite the drop in inflation to 23.71 per cent, Nigeria’s macroeconomic conditions still remained harsh due to the persistent inflationary pressures, fuelled by exchange rate volatility, rising fuel and logistics costs, and deep-rooted structural challenges.
The Chamber stated: “A premature reduction in interest rates under such conditions could undermine investor confidence and raise doubts about the CBN’s commitment to price stability. Maintaining the current rate reflects a balanced approach: one that avoids inflationary risks while allowing time for consistent macroeconomic trends to emerge.”
As a means of improving business-supporting funding, the OPS group urged the apex bank’s MPC to complement the rate-hold with a forward-guided, data-driven policy option for future easing, insisting that adopting that policy approach will guide the business owners with the clarity needed for medium and long-term planning.
Reacting to the latest CBN’s MPR and other lending rates, the Manufacturers Association of Nigeria (MAN) expressed serious concern about the sustenance of the 27.5% MPR since November 2024, despite the lowering on lending rates by other central banks in other climes as part of their efforts to boost economic productivity and combating stagflation in their economies.
The Director-General of the OPS group, Mr. Segun Ajayi-Kadir, stated that while the more developed and futuristic economies’ monetary authorities were charting industrial recovery and macroeconomic stability roadmap through their monetary policies, the CBN’s monetary stance tended to be pushing the nation’s economy in a different direction.
The Director-General stated: “Over the last quarter, countries such as members of the Euro Area, the United Kingdom, Denmark, Australia, China, India, Thailand and Egypt, have implemented interest rate cuts to bolster economic growth and support productive sectors.
“Yet, our rigidity continues to create unintended consequences that may deepen the parlous performance of the productive sector.
“A nation cannot industrialise on the back of prohibitively expensive credit. With the benchmark interest rate held at 27.5 per cent, Nigeria has become the 6th most expensive country to source credit as local manufacturers grapple with an average lending rate of over 37 per cent. Ajayi-Kadir added.
He described the CBN’s sustained hawkish policy stance as not only inflationary, but also undermining the capacity of the real sector, despite efforts by manufacturers to improve its contributions to the nation’s Gross Domestic Product (GDP) growth
The industrialist pointed out that the CBN’s policy, which is being complemented by other limiting factors, had continued to limit the capacity of the nation’s small, medium and even large-scale manufacturers to expand production lines, or even meet basic operational costs.
The MAN chief cautioned: “When credit is priced highly, production declines and the nation “imports poverty”. Our concerns go beyond the debilitating impact on our numbers business. The “Nigeria First Policy”, which seeks to strengthen local industry and reduce import dependence, may be under severe threat.”
