The Lagos Chamber of Commerce & Industry (LCCI) has emphasized the need for the Monetary Policy Committee (MPC) to strike a careful balance between preserving macroeconomic stability and supporting economic recovery especially in light of the extension of the capital expenditure component of the 2024 federal budget to December 2025.In a statement the LCCI Director General, Dr. Chinyere Almona said while the Chamber appreciates that current reforms may have started to have some impact on stabilizing the exchange rates, easing headline inflation, and increasing government revenue, we must restate that interest rate at 27.5 percent remains a depressing burden on businesses.She therefore called for a reduction in the Monetary Policy Rate (MPR).According to her 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.She maintained that the ongoing structural reforms and evolving domestic and external economic conditions are factors to be considered.She said: “We estimate that this budget extension could increase liquidity in the system as more capital funds are released, potentially exacerbating inflationary pressures”.”The Committee should consider that while headline inflation declined marginally to 22.22 percent in June from 22.79 percent in May, the rate remains significantly above the Central Bank’s target.Nigerian businesses and households continue to grapple with high operating and living costs, increasing the cost of credit”.The LCCI Chief argued that rate hikes alone cannot curb inflation and canvassed the need for the Committee to recommend to the CBN that targeted interventions be provided to boost growth sectors like agriculture, power, and infrastructure.Almona stated that the current interest rate environment is tight, making access to credit above the affordability of small businesses, while the private sector is crowded out of funding.She urged the Central Bank to complement its conventional policy tools with targeted, non-cash measures in the form of concessionary interest rates to small businesses.According to her, a coordinated approach with fiscal authorities is essential to resolving key drivers of inflation such as insecurity, infrastructure deficits, and disruptions in food supply chains.To support the real sector while maintaining price stability, the LCCI Chief recommended the following strategic, market-oriented actions to sustain market-driven reforms that promote price stability by stimulating production and investment in the real economy.Part of her recommendation hinted on the need to strengthen development finance interventions through concessional funding to high-impact sectors like manufacturing, agriculture, renewable energy, and power.In addition she asked that Development finance institutions such as the Development Bank of Nigeria, Bank of Agriculture, NEXIM Bank, and the Bank of Industry should be better resourced and aligned with industrial growth priorities.Also she called for the enhancement of transparency in lending practices to ensure that borrowing costs are fair and that banks do not impose excessive margins over the MPR.Others are to stabilize the foreign exchange market by closing arbitrage windows, improving liquidity, and rebuilding investor confidence which is a critical step toward curbing imported inflation and supporting long-term economic stability.Furthermore she advised that the fight against inflation is sustained at this time with managed rate cuts before the end of the year in preparation for a new tax system coming with new rates and administration.
