Market News

The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has faulted the decision of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to increase the country’s interest rate to 15.5 per cent from 14 per cent, saying it will not solve the underlying causes of inflation in the country.

However, NACCIMA, the regulatory body of the Organised Private Sector (OPS) in Nigeria, explained that the new rate announced was primarily a strategy to manage inflation and does not address the underlying cause of inflation, which is rising food costs caused by several variables, including the devaluation of the naira and the cost of energy, which has impacted production and transportation.

The National President of NACCIMA, Ide John Udeagbala, in a press release yesterday, made available to New Telegraph, stated that the persistent increase in interest rates may not be sufficient to reduce the inflation rate in the country. Udeagbala noted that to attain low inflation rates, the Federal Government must assure monetary stability, a continuous electricity supply, and security to promote inclusive economic growth. Particularly, the NACCIMA president stressed that the new rate was the third by the CBN in 2022 alone. Indeed, the renowned industrialist said this approval reflected the resolve of the Central Bank of Nigeria to stem inflation.

Nonetheless, he faulted the MPC for not inviting the OPS in their decision making, stressing that “this should have been accomplished in close cooperation with the OPS in the country.” On the implications of the new interest rate on businesses in the country, the renowned industrialist explained: “The current state of the economy has severely diminished the production capability of the majority of industries; enterprises are already closing. “Small and medium-sized firms, which accounted for 91 per of all businesses in the country and employed about 60 per cent of the working population, would be severely harmed by the implementation of this new policy, since it would inevitably result in an increase in operating costs. “As the cost of raw materials increases for firms, they are forced to raise prices regardless of demand as a result of inflation’s root causes. Attempts by the government to restrict the circulation of money would inevitably result in a rise in the price of products and consumables, as well as a decline in the standard of living.”