The Lagos Chamber of Commerce and Industry (LCCI) issued a statement in response to the recent decision by the Central Bank of Nigeria (CBN) to raise the benchmark lending rate by 400 basis points to 22.75%, describing it as an aggressive regulatory intervention.
Dr. Chinyere Almona, the Director-General of LCCI, acknowledged the significance of the CBN’s move amidst the challenging economic landscape characterized by elevated inflation, commodity price hikes, forex crisis, and rising production costs. However, while recognizing the CBN’s intent to curb inflation, the LCCI expressed concerns over the effectiveness of the fifth consecutive rate hike, particularly in addressing food inflation and its potential impact on businesses and economic growth.
The chamber emphasized the need for a comprehensive approach to tackling inflation, advocating for a combination of fiscal and monetary policies. Despite the successive rate hikes, the headline inflation rate for January 2024 rose to 29.90%, indicating the limited impact of monetary measures alone.
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In addressing inflation, the LCCI urged the CBN to prioritize supply-side interventions, including forex market reforms, to address the high exchange rate against the naira, a major driver of inflation. Additionally, it called for fiscal measures such as subsidizing key sectors like agriculture, transport, and healthcare, and enhancing security to support economic stability.
Furthermore, the LCCI emphasized the importance of making credit accessible to Micro, Small, and Medium Enterprises (MSMEs) at concessionary rates lower than the prevailing MPR. High lending rates hinder MSMEs’ access to credit, impacting their operations and competitiveness. The chamber also advocated for investment in agro-industrial hubs and the adoption of cheaper duty rates for agricultural inputs to promote local manufacturing.
As a representative of the business community, the LCCI reiterated its commitment to engaging with policymakers to create a conducive business environment that fosters growth, investment, and sustainability in Nigeria.
