The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, has urged the Central Bank of Nigeria (CBN) to adapt its market-oriented monetary policy to better support the real sector of the Nigerian economy. This call was made during a Networking and Breakfast Meeting organized by the Association of Corporate Treasurers of Nigeria (ACTN) in Lagos.
Dr. Yusuf criticized the current monetary policy, arguing that it favors speculative investors who benefit from high margins in fixed income assets, such as Treasury Bills, while neglecting those in the real sector, including manufacturers and farmers. He pointed out that with interest rates exceeding 32 percent and significant currency depreciation since the shift back to orthodox monetary policy in 2023, businesses in the real sector are struggling to survive.
He stated, “The current policy being adopted by the CBN seems to penalize people who are in production, which is counterproductive.” He highlighted that while investments in bonds and Treasury Bills are often tax-free, manufacturers face burdensome taxation, further complicating their operational challenges.
Dr. Yusuf noted that the transition from unorthodox to orthodox monetary policy has led to significant shocks to the economy, advocating for a reassessment and fine-tuning of the ongoing reforms. He pointed out that the lending rates have surged to over 34 percent, making it nearly impossible for businesses across various sectors, including manufacturing and agriculture, to secure affordable loans that yield viable returns on investment.
He further emphasized the uniformity in foreign exchange rates, stating that whether one is a manufacturer importing raw materials or an individual purchasing luxury goods, they face the same FX costs. “It is debatable if this model is the right thing,” he remarked, raising concerns about its sustainability.
Dr. Yusuf warned of the unintended consequences of the return to orthodox monetary policy, which has resulted in the exit of multinational manufacturers and large corporations facing substantial foreign currency risks. He called for a more nuanced approach that balances the needs of speculative investors with the critical support required by the real sector to foster sustainable economic growth.
