The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has said the hike of the Monetary Policy Rate (MPR) to 24.75 per cent will have negative impacts on Nigeria’s private sector.
President of the association, Dele Oye, who said this in a statement, also noted that the Cash Reserve Ratio (CRR) of 45 per cent will also have severe repercussions on private businesses in the country.
The Central Bank of Nigeria (CBN) had after its two-day Monetary Policy Committee (MPC) meeting announced that MPR had been raised to 24.75 per cent.
Oye said the association had earlier written to the CBN governor on March 13, 2024, when the apex bank first raised the MPR to 22.75 per cent at its first meeting of the year.
He accused the CBN of sidelining the private sector in its decision-making process.
On the latest MPR hike, the NACCIMA president said it could inadvertently cause inflation, with businesses likely to increase the prices of goods and services to offset the higher borrowing costs.
He pointed out that with the new rate, existing loans will incur higher interest rates, raising the cost of capital for businesses, banks’ ability to lend would be further curtailed and that tightened monetary conditions may lead to a reduction in investment and consumption, which are essential drivers of economic growth, a development that could potentially stifle economic recovery and dampen the prospects for prosperity.
NACCIMA advised the CBN governor to aim for a refined and focused strategy that directly tackles liquidity challenges in the public sector, while minimising the strain on the private sector.
The president also emphasised the need for clear policy directions communicated quarterly and a strong strategy to engage stakeholders, ensuring the private sector’s input in policy making.
