LCCI says interest rates still high for private sector growth
The Lagos Chamber of Commerce and Industry (LCCI) has said that the current level of Monetary Policy rate (MPR) of the Central Bank of Nigeria (CBN) remains high for private sector development.
The Director General of LCCI, Dr Chinyere Almona who made this statement while reacting on the Monetary Policy Committee decision to retain MPR at 27.50 per cent said that MSMEs, the engine of job creation and productivity in Nigeria are being squeezed by the high cost of credit, without affordable financing, their caps it’s to grow, compete and contribute to economic development is severely limited.
She said that it is increasingly clear that monetary policy alone cannot curb inflation that stems from structural and supply-side inefficiencies. Coordinated action with fiscal authorities is essential to address the root causes of inflation, such as insecurity, infrastructure deficits, and food supply disruptions.
She said while the recent marginal decline in headline inflation offers some relief, the Central Bank of Nigeria (CBN) needs to adopt a cautious stance while also providing a clear signal of possible future easing, subject to sustained economic improvements.
She said, “despite the drop in inflation to 23.71 per cent, Nigeria’s macroeconomic conditions remain harsh due to the persistent inflationary pressures, fuelled by exchange rate volatility, rising fuel and logistics costs, and deep-rooted structural challenges, including insecurity and disruptions in food production. “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.”
Urging the MPC the MPC to complement this rate hold with a forward-guided, data-driven roadmap for future easing she said that such a strategy would provide the business community with the clarity needed for medium- and long-term planning.
To cushion the real sector while maintaining price discipline, the LCCI offers a strategic, market-friendly proposals.
She urged the apex bank to remain consistent with the reforms that support price stability through increased production in the real economy, reinforce development finance initiatives by offering concessional rates to high-impact sectors such as manufacturing, agriculture, renewable energy, and power supply. Development finance institutions like the Development Bank of Nigeria, Bank of Agriculture, NEXIM Bank, and the Bank of Industry need better funding and directions towards supporting the productive and industrial sectors of the economy.
