The Central Bank of Nigeria’s decision to raise the Monetary Policy Rate to 27.50% has drawn sharp criticism from labour leaders and private sector stakeholders, who foresee surging inflation, a weaker naira, and economic hardships for businesses and workers alike.
Governor Olayemi Cardoso announced the 25-basis-point hike on Tuesday after the apex bank’s Monetary Policy Committee meeting in Abuja, citing a commitment to tackling inflation, which reached 33.87% in October. Alongside the rate hike, the Cash Reserve Ratio was raised to 50% for deposit money banks, while other key monetary parameters, such as the liquidity ratio, remained unchanged. Cardoso projected that the effects of these policies would begin to manifest by early 2025.
However, critics argue that the move will exacerbate structural inflationary pressures, with manufacturers facing rising costs for financing operations and energy inputs. Labour leaders, including an unnamed senior official from the Nigeria Labour Congress, warned of reduced production, higher consumer prices, and declining investment. “Our inflation is cost-driven, not demand-driven. What we need is cheaper energy, stable exchange rates, and affordable credit,” the official said, highlighting skepticism over the policy’s ability to address core issues.
Voices from the Organised Private Sector echoed these concerns. Dr. Muda Yusuf, head of the Centre for the Promotion of Private Enterprise, noted that restrictive monetary policies risk deepening financing constraints in critical sectors like agriculture and manufacturing, which posted sluggish growth in the third quarter of 2024. “Monetary tightening is further disconnecting the financial sector from the real economy,” Yusuf said, urging coordinated fiscal and monetary strategies to stimulate growth.
Small business advocates also decried the implications of higher borrowing costs. Dr. Femi Egbesola, president of the Association of Small Business Owners of Nigeria, warned that the tighter monetary stance would increase loan defaults, stifle consumer spending, and trigger widespread job losses.
The chorus of dissent underscores a broader concern about Nigeria’s economic trajectory, with calls for a recalibration of policies to balance inflation control with growth and job creation. For now, the labour movement and private sector agree: without structural reforms, the latest rate hike risks deepening economic challenges.
