The Lagos Chamber of Commerce and Industry (LCCI) notes with concern 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%. Following the 296th Monetary Policy Committee (MPC) meeting, this increment comes amid escalating inflation and surging food prices.
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 should sustain the 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:
·      The government should release more capital expenditure to reflate business activities and support the contribution to economic growth. The capital expenditure released so far is too small in the face of the magnitude of the infrastructural deficit that businesses suffer from. With the new capital expenditure component of N12.2 trillion and a release of only N1.84 trillion at mid-year, we definitely need to speed up the release of funds for capital projects in the next quarter to boost economic growth.
·      We want to advise that the government becfaithful to deploying the supplementary budget funds on business-boosting infrastructure as proposed to the National Assembly.
·      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.
·      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.
DR CHINYERE ALMONA, FCA
DIRECTOR GENERAL
LAGOS CHAMBER OF COMMERCE & INDUSTRY
23rd JULY 2024
