Lagos, July 27. 2023: The Nigeria Employers’ Consultative Association (NECA) has urged the Central Bank of Nigeria (CBN) to collaborate with relevant government agencies in addressing supply-driven inflationary factors.
The Director-General, Mr Adewale-Smatt Oyerinde, said this in a statement on Wednesday, in Lagos.
He said that such factors include high energy prices; high costs of logistics and Foreign Exchange pressure, among others.
Oyerinde was reacting to the decision by the Monetary Policy Committee of CBN to raise the Monetary Policy Rate (MPR) by 25 basis points to 18.75 per cent.
According to him, such increase can be chaotic to the growth trajectory of the nation.
“It is apt that the apex bank collaborate with fiscal authorities in addressing the fundamentals behind the persistent increase in consumer prices, which has defied the policy measures put in place by previous rate hikes.
“Tightening monetary policy stance by raising the anchor rate has proved ineffective, as inflation has been rising steadily and could climb as high as 25 per cent before year end.
“The focus of CBN should be on tackling the structural drivers of inflation, mostly the supply-side, “ he said.
The NECA boss said it was understandable that CBN’s stance in raising interest rate was needed to attract foreign inflows into the economy to moderate pressure on the foreign exchange rate.
He said, however, that in the light of hardship being experienced by the populace, it would have been appealing that CBN retained the MPR for a while, to observe the impact of the current executive orders on the economy.
“In our view, high cost of borrowing is injurious for business growth; amid tough business conditions, small and medium enterprises need to be supported with relatively low interest rates to stimulate access to liquidity.
“The focus should be driving up investment and ensuring the sustainability of local businesses as one of the key elements to improving economic stability, “ Oyerinde said.
