The Lagos Chamber of Commerce and Industry (LCCI) has expressed concerns about the recent hike in the Monetary Policy Rate (MPR) as a way of tackling rising inflation, noting that rather than achieve such an objective, the new rate might have a serious impact on businesses and the nation’s economic growth.
The Central Bank of Nigeria (CBN), as part of its regulatory intervention, recently raised the benchmark lending rate by 400 basis points, from 18.75% to 22.75%, signalling a significant shift in monetary policy as a way of checking rising inflation in the country.
But the Chamber, in a statement signed by its Director General, Dr Chinyere Almona, noted that checking the current rising inflation requires an effective combination of both fiscal and monetary policies to achieve a meaningful result.
It argued that while the country’s apex bank intends to control inflation, with these regulatory efforts, the fifth hike in a row might be ineffective since it was not directed at the factors driving inflation rates.
“The Chamber’s view on the current fight against inflation is that the monetary and fiscal authorities should focus on the factors driving the inflation rates by tackling supply-side deficiencies instead of focusing too much attention on demand-side management.
“We urge the CBN to continue with its FOREX market reforms to a conclusive end, as the high exchange rate against the naira is a major culprit in the skyrocketing inflation rates.
“On the fiscal side, the government needs to subsidise some productive sectors like agriculture, transport, and healthcare while keeping a stern eye on enhancing the country’s security profile,” it stated.
Other areas in dire need of the government’s intervention, as listed by the Chamber, include the adoption of a cheaper duty rate for the importation of agricultural inputs for local manufacturing, investment in building agro-industrial hubs across the country; and making credit available to MSMEs to support their operations and production lines.
It also advocated for concessionary rates lower than the CBN’s prevailing MPR for MSMEs, noting that high lending rates make it challenging for businesses to access credit, especially for SMEs that are the backbone of the economy.
“The increase in production costs could lead to higher prices for goods and services, potentially affecting the competitiveness of Nigerian products in Africa and global markets, respectively,” it stated.
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