Interest Rate Debate Deepens: Manufacturers Cry Out, LCCI Urges Caution Over CBN’s 27.5% MPR Hold
The decision by the Central Bank of Nigeria (CBN) to retain the Monetary Policy Rate (MPR) at 27.5% since November 2024 has sparked sharp divisions between major industry stakeholders. While the Manufacturers Association of Nigeria (MAN) describes the policy as stifling to industrial growth, the Lagos Chamber of Commerce and Industry (LCCI) sees it as a cautious, balanced response to Nigeria’s macroeconomic realities.
Manufacturers Warn of Policy Backfire on ‘Nigeria First’ Agenda
The Director General of MAN, Segun Ajayi-Kadir, voiced deep concern over the prolonged high-interest environment, warning that it undermines the ‘Nigeria First’ policy, which aims to strengthen local production and reduce import dependence.
He lamented that despite a global shift towards rate cuts to drive economic recovery and reduce stagflation risks, Nigeria is heading in the opposite direction.
“A nation cannot industrialize on the back of prohibitively expensive credit,” Ajayi-Kadir stated. “With lending rates now averaging over 37%, local manufacturers are suffocating under the weight of expensive financing, making Nigeria the 6th most expensive country to access credit.”
He further warned that the current stance could derail efforts to boost manufacturing capacity utilization and economic self-sufficiency, both of which depend heavily on affordable financing.
LCCI Backs CBN’s Prudence but Calls for Future Easing Roadmap
On the other hand, Dr. Chinyere Almona, Director General of the LCCI, offered a more measured response, acknowledging the logic behind holding the rate steady in the face of persistent inflation risks.
She argued that the CBN’s decision reflects a balanced approach—one that protects macroeconomic stability in the short term while creating space to evaluate longer-term trends.
However, Almona urged the CBN’s Monetary Policy Committee to go further by providing a forward-guided, data-driven plan for easing in the future.
“The current MPR level remains prohibitively high for private sector development,” she noted. “MSMEs—the backbone of job creation in Nigeria—are particularly vulnerable, and without affordable credit, their ability to thrive and scale remains limited.”
She emphasized that monetary policy alone cannot fight inflation, especially when core issues like insecurity, infrastructure deficits, and food supply chain disruptions are driving price instability. LCCI called for stronger collaboration between fiscal and monetary authorities to address these root challenges.
What Lies Ahead?
The debate reveals a clear tension: while the CBN prioritizes inflation control and macroeconomic signals, Nigeria’s real sector players are asking for breathing room to survive and grow.
As the economy continues to grapple with tight credit, volatile FX, and inflationary pressures, many are now watching to see whether the CBN will eventually signal a shift—or double down on its hawkish stance.
The decision by the Central Bank of Nigeria (CBN) to retain the Monetary Policy Rate (MPR) at 27.5% since November 2024 has sparked sharp divisions between major industry stakeholders. While the Manufacturers Association of Nigeria (MAN) describes the policy as stifling to industrial growth, the Lagos Chamber of Commerce and Industry (LCCI) sees it as a cautious, balanced response to Nigeria’s macroeconomic realities.
Manufacturers Warn of Policy Backfire on ‘Nigeria First’ Agenda
The Director General of MAN, Segun Ajayi-Kadir, voiced deep concern over the prolonged high-interest environment, warning that it undermines the ‘Nigeria First’ policy, which aims to strengthen local production and reduce import dependence.
He lamented that despite a global shift towards rate cuts to drive economic recovery and reduce stagflation risks, Nigeria is heading in the opposite direction.
“A nation cannot industrialize on the back of prohibitively expensive credit,” Ajayi-Kadir stated. “With lending rates now averaging over 37%, local manufacturers are suffocating under the weight of expensive financing, making Nigeria the 6th most expensive country to access credit.”
He further warned that the current stance could derail efforts to boost manufacturing capacity utilization and economic self-sufficiency, both of which depend heavily on affordable financing.
LCCI Backs CBN’s Prudence but Calls for Future Easing Roadmap
On the other hand, Dr. Chinyere Almona, Director General of the LCCI, offered a more measured response, acknowledging the logic behind holding the rate steady in the face of persistent inflation risks.
She argued that the CBN’s decision reflects a balanced approach—one that protects macroeconomic stability in the short term while creating space to evaluate longer-term trends.
However, Almona urged the CBN’s Monetary Policy Committee to go further by providing a forward-guided, data-driven plan for easing in the future.
“The current MPR level remains prohibitively high for private sector development,” she noted. “MSMEs—the backbone of job creation in Nigeria—are particularly vulnerable, and without affordable credit, their ability to thrive and scale remains limited.”
She emphasized that monetary policy alone cannot fight inflation, especially when core issues like insecurity, infrastructure deficits, and food supply chain disruptions are driving price instability. LCCI called for stronger collaboration between fiscal and monetary authorities to address these root challenges.
What Lies Ahead?
The debate reveals a clear tension: while the CBN prioritizes inflation control and macroeconomic signals, Nigeria’s real sector players are asking for breathing room to survive and grow.
As the economy continues to grapple with tight credit, volatile FX, and inflationary pressures, many are now watching to see whether the CBN will eventually signal a shift—or double down on its hawkish stance.