The Lagos Chamber of Commerce and Industry (LCCI) has condemned the recent decision by the Central Bank of Nigeria (CBN) to raise the Monetary Policy Rate (MPR) by 50 basis points, bringing it from 26.25% to 26.75%. This increment, decided during the 296th Monetary Policy Committee (MPC) meeting, comes amid escalating inflation and surging food prices. While acknowledging the CBN’s efforts to combat inflation, the LCCI emphasized the detrimental impact of this hike on businesses and the overall economy.
The LCCI acknowledges the CBN’s efforts to control inflation and stabilize the economy. However, we are deeply concerned about the broader implications of this rate hike on the business community and the overall economic landscape. We recommend that the government sustain waivers and tax exemptions in the mid-term and long-term to allow for a more significant impact on price pressures and the cost of doing business.
The LCCI urges the government and the CBN to consider a more balanced approach to monetary policy. While controlling inflation is crucial, mitigating adverse effects on business operations and economic growth is imperative. The Chamber proposes the following:
- Release More Capital Expenditure: The government should release more capital expenditure to reflate business activities and support economic growth. The capital expenditure released so far is insufficient given the magnitude of the infrastructural deficit businesses face. With the new capital expenditure component of N12.2 trillion and a release of only N1.84 trillion at mid-year, it is essential to speed up the release of funds for capital projects in the next quarter to boost economic growth.
- Deploy Supplementary Budget Funds: The government must faithfully deploy supplementary budget funds on business-boosting infrastructure as proposed to the National Assembly. This will help support and grow the business sector.
- Diversify Inflation Control Measures: We should diversify our approach to controlling inflation beyond interest rate hikes. Policies that directly address supply-side constraints, such as improving agricultural productivity and stabilizing energy prices, can help reduce inflationary pressures more effectively.
- Invest in Infrastructure: Increased investment in infrastructure can alleviate production bottlenecks and reduce business costs. This will enhance productivity and competitiveness, helping to tame inflation from the supply side.
The LCCI remains committed to working with the government and the CBN to ensure policies that foster a conducive environment for business growth and economic stability. A holistic approach, balancing inflation control with support for businesses, will pave the way for sustainable economic development in Nigeria.
