The Centre for the Promotion of Private Enterprise (CPPE) has urged Nigerian commercial banks to reduce lending rates after the Central Bank of Nigeria (CBN) cut the Monetary Policy Rate (MPR) by 350 basis points to 23%. In a statement signed by its CEO, Dr. Muda Yusuf, on Tuesday, September 22, CPPE described the move as a positive development for the economy, saying the reduction should flow through to businesses facing high financing costs.
CPPE Calls for Lending Rate Adjustment
CPPE said the adjustment in the benchmark rate must be reflected in the pricing of credit across the banking system for the policy to have a meaningful effect. The organisation stated: "The CPPE expects banks to reflect the new monetary policy environment in the pricing of credit. Lending rates on both new and existing facilities should progressively adjust downwards."
The organisation added that keeping commercial lending rates high despite the MPR cut would neutralise the intended benefits. CPPE said: "Without meaningful transmission to borrowers, the impact of the policy adjustment on investment and economic growth would be limited."
CBN's Largest Rate Cut in Nearly Two Decades
The CBN made the 350-basis-point cut at the 307th meeting of the Monetary Policy Committee (MPC) held in Abuja, bringing the MPR to 23%. The committee also adjusted the corridor around the MPR to +50 basis points and -300 basis points. The CBN retained the Cash Reserve Requirement (CRR) for commercial banks at 45%, with merchant banks remaining at 16%. The 75% CRR on non-Treasury Single Account public sector deposits was also unchanged.
The 350-basis-point reduction is the largest single cut to the benchmark rate since December 2006, when the CBN reduced the MPR by 400 basis points from 14% to 10%, followed by a further 200-basis-point cut in June 2007.
Impact on Businesses and Sectors
CPPE said lower borrowing costs could ease pressure on business cash flows, encourage investment, and support working capital, particularly in sectors such as manufacturing, agriculture, construction, and logistics. The organisation noted that businesses operating on tight margins and long investment cycles stand to benefit the most from more affordable credit.
CPPE said the real measure of the policy's success would depend on how quickly banks pass the reduction on to borrowers. The organisation also warned that the policy cut would have little effect if commercial banks failed to pass on lower borrowing costs to businesses.
Previous CPPE Position on Sugar-Sweetened Beverages
Earlier, Legit.ng reported that CPPE had warned against plans to impose additional taxes on sugar-sweetened beverages (SSBs). CPPE told the government that such a move could harm Nigeria's manufacturing sector and slow economic recovery. The position came amid calls by Corporate Accountability and Public Participation Africa (CAPPA).
