Monetary policy: Reps frown at high interest rate impacts on economic growth

…as NBS set to release latest rebasing report on current living standard, Poverty rate, others

The House of Representatives on Wednesday tasked Monetary Policy Committee (MPC) on the need to adopt friendly monetary policy that will reduce high interest rate, enable promote growth and employment generation during the 300th meeting scheduled to hold next week.

Chairman, House Committee on National Planning, Hon. Adegboyega Isiaka gave the charge in Abuja during an interactive session with the Statistician General of National Bureau of Statistics (NBA), Prince Aderemi Adeniran, who hinted on the Agency’s plan to release the latest rebasing report which captured 934 goods and services manual which has 13 divisions.

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Isiaka who frowned at the inability of organised private sector to raise fund from the financial sector due to the high interest rate which stands at over 30 percent, said: “Our work plan and schedule can be categorised under the following groups: national plan and all matters relating to it which include the MTEF and the annual budget; Oversight over listed ministry and agencies; action to be taken on referrals from the House including investigation and other matters the need to be done and matters that relate to economic development including opinions on economic policies and all issues that impact on achieving the target set in the national plan and economic objectives.

“In all there seem to be a majority opinion that this government has taken very bold steps end have pursued market driven reforms that is beginning to yield positive numbers and reduce high interest rate. For instance the nations capital market has surged significantly by about 100% increase in the last two years the Central Bank has recorded the highest level of external reserves in over three years and reported to have recorded a profit of N38 8 billion, remarkable turnaround from the N1.15 trillion loss recorded in 2023. In all, the economy is getting stabilised and confidence is being restored.

“However, as the Central Bank will be going into its 300° MPC meeting early next week, it is important to state that high interest rate aimed at curbing inflation have had significant unintended consequences on growth, particularly in the manufacturing, agriculture and SME sectors which are significant employers of labour.

“The MPR has been raised 10 times since January 2023 currently standing at 27.5% from 16.5% in 2023 with the aim of curbing demand pull inflation and high interest rate. However, it will appear that the effectiveness of this policy has been undermined by structural bottleneck, supply chain inefficiencies, etc.

“It is therefore our view that considering the current economic landscape, the monetary authorities as the meet next week should consider a more accommodative stance that also promotes growth and employment generation,” he said.

In his presentation, Statistician General for the Federation, Prince Aderemi Adeniran who also doubles as member of the Monetary Policy Committee, said: “as you are aware, NBS recently released the new series of the Consumer Price Index and Inflation (CPI) following the rebasing exercise, which resulted in a headline inflation of 24.48% in January 2025, 23.18% in February, and 24.23% in March 2025.

“NBS is currently finalising the rebasing of GDP, after the last rebasing done in 2014 using 2010 as the base year. The recent rebasing of the GDP has a base year of 2019 and has incorporated new areas and activities of interest into the computations. These include – digital economic activities; pension funds administrators; Health and Social Insurance activities as covered by the National Health Insurance Authority (NHIA) and the National Social Insurance Trust Fund (NSITF); Modular refineries; and an improved coverage of the informal activities, among others.

“Overtime, the Bureau, in the course of the rebasing has engaged with critical stakeholders such as the Federal Ministry of Communications and Digital Economy, Federal Ministry of Foreign Affairs, Federal Ministry of Solid Minerals Development, Federal Ministry of Arts, Culture and Creative Economy, Central Bank of Nigeria, Ministry of Marine and Blue Economy, National Pension Commission, National Social Insurance Trust Fund, National Health Insurance Authority, Nigerian Midstream and Downstream Petroleum Regulatory Agency, among others.

“Other key stakeholders consulted are the economic management team, development partners, experts, media practitioners, academia, etc. The different levels of engagement were aimed at fostering collaborations and improvements of the rebasing process.

“It is worth noting that we have concluded the major activities of the rebasing exercise and are currently at the final stages of engaging stakeholders. The preliminary results showed that the top seven economic activities are crop production; trade; real estate; telecommunications; crude petroleum and natural gas; livestock and construction, while the least seven are rail transport & pipelines; electrical & electronics; coal mining; metal ores; post and courier services; publishing and oil refining. We hope to release the new rebased numbers in a few weeks.”

Speaking on the Q4 2024 and full year 2024 performance of the economy, Adeniran said: “While we await the final rebased results. The Bureau published the Q4 2024 and full year 2024 economic performance report on 24th February 2025. The report showed that nominal GDP in Q4 2024 was N78.37 trillion, higher than N65.91 trillion in Q4 2023, while real GDP was N22.61 trillion, from N21.77 trillion in Q4 2023. Growth of the economy in the fourth quarter of 2024 was 3.84% on a year-on-year basis in real terms, supported strongly by the performance of the services sector. This growth was higher than the 3.46% recorded in the fourth quarter of 2023 and the third quarter of 2024. The contributions of agriculture (25.59%), and industry (17.03%) declined in the quarter, while services (57.38%) increased from the corresponding period of 2023.

“Average daily oil production was 1.54 million barrels per day (mbpd), lower than the 1.56mbpd recorded in the same quarter of 2023, but higher than the third quarter of 2024 production volume of 1.47mbpd. Real growth of the oil sector was 1.48% (year-on-year) in Q4 2024, from 12.11% in Q4 2023, while non-oil growth stood at 3.96% over the period. Overall, the annual GDP growth in 2024 was 3.40% from 2.74% in 2023. Let me state that Q1 2025 is being processed on the rebased benchmark numbers.

“Foreign Trade Statistics, as published by the Bureau, show the value of merchandise trade between Nigeria and its trading partners around the world. In Q4 2024, the total trade stood at ₦36.60 trillion, up from N35.82 trillion in Q3 2024. This was the highest total trade value in any quarter since the year 2020. Out of this total value, Exports stood at ₦20.01 trillion in Q4 2024, and imports were ₦16.59 trillion. Crude oil remained the dominant export commodity with a 68.87% share of total exports from 65.28% in Q3 2024.

“In terms of annual figures, Nigeria’s international trade witnessed significant expansion between 2023 and 2024. Total imports nearly doubled, rising sharply from approximately ₦30.86 trillion in 2023 to ₦60.59 trillion in 2024, reflecting a growth rate of about 96.3%. Similarly, exports grew from ₦35.96 trillion to ₦77.44 trillion, marking a 115.3% increase. This strong trade growth resulted in a substantial positive trade balance of ₦16.85 trillion in 2024, compared to just ₦5.10 trillion in 2023, indicating a stronger external sector performance for the country.

“Crude oil remained the dominant driver of Nigeria’s export earnings, contributing ₦55.29 trillion, which accounted for 71.4% of total exports in 2024. However, non-crude oil exports also saw considerable improvement, rising to ₦22.16 trillion. Within this category, non-oil exports alone contributed ₦9.09 trillion, more than doubling from ₦3.14 trillion in 2023. This shift suggests progress in diversifying the export base and reducing over-dependence on crude oil amd high interest rate, even though oil remains central to Nigeria’s trade structure. Moreover, Q1 2025 report is being processed at the moment.”

Speaking on the Nigeria Labour Force Survey (NLFS), he explained that “the latest reference period published by the Bureau is for Q2 2024, which reported an unemployment rate of 4.3 per cent, down from 5.3 per cent in the previous quarter. Unemployment was more prevalent among females (5.1 per cent) than males (3.4 per cent) and was higher in urban areas (5.2 per cent) compared to rural areas (2.8 per cent). Young people faced a relatively higher unemployment rate of 6.5 per cent compared to the headline figure.

“Additionally, 12.5 per cent of youth were not in employment, education, or training (NEET), with the rate higher among young females (14.3 per cent) compared to young males (10.9 per cent). However, the Q3 and Q4 2024 reports are being finalised to be disseminated to the public.”

While speaking on the poverty and living standards rate in the country, Adeniran explained that using the monetary approach being used for poverty measurement using a monetary approach “reported as 40.1% in 2018/2019..

He, however, explained that using Multidimensional Poverty Index (MPI) 2021/2022 survey “indicated 63 per cent of people (133 million) are multi-dimensionally poor, meaning that they suffer deprivations from more than one of the dimensions outlined above.”

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