The Centre for The Promotion of Private Enterprise [CPPE] has warned that the decisions taken by the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) would hurt the economy.
The CBN Governor, Olayemi Cardoso, held earlier on Tuesday in Abuja, announced the committee’s decision to further raise the Monetary Policy Rate (MPR) by 50 basis points from 26.75% to 27.25% to tighten the inflation rate which stands at 32.15%.
However, in a statement sent to Naomisophyblog the same day, the CPPE Chief Executive, Mr. Muda Yusuf, lamented that while other investors in the economy are craving for a breath of fresh air, the CBN chose to tighten the noose on them by resorting to a tight monetary policy.
He said the CBN’s latest policy was at variance with the mood of most economic players and the desire to promote economic recovery and growth.
The statement read: “It is quite troubling that at a time when manufacturers, entrepreneurs, and other investors in the economy are craving for a breath of fresh air, the CBN chose to tighten the noose on them by resorting to a further tightening of monetary policy.
“The latest policy choice of the apex bank is at variance with the mood of most economic players and the desire to promote economic recovery and growth.
“What manufacturers and other investors need at this time is some oxygen and stimulus, not policy measures that would worsen an already suffocating situation.
“MPR at 27.25%; CRR at 50% and asymmetric corridor at +500 and -100 are very difficult monetary condition to bear for most businesses, given the prevailing macroeconomic and structural conditions.”
Yusuf noted that the second quarter Gross Domestic Product (GDP) numbers showed clearly that the economy was still floundering as many critical sectors of the economy slowed.
“These include manufacturing and other subsectors of the industrial sector such as cement, food and beverage, chemicals and pharmaceuticals, trade, ICT and real estate.
“The road transport, motor assembly, publishing, and motion pictures sectors contracted during the quarter. The Aviation, Oil Refining, textile, livestock and quarry, and minerals sectors were still in recession.
“Tightening financial conditions in the circumstances does not seem appropriate. The private sector should not be made to pay the price of liquidity growth which they were not responsible for.
“Issues of excess liquidity should be addressed within a causative context. The injection of liquidity into the system are largely public-sector driven, as rightly noted by the CBN Governor.
“Therefore, the focus of resolving it should be within that context,” he stated.
By: Babajide Okeowo
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