…seeks reduction in MPR
The Lagos Chamber of Commerce and Industry (LCCI) has urged for sustainable market-driven reforms that will help prices stay stable and the economy grow. In a statement by Chinyere Almona, the director general of LCCI, it was noted that while some recent policies have helped stabilize exchange rates, reduce inflation, and increase government money, the high interest rate of 27.5 percent is still making it hard for businesses to thrive.
As the Monetary Policy Committee (MPC) of the Central Bank of Nigeria gets ready for their next meeting in 2025, the LCCI is suggesting that they lower the main interest rate. They believe that after reviewing important economic information, like inflation rates and changes in currency value, the MPC might decide to keep the interest rate the same. The LCCI pointed out the need to balance keeping the economy stable while allowing for recovery, especially since some government spending for 2024 will continue into December 2025.
Additionally, the LCCI urged the MPC to think about ongoing changes in the economy and the impact of financial conditions both in Nigeria and around the world. They recommended that the committee consider how the extended government budget could lead to more money available in the economy, which could help businesses, but might also increase inflation.
To bolster the real sector while ensuring price stability, the LCCI proposed boosting development finance interventions through concessional funding targeted at high-impact sectors such as manufacturing, agriculture, renewable energy, and power. They highlighted that Nigerian businesses and households continue to face high operating and living costs, increasing the cost of credit.
The chamber also suggested that the MPC should make lending practices clearer to ensure that borrowing costs are fair and to stop banks from adding too much to the Monetary Policy Rate (MPR).
The LCCI stressed the importance of stabilizing the foreign exchange market by closing arbitrage opportunities, improving liquidity, and restoring investor confidence, pointing out that these are critical steps to alleviate imported inflation and foster long-term economic stability.
They also noted that development finance institutions, including the Development Bank of Nigeria, Bank of Agriculture, NEXIM Bank, and the Bank of Industry, should be better equipped and aligned with the goals of industrial growth.
We recognize that the current interest rate situation presents major hurdles, making it tough for small businesses to get loans, and it also leaves the private sector with few funding choices.
“As a result, we urge the Central Bank to improve its standard policy tools with specific, non-cash measures, particularly by offering lower interest rates for small enterprises,” said the LCCI, highlighting the need for teamwork with fiscal authorities to tackle urgent inflation challenges like insecurity, poor infrastructure, and disruptions in food supply chains.
As we prepare for a new tax system that will introduce different rates and administrative procedures, the chamber suggests that the ongoing fight against inflation should be actively pursued right now, with expected reasonable rate reductions before the year wraps up.