MPR hike has wider implication for economy, says ActionAid
Omeiza Bilal
ActionAid Nigeria has said that the decision by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria’s (CBN) has broader implications for the economy.
The MPC at its meeting Tuesday jerked up the Monetary Policy Rate (MPR) to 26.25%, making it the third consecutive time.
Country Director, ActionAid Nigeria’s Andrew Mamedu in a press release issued by the Communications Coordinator Oluwakemi Akinremi-Segun noted that, while the decision to adjust the MPR demonstrates a proactive approach to achieving price and economic stability, it will inevitably lead to higher borrowing costs for businesses and individuals.
According to him, Small and Medium-sized Enterprises (SMEs), which are the backbone of our economy will face heightened challenges in accessing affordable credit adding that it could stifle innovation, growth, and job creation within these vital sectors of the economy.
“For vulnerable populations, the rising cost of living and food prices, exacerbated by higher interest rates, will further strain their already limited financial resources.
“This becomes a case of double jeopardy of high inflation and high interest rates. As the cost of borrowing increases, so does the difficulty in securing loans for essential needs, pushing many deeper into poverty.
“To mitigate the impacts of the increase in interest rates and inflation, ActionAid Nigeria proposes that the Federal and State Governments must immediately step-up social protection programs to support the most vulnerable populations.
“This includes expanding food assistance initiatives, providing targeted financial aid to low-income families, and offering more support to other social sectors, including education, health, and housing,” he said.
