NECA, Economist Commend CBN’s Tight Monetary Policy Stance, Seek Structural Reforms

•LCCI laments MPR at 27.5%, says it’s burden on businesses

Emma Okonjiand Dike Onwuamaeze

The Nigeria Employers’ Consultative Association (NECA), as well as an economist, Samuel Ayininuola, have backed the decision of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) to sustain a tight monetary policy stance, describing it as a necessary step to consolidate recent economic gains and ensure long-term stability.

On the other hand, the Lagos Chamber of Commerce and Industry (LCCI), restated its position that the benchmark interest rate at 27.5 per cent remains a depressing burden on businesses.

NECA’s view was made yesterday by its Director General, Mr. Adewale-SmattOyerinde, in statement titled: “NECA Applauds MC’s Decision to Sustain Tight Monetary Policy, Calls for Strategic Consolidation Toward Sustainable Growth.” 

Oyerinde recalled that during the July 2025 MPC’s meeting the committee retained the Monetary Policy Rate (MPR) at 27.5 per cent, while also keeping the Cash Reserve Ratio (CRR) and Liquidity Ratio unchanged.

The move, according to NECA, aligned with the prevailing economic conditions and signals the central bank’s commitment to maintaining macroeconomic discipline.

Oyerinde described the decision as “a critical and timely intervention aimed at safeguarding Nigeria’s modest progress in reducing inflation, stabilising the naira, and attracting investor confidence.

“Inflation has eased from 24.48 per cent in January to 22.22 per cent in June 2025, capital inflows have improved, and the exchange rate has shown marginal appreciation. These indicators, though encouraging, remain fragile.

“The MPC’s data-informed and steady approach is commendable and sends a reassuring signal to investors and the private sector.” 

While acknowledging this positive direction, NECA warned of lingering inflationary risks, particularly amid a 19.9 per cent year-on-year increase in money supply and the ongoing banking sector recapitalisation efforts.

Oyerinde, therefore, warned that “a premature policy easing could unravel the delicate progress we have made and endanger economic stability.” 

But the LCCI restated its position that MPR at 27.5 per cent has remained a depressing burden on businesses.

The Director General of LCCI, Dr. ChinyereAlmona, said, “We, therefore, desire to see a reduction in the MPR. Having examined key economic indicators, including inflation dynamics, exchange rate movements, fiscal developments, and global monetary trends, we may expect to see a possible hold on the MPR by the committee.

“Nigerian businesses and households continue to grapple with high operating and living costs, increasing the cost of credit. In our view, and consistent with our earlier position, rate hikes alone cannot curb inflation.

“The committee must recommend to the CBN that targeted interventions be provided to boost our growth sectors like agriculture, power, and infrastructure.

“We recognise that the current interest rate environment is tight, making access to credit above the affordability of small businesses, and the private sector is being crowded out of funding.

“We, therefore, urge the central bank to complement its conventional policy tools with targeted, non-cash measures in the form of concessionary interest rates to small businesses,” the LCCI said.

For his part, Ayininuola called for caution and structural reforms, especially in the light of the latest GDP rebasing and the outcome of the MPC meeting.

Ayininuola, who spoke yesterday, during an interview on ARISE News Channel, the broadcast arm of THISDAY, provided insight into Nigeria’s economic trajectory, reflecting on the newly rebased GDP figures and the MPC’s decision to hold the benchmark interest rate.

Ayininuola argued that such that the latest GDP growth of 3.13 percent in the first quarter of 2025, was insufficient, stressing that, “Until we consistently see growth rates above five per cent or six per cent, the average Nigerian will continue to feel no real impact.”

While the MPC’s unanimous decision to maintain current interest rates was described as a cautious move to manage inflation and stabilise the naira, many Nigerians continue to call for lower interest rates to reduce the cost of borrowing.

But Ayininuola warned that slashing rates could worsen inflation and increase pressure on the naira due to heightened demand for foreign exchange.

“Inflation is a monster,” he emphasised, noting that any significant loosening of monetary policy could erode recent stability in the exchange rate and further strain living conditions. If the naira depreciates again, things will become even tougher for the average Nigerian,” Ayininuola said.

He also emphasised the growing mismatch in Nigeria’s economic structure. The recent GDP figures show an increase in the services sector while the industrial sector continues to contract, an imbalance Ayininuola believes is unsustainable.

“Without a strong manufacturing base, long-term economic stability is exclusive. Service growth is good, but we need to build local capacity, improve self-reliance, and invest in critical infrastructure,” Ayininuola further said.

Ayininuola also discussed agriculture as a viable path to job creation, pointing to Nigeria’s fertile land and natural advantages. He praised initiatives like the Lagos State food production programs and stressed the importance of value chains.

Addressing Nigeria’s recent approval to borrow $21.5 billion from foreign sources, Ayininuola cautioned, saying: “There’s nothing wrong with borrowing, what matters is how it is used. We must ensure this debt goes into production, infrastructure, and education, not wasteful consumption.”

He urged citizens to hold the government accountable, saying: “All of us must be vigilant. The solution lies in structural change, productivity, and disciplined governance.”