Latest Rate Hike by CBN Will Hurt Investments—CPPE

By Adedapo Adesanya

An advocacy group for the private sector in Nigeria, the Centre for the Promotion of Private Enterprise (CPPE), has criticised the decision by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to raise the lending rate, otherwise known as the Monetary Policy Rate (MPR), saying this action will further hurt investments in the country.

At the end of its 297th MPC meeting in Abuja on Tuesday, the committee further increased the MPR by 50 basis points to 27.25 per cent from 26.75 per cent, shocking those expecting a pause after recent progress with inflation slowing consequently.

Reacting to the development through its chief executive, Mr Muda Yusuf, CPPE noted that tightening the monetary policy at a time when manufacturers, entrepreneurs, and other investors in the economy are struggling and need succour was not the right decision.

According to him, this is at variance with the mood of most economic players at this time.

“What manufacturers and other investors need at this time is some oxygen and stimulus, not policy measures that would worsen an already suffocating situation.

“The MPR at 27.25 per cent; CRR at 50 per cent, and asymmetric corridor at +500 and -100 are very difficult monetary conditions to bear for most businesses. “This is given the prevailing macroeconomic and structural conditions,” he said.

Mr Yusuf said that the second quarter gross domestic production (GDP) numbers showed clearly that the economy was still in a floundering mode, adding that many critical sectors of the economy slowed during the quarter.

He listed the sectors to include manufacturing and its other sub-sectors such as cement, food and beverage, chemicals and pharmaceuticals, trade, ICT and real estate.

The economic expert said that the road transport, motor assembly, publishing and motion pictures sectors contracted during the quarter while aviation, oil refining, textile, livestock and quarry and minerals sectors were still in recession.