Follow Us on Google
By Bimbola Oyesola, [email protected]
The Nigeria Employers Consultative Association (NECA) has warned the Federal Government that the recent action of the Central Bank of Nigeria (CBN) to raise the Monetary Policy Rate (MPR) by 25 basis points to 18.75%, will create crisis and further impede growth of businesses in the country.
The Director-General of NECA, Mr. Adewale-Smatt Oyerinde, in an interview with Daily Sun Workforce said the decision of the CBN’s Monetary Policy Committee (MPC) could be chaotic to the growth trajectory of the country as well.
Rather, he advised that the Apex Bank should collaborate with fiscal authorities in addressing the fundamentals behind the persistent increase in consumer prices, which has defy the policy measures put in place by previous rate hikes.
“Tightening monetary policy stance by raising the anchor rate has proved ineffective, as inflation has been rising steadily and could climb as high as 25 percent before year end,” he cautioned.
Oyerinde said the focus of CBN should be on tackling the structural drivers of inflation, which is mostly the supply-side. According to him, in the light of hardship being experienced by the populace, it would have been appealing that the CBN retain the MPR for a while, in order to observe the impact of the current Executive Orders on the economy.
He however reasoned that NECA understood the CBN’s stance that raising interest rate is needed to attract foreign inflows into the economy to moderate pressure on the foreign exchange rate.
But he expressed that the businesses in the country deserve more support from the government than what is currently available.
He said, “In our view, high cost of borrowing is injurious for business growth. Amid tough business conditions, small and medium enterprises needs to be supported with relatively low interest rates to stimulate access to liquidity.
“So, rather than supporting any future hikes in the MPR, the apex bank should collaborate with relevant government agencies in addressing supply-driven inflationary factors such as high energy prices; high costs of logistic and FX pressure amongst others.”
The NECA Director-General stressed that the focus should be driving up investment and ensuring the sustainability of local businesses as one of the key elements to improving economic stability.
