NACCIMA Faults CBN’s Monetary Policies, As Inflation Keeps Rising 

NACCIMA Faults CBN’s Monetary Policies, As Inflation Keeps Rising 

4 weeks ago
3 mins read

National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dele Kelvin Oye, has observed that the current Monetary policies adopted by the Central Bank of Nigeria (CBN) are not effective in addressing the prevailing economic challenges, particularly inflation, which keeps rising.

It therefore called for an urgent paradigm shift in the nation’s monetary policies to stabilize the economy and drive sustainable economic growth and development.

The NACCIMA president made the call in a statement in reaction to the recent Gross Domestic Production (GDP) report for first quarter (Q1) of 2024, released by the National Bureau of Statistics (NBS).

The NBS report revealed that GDP grew by 2.98 per cent year-on-year in real terms in Q1 2024.

To tackle soaring inflation, the CBN has hiked the monetary policy rate (MPR), the benchmark interest rate, by 750 basis points from 18.75 per cent to 26.25 per cent in three months. However, the inflation rate keeps soaring as the Consumer Price Index (CPI) report for April revealed that it further rose to 33.69 per cent despite the interest rate hike to limit money supply to the economy.

Oye observed that despite the GDP growth in the first quarter of 2024, “it is evident that the high interest rate is not translating into tangible economic benefits for ordinary Nigerians, farmers, SMEs and large businesses who report lower investment and increased devaluation induced losses.”

He further noted that “The services sector’s notable growth is principally driven by phenomenal profits gifted to Banks by these policies.

“The slight improvements in agriculture must be adjusted for recovery from the significant losses in preceding years.

“The industrial sectors are boosted by investment decisions in the preceding years but now overshadowed and at risk of challenges posed by stubborn inflation, currency instability and high interest rates.”

NACCIMA Faults CBN’s Monetary Policies, As Inflation Keeps Rising 
NCCIMA national president , Dele Oye

READ ALSO: Nigeria’s Oil GDP Growth Slows To 5.7% In Q1 2024

The NACCIMA boss also stated that the persistent depreciation of the Naira, combined with the CBN’s refusal to collaborate meaningfully with the currency market operators, has exacerbated the economic difficulties faced by businesses and ordinary Nigerians.

“The CBN must accept that 35% interest rates offered by commercial banks, makes it virtually impossible for businesses to access much-needed capital,” Oye stated.

“This situation starkly contrasts with Mr. President’s 8th Point Agenda, which emphasizes access to capital for businesses, particularly SMEs, at single-digit interest rates through the Bank of Industry.”

“This begs the question; who is the target of these high interest rates? Who is responsible for excess liquidity injections into the financial system? Who is responsible for printing trillions of excess naira for the last 24 months? Who is responsible for over 1.3 trillion naira FAAC injection every month?” Oye queried.

According to him, both the CBN and the Federal Ministry of Finance have the power to control money supply to the economy.

READ ALSO: Nigeria To Receive $1bn Afreximbank Loan In May For Bolstering Economy 

“The current monetary policies of mopping up excess liquidity is ingenious and impractical. The private sector must be held blameless and relieved of this unnecessary suffering.”

Oye said the misguided monetary policies have resulted in several detrimental outcomes which include hyper-inflation, lack of access to capital due to high interest rates imposed by commercial banks which has made many unable to access loans, therefore stifling business growth and innovation; and also foreign exchanges losses.

“Hyper-Inflation: Eroding purchasing power of consumers leads to higher unsold inventory. Eroding SME capital leads to lower SME investment which is a major driver of this economy.

“Access to Capital: The high interest rates imposed by commercial banks have rendered loans unaffordable, stifling business growth and innovation.

“Foreign Exchange Losses: The ongoing depreciation of the Naira has led to significant foreign currency losses, further destabilizing businesses engaged in international trade.

“Business Closures: The unfavorable economic environment has forced many businesses to close or exit the market, resulting in job losses and reduced economic activity.”

The NACCIMA boss further stated: “It is clear that the CBN’s current approach has been a resounding failure. The insistence on an imperial, know-it-all stance, devoid of stakeholder engagement and collaboration, has only deepened the economic crisis. The time to change tactics is now.

“Clearly, private entreaties to CBN have failed, so we have to publicly engage now before it is too late.”

He called on CBN to engage with relevant stakeholders such as currency market operators, business leaders, and economic experts, to develop inclusive and effective monetary policies.

Stabilize the Naira

The NACCIMA boss also tasked the monetary authorities to implement strategic measures on the public expenditure side to stabilize the Naira, thereby reducing foreign exchange losses and restoring confidence in the economy.

On tackling inflation, he urged the apex bank to adopt policies that directly address the root causes of it on the public sector side to ensure that price stability is achieved.

Other recommendations include that the monetary authorities should facilitate access to capital to enable businesses, particularly SMEs, get loans at reasonable interest rates.

“The CBN must recognize that the current path is unsustainable. It is time for a profound shift in strategy, one that prioritizes economic stability, growth, and the well-being of all Nigerians.

“We urge the CBN to abandon its unilateral approach and embrace a collaborative, transparent, and pragmatic approach to monetary policy. Only then can Nigeria’s economy recover and thrive once more,” he charged.

Leave a Reply

Your email address will not be published.


MOST READ

Follow Us

Latest from Finance & Economy

Don't Miss