Nigeria’s Central Bank Under Fire as Private Enterprise Centre Warns of Economic Backlash
As the Central Bank of Nigeria (CBN) tightened monetary policy for the fifth time this year, the Centre for the Promotion of Private Enterprise (CPPE) has slammed the move, warning of severe economic consequences.
According to Muda Yusuf, CPPE’s Executive Director, the latest interest rate hike is a significant setback for investors and manufacturers, who were already struggling to breathe amidst the country’s economic downturn. The CBN, he said, has missed the mark in addressing the prevailing economic conditions and challenges faced by entrepreneurs.
"It’s oxygen and stimulus we need, not policy measures that would worsen the already suffocating situation," Yusuf stated in a statement. "Monetary conditions are very difficult to bear for most businesses, given the prevailing macroeconomic and structural conditions."
The CPPE Director criticized the CBN’s decision to raise the Monetary Policy Rate (MPR) to 27.25% and the Cash Reserve Ratio (CRR) to 50%, stating that this would further exacerbate the operating and production costs of businesses. He also pointed out that the injection of liquidity into the system was largely public-sector driven and should be addressed within a causative context.
"We believe that the policy decisions of the CBN are most inappropriate for the prevailing economic conditions and the challenges faced by entrepreneurs in the country," Yusuf stated. "The private sector should not be made to pay the price of liquidity growth which they were not responsible for."
The think tank warned that the move could lead to cost funds exceeding 35% or more, negatively impacting financial intermediation and the banking system as a whole. The country’s economic prospects, they cautioned, hung in the balance.
Meanwhile, the CBN had earlier announced a 50-basis-point interest rate hike at its 297th Monetary Policy Committee (MPC) meeting in September 2024, citing concerns over inflation and the economy.
As Nigeria grapples with recession and economic uncertainty, experts are keenly watching how the government and regulatory bodies respond to the challenges ahead. Will the CBN’s latest move pay dividends, or will it spell further economic woes for the country? Only time will tell.
