CBN must balance stability with growth — Lagos chamber warns

As the Central Bank of Nigeria’s Monetary Policy Committee (MPC) convenes for its scheduled third meeting in 2025, the Lagos Chamber of Commerce and Industry (LCCI) has called for a reduction in Monetary Policy Rate (MPR), noting that the current 27.5% interest rate remains a ‘depressing’ burden on businesses.

The Chamber, in a statement issued by its Director General, Dr. Chinyere Almona, on Tuesday, also called for targeted interventions from the apex bank to boost the economy’s growth sectors like agriculture, power and infrastructure.

While acknowledging the current reforms have started having some impact on stabilising the exchange rates, easing headline inflation, and increasing government revenue, the Chamber, however, believed there is the need, for the committee, to strike a careful balance between preserving macroeconomic stability and supporting economic recovery.

This, it stated, has become imperative in the light of the extension of the capital expenditure component of the 2024 federal budget to December 2025.

The Chamber noted that while headline inflation declined marginally to 22.22% in June from 22.79% in May, the rate still remains significantly above the Central Bank’s target.

“Nigerian businesses and households continue to grapple with high operating and living costs, increasing the cost of credit.

“In our view, rate hikes alone cannot curb inflation. The Committee must recommend to the CBN that targeted interventions be provided to boost our growth sectors like agriculture, power, and infrastructure.

“We recognise that the current interest rate environment is tight, making access to credit above the affordability of small businesses, and the private sector is being crowded out of funding,” it stated.

LCCI, therefore, urged CBN to complement its conventional policy tools with targeted, non-cash measures in the form of concessionary interest rates to small businesses.

The Chamber noted that a coordinated approach with fiscal authorities, remains essential to resolving key drivers of inflation such as insecurity, infrastructure deficits, and disruptions in food supply chains.

On support for the real sector, the Chamber called for strategic, market-oriented actions, such as: market-driven reforms that promote price stability by stimulating production and investment in the real economy.

It also stressed the imperatives of strengthening development finance interventions, through concessional funding to high-impact sectors like manufacturing, agriculture, renewable energy, and power.

Besides, the Chamber called for enhanced transparency in lending practices to ensure fairness in borrowing costs, and to also stop banks from imposing excessive margins over the MPR.

On the preparation for a new tax system coming with new rates and administration, it advised that the fight against inflation is sustained, with managed rate cuts, before the end of the year.

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