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By Merit Ibe
The Organised Private Sector (OPS) has identified weak monetary policy transmission and fiscal indiscipline as key barriers to sustainable economic growth, despite recent easing measures by the Central Bank of Nigeria (CBN).
The OPS commended the Monetary Policy Committee (MPC) of the apex bank for reducing the Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent in February, describing the move as a cautious but positive step toward economic stabilisation.
In his comments, Director-General of the Nigeria Employers’ Consultative Association (NECA), Adewale-Smatt Oyerinde, said the modest easing would only have meaningful impact if complemented by coordinated fiscal and structural reforms that address supply-side constraints, strengthen infrastructure, and boost productivity.
He urged financial institutions to ensure that the reduction in the benchmark rate is gradually reflected in lending conditions, particularly for manufacturers, small and medium enterprises (SMEs), and other productive sectors.
Oyerinde noted that although the MPC has slightly adjusted its stance, overall monetary conditions remain tight. He pointed to the retention of the Cash Reserve Ratio (CRR) at 45 per cent for commercial banks and the liquidity ratio at 30 per cent, warning that these measures continue to limit banks’ capacity to expand credit to the real sector.
According to him, while the 50-basis-point cut may not immediately translate into significantly lower lending rates, it signals cautious optimism and a gradual shift toward supporting economic growth without jeopardising price stability. He stressed that sustained improvements in inflation, exchange-rate stability, and investor confidence would determine the scope for further easing.
The Lagos Chamber of Commerce and Industry (LCCI) described the decision as a transition from aggressive monetary tightening to a stabilisation phase anchored on disinflation and exchange-rate convergence. The Chamber noted that inflation has moderated for eleven consecutive months to 15.1 per cent in January 2026, reflecting improved macroeconomic discipline.
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While acknowledging that liquidity conditions remain restrictive, the LCCI said the rate cut sends a confidence signal to businesses and could pave the way for a gradual reduction in the cost of capital. However, it stressed that tangible relief in financing costs is still needed to restore production, expand capacity, and safeguard jobs.
The Chamber also called for sustained reforms in power supply, transport logistics, agriculture, and the regulatory environment, alongside efforts to attract foreign direct investment into renewable energy, agro-processing, oil and gas, and other strategic sectors. It expressed optimism that the newly launched digital single window by the Nigerian Customs Service would ease port transactions.
Similarly, the Centre for the Promotion of Private Enterprise (CPPE) described the rate cut as a continuation of the shift from aggressive tightening to cautious easing. The Centre said improving macroeconomic indicators — including sustained disinflation, stronger external reserves, exchange-rate stability, and a better trade balance — supported the decision.
However, CPPE warned that high lending rates persist due to structural rigidities such as the elevated CRR, high deposit costs, risk premiums tied to macroeconomic uncertainty, government borrowing that crowds out private credit, and high banking operating costs.
It stressed that unless these constraints are addressed, the benefits of monetary easing may not translate into lower borrowing costs for manufacturers, SMEs, agriculture, and other productive sectors.
Beyond monetary adjustments, CPPE underscored the need for fiscal consolidation, citing rising public debt, persistent deficits, and heavy debt-service obligations as threats to macroeconomic stability. The Centre called for stronger non-oil revenue mobilisation, expenditure rationalisation, improved transparency, credible deficit-reduction strategies, and reduced reliance on costly domestic borrowing.
The OPS groups maintained that stronger coordination between fiscal and monetary authorities is essential to ensure that monetary gains are not undermined by fiscal pressures.
While the rate cut offers a positive signal to investors and businesses, they agreed that disciplined fiscal management, structural reforms, and effective credit transmission remain critical to unlocking sustained investment and achieving durable economic growth.
