The Organised Private Sector (OPS) has urged the Central Bank of Nigeria (CBN) to reduce the Monetary Policy Rate (MPR) from its current 27.50 per cent to encourage economic growth. Stakeholders in the private sector believe that a high interest rate is stifling businesses and discouraging investment.
In separate interviews, business leaders called on the Monetary Policy Committee (MPC) to start a phased reduction of the MPR to send a positive signal to the economy. A member of the MPC, Mustapha Akinkunmi, revealed that Nigeria’s MPR is the fifth highest in the world, only lower than Argentina’s 29 per cent, Zimbabwe’s 35 per cent, Turkey’s 45 per cent, and Venezuela’s 59.4 per cent.
With the next MPC meeting scheduled for May 19 and 20, the OPS has urged the CBN to adopt a balanced approach by harmonising monetary policy with fiscal strategies and reducing the cash reserve ratio (CRR) to support business expansion.
Gabriel Idahosa, President of the Lagos Chamber of Commerce and Industry (LCCI), criticised the high interest rate, describing it as a sign of economic distress. He argued that raising interest rates to curb inflation had not worked in Nigeria due to its heavy dependence on imports. He advised the CBN to focus on attracting investments instead of relying on MPR adjustments. According to him, although some inflationary factors, like exchange rates, have started stabilising due to CBN policies, a gradual reduction of the MPR is necessary to lower production costs and stimulate economic growth.
He suggested that the MPR should be reduced by at least 25 basis points to show a shift in policy direction. Similarly, Adewale Oyerinde, Director-General of the Nigeria Employers’ Consultative Association (NECA), warned that a prolonged high MPR could stifle business growth and restrict credit access, particularly for small and medium enterprises (SMEs). He proposed a reduction of 150 to 250 basis points (1.5 to 2.5 per cent) to encourage borrowing and economic activity.
Oyerinde stressed that global monetary trends show a gradual easing of interest rates to support economic recovery, and Nigeria risks being left behind if it fails to align with these changes. He called for a clear policy direction from the CBN to reduce economic uncertainty and encourage long-term business planning.
Dr Muda Yusuf, Director of the Centre for the Promotion of Private Enterprise, also raised concerns over Nigeria’s high CRR, which stands at 50 per cent. He argued that such a high CRR is limiting financial intermediation and making it difficult for banks to support businesses. He questioned why Nigeria, despite not having the worst macroeconomic conditions, should bear one of the highest CRRs in the world. He insisted that easing monetary policy is crucial for economic growth.
Segun Kuti-George, National Vice President of the Nigerian Association of Small-Scale Industrialists, explained that the high MPR discourages borrowing, increases production costs, and reduces consumer demand. He warned that when businesses struggle to access affordable credit, they shrink, leading to higher unemployment rates.
While he acknowledged that high interest rates can help reduce money circulation and inflation, he argued that the policy had not worked effectively in Nigeria. He pointed out that despite continuous increases in the MPR, inflation has not dropped significantly.
Dr Femi Egbesola, President of the Association of Small Business Owners of Nigeria (ASBON), also lamented the high MPR, stating that it discourages investment and innovation. He compared Nigeria to peer nations that maintain lower rates to support their productive sectors. He urged policymakers to adopt a more holistic approach by combining supportive fiscal policies, infrastructure development, and targeted incentives for businesses.
Egbesola maintained that simply keeping interest rates high will not solve Nigeria’s economic problems but will further slow economic activities.
With the upcoming MPC meeting, stakeholders in the private sector hope the CBN will consider their calls for a gradual reduction in interest rates to foster business growth, attract investments, and support economic development.
