Dike Onwuamaeze
The Lagos Chamber of Commerce and Industry (LCCI), has urged the federal government and the Central Bank of Nigeria (CBN) to make credit available to Micro, Small and Medium Enterprises (MSMEs) at concessionary rates in order to support their operations and production lines.
It made the demand yesterday, in a statement on the Monetary Policy Committee Decisions on the Monetary Policy Rate (MPR).
The Director General of LCCI, Dr. Chinyere Almona, stated: “Concessionary rates that are lower than CBN prevailing MPR are hereby advocated for the MSMEs.
“The high lending rates make it challenging for businesses to access credit, especially for MSMEs that are the backbone of the economy.”
Almona, added that the increase in production costs due to high lending rate, “could lead to higher prices for goods and services, potentially affecting the competitiveness of Nigerian products in Africa and global markets respectively.”
The chamber also described the recent decision of the CBN to raise the benchmark lending rate by 400 basis points to 22.75 per cent as an aggressive regulatory intervention.
“The move comes at a crucial time for the Nigerian economy, facing challenges such as elevated inflation, commodity price hikes, the FOREX crisis, and rising cost of production.
“While the CBN intends to control inflation, the LCCI notes that the decision, particularly the fifth consecutive hike, raises concerns about its effectiveness in tackling the rising food inflation and the likely impact on businesses and economic growth,” it said.
It noted that the CBN’s latest increase in the Monetary Policy Rate (MPR) from 18.75 per cent to 22.75 per cent, signaled a significant shift in monetary policy.
The LCCI, however, observed that “curbing the current rising inflation clearly requires an effective combination of both fiscal and monetary policies to achieve a meaningful result.
“According to the latest data, the headline inflation rate for January 2024 rose to 29.90 per cent, compared to 28.92 per cent in December 2023. The year-on-year increase is notable, with a rise of 8.08 percentage points from January 2023.
“We cannot say the hikes in rates have had any significant impact on curbing inflation in Nigeria, especially in recent months.”
The chamber stated that its view on the current fight against inflation is that the monetary and fiscal authorities should focus on the factors driving the inflation rates by tackling the supply-side deficiencies instead of focusing too much attention on the demand-side management.
It, therefore, urged, “the CBN to continue with its FOREX market reforms to a conclusive end, as the high exchange rate against the naira is a major culprit in the skyrocketing inflation rates.
“On the fiscal side, the government needs to subsidise some productive sectors like agriculture, transport, and healthcare while keeping a stern eye on enhancing the country’s security profile.
“Other areas of intervention could be the adoption of a cheaper duty rate for the importation of agricultural inputs for local manufacturing and investment in building agro-industrial hubs across the country.”
