The Nigerian private sector has voiced strong opposition to any further interest rate hikes by the Central Bank of Nigeria (CBN), advocating instead for a stable or reduced Monetary Policy Rate (MPR). As the CBN’s Monetary Policy Committee (MPC) convened for its 300th meeting, key figures within the Organized Private Sector of Nigeria (OPSN) stressed the detrimental impact of the current 27.5% MPR, already among the highest globally, on businesses, particularly Micro, Small, and Medium Enterprises (MSMEs). They argued that further increases would stifle economic growth, discourage investment, and exacerbate the challenges faced by businesses already grappling with rising energy costs, foreign exchange volatility, and weakened consumer spending.
The OPSN Chairman, Dele Oye, pointed out the impossibility of profitable business operations under such a high interest rate regime. He criticized the current MPR, asserting that the economy could not function effectively with such exorbitant borrowing costs. Oye highlighted the negative repercussions of high interest rates on businesses, including increased borrowing costs, reduced investment in expansion and innovation, and suppressed consumer spending due to decreased disposable income. He warned of the cascading effects on the retail and service sectors, as weakened consumer spending ripples through the economy.
Echoing these concerns, the Association of Small Business Owners of Nigeria (ASBON) urged the CBN to prioritize a downward review of the MPR. Acknowledging the CBN’s efforts to combat inflation, ASBON President, Dr. Femi Egbesola, emphasized the need for a balanced approach that avoids stifling productive business activity. He argued that elevated borrowing costs directly hinder investment, expansion, and job creation, exacerbating the challenges businesses already face. He emphasized the urgency of easing the MPR to stimulate economic activity, boost industrial output, and facilitate credit flow to the real sector.
While Nigeria experienced a marginal decrease in inflation in April 2025, dropping to 23.71% from 24.23% in March, the private sector maintains that further interest rate hikes are not the solution. The Centre for the Promotion of Private Enterprise (CPPE) predicted that the MPC would likely hold the MPR at its current 27.5%, citing global economic uncertainties and existing stringent fiscal measures, including a high cash reserve ratio. CPPE Director, Dr. Muda Yusuf, argued that the existing monetary policy tightening mechanisms were already at their limit and cautioned against further strangulating the financial system. He advocated for maintaining the current MPR or, ideally, easing it given the prevailing economic climate.
The private sector’s concerns are rooted in the practical realities faced by businesses operating under high borrowing costs. Manufacturers, in particular, find it increasingly challenging to generate profits with such expensive loans. The Lagos Chamber of Commerce and Industry (LCCI), for instance, criticized the 27.5% MPR, arguing that it should not have reached double-digit levels in the first place. LCCI President, Gabriel Idahosa, questioned the effectiveness of the MPR in curbing inflation in an import-dependent economy like Nigeria’s, urging the CBN to prioritize attracting investments instead.
In essence, the Nigerian private sector’s message to the CBN is clear: further interest rate hikes will be counterproductive. They argue that the current high MPR is stifling economic growth, hindering investment, and exacerbating the challenges faced by businesses already struggling with a multitude of economic pressures. They advocate for a stable or reduced MPR to stimulate economic activity, facilitate investment, and foster a more conducive environment for businesses to thrive. They believe that focusing on attracting investments and addressing structural issues within the economy is more effective than relying solely on interest rate adjustments to combat inflation. Their plea to the CBN is to prioritize a balanced approach that supports both price stability and economic growth.
