The Organised Private Sector (OPS) and financial analysts have welcomed the recent cautious reduction in the Monetary Policy Rate (MPR), describing it as a positive but measured step toward easing monetary conditions. They, however, urged the federal government to take stronger actions to de-risk the business environment and improve credit access to the real sector of the economy.
The stakeholders said while the adjustment in the benchmark interest rate signals responsiveness by monetary authorities, the prevailing high interest rate environment continues to constrain economic growth. They stressed that sustained economic expansion cannot occur under excessively restrictive borrowing conditions.
According to industry leaders, the modest cut in the MPR reflects a balancing act by the Central Bank to manage inflationary pressures while attempting to stimulate economic activity. They noted that inflation remains a concern, making a more aggressive rate cut unlikely at this stage.
Members of the OPS said businesses, particularly small and medium-sized enterprises (SMEs), are grappling with high borrowing costs. They explained that elevated lending rates have limited access to credit, slowed expansion plans, and reduced capacity utilization across several sectors.
Analysts argued that while the cautious rate reduction may gradually ease financial conditions, complementary fiscal measures are needed to unlock growth. They called on the federal government to address structural challenges that increase operational risks for investors.
Stakeholders emphasized the importance of improving credit flow to the real sector, including manufacturing, agriculture, and other productive industries. They said increased lending to these areas would enhance output, create jobs, and strengthen economic resilience.
Business leaders also pointed out that the high cost of funds discourages long-term investment. They warned that without affordable financing, companies may delay capital projects, reduce hiring, or scale back operations.
Some analysts noted that monetary policy alone cannot deliver sustained economic recovery. They urged closer coordination between fiscal and monetary authorities to ensure that policy decisions reinforce one another.
The OPS further highlighted the need for reforms aimed at reducing systemic risks. These include addressing infrastructure deficits, ensuring policy consistency, and enhancing security in business locations across the country.
They stressed that de-risking the business climate would encourage both domestic and foreign investment. Improved investor confidence, they said, would help drive growth even in a moderately high interest rate environment.
Economic experts also lamented that prolonged high interest rates tend to suppress consumer spending and private sector activity. They argued that a gradual but clear path toward lower rates would help stabilize expectations and promote economic planning.
While commending the Central Bank for its cautious stance, stakeholders maintained that additional interventions may be necessary to support key sectors. Targeted credit schemes and incentives for priority industries were among the measures suggested.
The OPS reiterated that sustainable growth requires a supportive financial ecosystem. They urged authorities to create conditions that enable banks to lend more freely to productive enterprises without exposing themselves to excessive risk.
Analysts concluded that the recent MPR reduction is a step in the right direction but must be accompanied by broader economic reforms. They emphasized that lowering inflation, stabilizing the currency, and improving the ease of doing business remain critical to achieving long-term economic growth.
As Nigeria navigates a challenging economic landscape, stakeholders continue to advocate a balanced approach that curbs inflation while fostering investment and productivity.
