By: Tijani Salako.
The Lagos Chamber of Commerce and Industry (LCCI) has applauded the Central Bank of Nigeria’s decision to cut the Monetary Policy Rate (MPR) by 350 basis points to 23 per cent, affirmed that reduction must translate into affordable credit for businesses.
The CBN’s Monetary Policy Committee (MPC) announced the cut from 26.5 per cent at the end of its 307th meeting.
In a statement on Monday, the Director General of LCCI, Dr. Chinyere Almona, described the move as a significant easing of monetary conditions and a positive signal for businesses, especially Micro, Small and Medium Enterprises (MSMEs) constrained by high borrowing costs.
Dr Almona said a lower policy rate could reduce cost of funds, improve credit conditions and support private sector investment through the monetary transmission mechanism.
However, she cautioned that the cut would not automatically lower lending rates or improve credit access.
“Now we have a lower MPR, but the lending environment remains challenging. The cost of borrowing is only one component of the overall business-risk equation,” she said.
According to her, businesses still face high energy costs, logistics expenses, exchange-rate risks, rising input costs, infrastructure gaps and high cost of doing business, while insecurity and policy uncertainty weigh on confidence and lenders’ risk appetite.
She noted that banks assess cash flow, collateral, credit history, sectoral risks and operating environment, not just the policy rate, adding that unless underlying risks are addressed, the impact on SMEs may be limited.
“Credit transmission must be the next priority,” she said.
LCCI called on the CBN to monitor how banks respond to the easing, particularly in lending rates and credit to productive sectors, and urged government and financial institutions to strengthen credit guarantees and de-risking instruments for SMEs.
The Chamber also advocated wider use of cash-flow-based lending, credit scoring and movable assets as collateral, noting that many viable SMEs are locked out by lack of conventional security.
It said monetary easing should be complemented by measures to tackle structural constraints, including energy costs, logistics, infrastructure deficiencies and multiple regulatory charges that weaken businesses’ ability to service loans.
Dr. Almona added that additional liquidity should be channelled to productive sectors such as manufacturing, agriculture, agro-processing, trade, logistics, technology, healthcare and construction to boost output and jobs.
While commending the CBN for easing financial conditions, LCCI said the decision, taken amid improving inflation dynamics, provides a window to boost investment and growth, but must be matched with reforms that lower lending risks and improve businesses’ capacity to borrow and repay.
