The Nigeria Employers’ Consultative Association, NECA, has commended the Central Bank of Nigeria for reducing the Monetary Policy Rate by 50 basis points to 27 per cent, while cautioning that the policy’s impact may be limited without complementary reforms.
In a statement on Tuesday, NECA’s Director-General, Adewale-Smatt Oyerinde, described the rate cut as a welcome development, especially as inflation slowed from 21.88 per cent in July to 20.12 per cent in August.
He said the moderation in inflation over the past five months had provided policymakers with “critical space to balance the twin objectives of price stability and stimulating economic growth.”
However, Oyerinde warned that the reduction would only have meaningful impact if it translated into cheaper credit for businesses, increased investment, and job creation.
“The effectiveness of the policy depends largely on the extent to which the banking and credit systems transmit the lower cost of borrowing to enterprises and households,” he said.
The NECA chief expressed concern that the persistently high Cash Reserve Ratio and other liquidity constraints could restrict banks’ lending capacity, limiting the real benefits of the policy.
He also noted that food inflation, which stood at about 21.87 per cent, remained a major burden on households, eroding disposable incomes and worsening the cost-of-living crisis.
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According to him, Nigerian businesses are still grappling with high costs of raw materials, energy, and logistics.
He stressed that unless those structural challenges are addressed, lower interest rates alone would not guarantee improved growth or expansion.
Oyerinde urged the government to complement the CBN’s efforts by stabilising the exchange rate, tackling insecurity in farming areas, promoting agricultural mechanisation, and addressing infrastructural bottlenecks in energy and transportation.
“Macroeconomic stability is only meaningful when it is felt by ordinary citizens in the form of lower food prices and reduced living costs,” he added.
NAN
