The Centre for the Promotion of Private Enterprise (CPPE) has expressed concern that the Central Bank of Nigeria (CBN) benchmark interest rate cut will require the federal government to play a complementary role to fully unlock growth potential for the Nigerian economy.
The CPPE Chief Executive Officer, Muda Yusuf, raised this in a statement on Tuesday, September 23, while commending that CBN’s rate cut will ease credit conditions in the Nigerian economy.
The CBN after its two-day Monetary Policy Committee (MPC) meeting on Tuesday, lowered the benchmark interest rate.
“While this monetary easing is a welcome development, CPPE emphasises that fiscal policy must play a complementary role to fully unlock growth potential,” Yusuf, a renowned economist, said.
READ ALSO: CBN Introduces 75% CRR on Non-TSA
To complement the rate cut, he suggested that the fiscal authorities should sustain fiscal consolidation to ensure macroeconomic stability and maintain investor confidence.
He said the authorities should also prioritise critical infrastructure investment to reduce production and logistics costs, improve competitiveness, and enhance productivity.
The CPPE boss urged the authorities to strengthen the regulatory and institutional framework to foster a more business-friendly environment that attracts domestic and foreign investment.
He further urged them to address security challenges decisively, as insecurity remains one of the most significant constraints to private sector investment and rural productivity.
MPC’s key decisions
Pinnacle Daily reported earlier that the MPC on Tuesday cut the benchmark interest rate, known as the Monetary Policy Rate (MPR) by 50 basis points to 27 per cent from 27.5 per cent.
It adjusted the asymmetric corridor to +250/-250 basis points around the MPR.
READ ALSO: CBN Cuts Rates by 50bps to 27% in Bid to Support Economic Recovery
It cut the CRR of commercial banks by 500 basis points to 45 per cent from 50 per cent but retained the CRR for merchant banks at 16 per cent.
The committee also retained the liquidity ratio at 30 per cent.
It introduced a notable new measure of a 75 per cent CRR on non-TSA public sector deposits, aimed at containing excess liquidity risks that could arise from fiscal operations.
Implications of the rate cut
Highlighting the implications of the MPC decision, Yusuf said the rate cut will improve credit conditions for the Nigerian economy.
He noted that the combination of lower MPR and reduced CRR should expand banks’ capacity to create credit, lowering lending rates and making financing more accessible for businesses, especially SMEs.
He stressed that the lower cost of funds will encourage new investments, support business expansion, and enhance capacity utilisation in the real sector.
“This will ultimately stimulate output growth and job creation,” Yusuf stated.
He maintained that a more accommodative monetary environment will enable banks to fulfil their core function of mobilising savings and channelling them into productive investments, reinforcing financial deepening and economic growth.
READ ALSO: Nigeria’s External Reserves Record Over $1bn Growth in 30 Days
He noted further that the decision for the committee to impose a 75 per cent CRR on non-TSA public sector deposits is a prudent measure to prevent excessive fiscal-driven liquidity injections from destabilising the financial system.
“The MPC’s decision represents a strategic and well-timed policy shift from a phase of stabilisation to a phase of growth accelerator,” Yusuf said.
Yusuf pointed out that if sustained and complemented by appropriate fiscal and structural reforms, the measures will stimulate economic growth and job creation, improve private sector performance and output, boost government revenues through an expanded tax base, and moderate inflation sustainably in the medium to long term.
“The CPPE regards this as a step in the right direction toward building a more resilient, inclusive, and growth-oriented Nigerian economy,” Yusuf added.
He stated specifically that the 75 per cent CRR on non-TSA public sector deposits is an action designed to prevent volatility in money supply growth that could undermine recent progress in price stability.
Five months of disinflation
Yusuf further explained that the policy easing comes at a time when the Nigerian economy has recorded five consecutive months of declining inflation, signalling that previous tightening measures are yielding results.
He said having restored a measure of macroeconomic stability and slowed inflationary pressures, the MPC’s pivot toward growth is both logical and timely.
Yusuf noted that high interest rates in recent quarters have significantly constrained private sector credit, increased the cost of funds, and weighed on business expansion.
“By lowering the MPR and CRR, the CBN is deliberately working to improve liquidity conditions, reduce borrowing costs, and unlock capital for productive sectors of the economy,” he maintained.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
