The Central Bank of Nigeria (CBN) has cut its Monetary Policy Rate (MPR) from 26.5 per cent to 23 per cent, a move welcomed by the Nigeria Employers’ Consultative Association (NECA) and the Centre for the Promotion of Private Enterprise (CPPE). The 350‑basis‑point reduction marks a significant shift from the country’s prolonged tight monetary stance and is seen as a potential catalyst for easing financing costs, boosting investment and supporting economic growth.
“For businesses that have faced elevated borrowing costs, the reduction in the MPR is a step in the right direction,” said Adewale‑Smatt Oyerinde, Director‑General of NECA. “However, a lower policy rate does not automatically translate into cheaper credit for businesses.”
“The 350‑basis‑point cut represents a major shift towards supporting growth, investment and economic recovery,” said Dr Muda Yusuf, Chief Executive Officer of CPPE. “It is timely against the backdrop of an improving inflation trend and the high cost of maintaining a restrictive monetary policy.”
Both organisations highlighted that the success of the rate cut will hinge on how quickly commercial banks transmit the lower policy rate into lending rates. They identified manufacturers and small‑and‑medium‑enterprises (SMEs) as the sectors most likely to benefit if banks reduce their borrowing costs. Yusuf warned that high commercial lending rates have constrained investment, production, working capital and job creation in manufacturing, agriculture, construction and logistics.
NECA noted that the CBN has retained a 45 per cent Cash Reserve Requirement (CRR) for Deposit Money Banks, indicating that monetary conditions remain relatively tight despite the benchmark rate cut. The body also pointed to other cost pressures—high energy and input costs, logistics challenges and foreign‑exchange expenses—and urged the government to complement monetary easing with measures to address these structural constraints.
CPPE echoed this sentiment, stressing that lower interest rates alone will not deliver sustainable recovery. Yusuf identified energy costs, logistics bottlenecks, insecurity, food‑production constraints, infrastructure deficits and high regulatory costs as major drivers of inflation and business operating expenses. He called for stronger fiscal and structural measures to reduce production costs and expand domestic productive capacity, and warned that a lower MPR could also pressure the naira if it reduces the attractiveness of Nigerian financial assets.
Both NECA and CPPE agreed that the real test of the CBN’s rate cut will be whether businesses gain access to credit at lower rates and whether this translates into higher investment, production and job creation. NECA also called for further measures to ease the burden on manufacturers, urging strategic support to enhance access to finance.
<small>Source: The Sun Nigeria — read the original story there.</small>
