Some of President Bola Ahmed Tinubu’s economic policies have raised concerns from financial experts.

Nigerians groan at the searing misery as the removal of gasoline subsidies, Naira floating, and the current Monetary Policy rates increase from 18.5 to 18.75 percent.

The Monetary Policy Committee of the Central Bank of Nigeria has been raising interest rates for more than six months in an effort to combat inflationary pressures, which, according to the National Bureau of Statistics, stood at 22.79% in June.

However, despite the apex banks’ best efforts, inflation pressures have not subsided over the previous six months.

The CBN had raised the interest rates to 18.75% from 16.50% in December 2022.

Given the difficulties Nigerians confront, stakeholders in the economy have not been silent about their dissatisfaction with the administration led by Tinubu’s numerous policies.

The recent increase in the Monetary Policy Rate (MPR) by the CBN was criticized by Nigeria’s organized private sector, OPS, the Lagos Chamber of Commerce and Industry (LCCI), and the Nigeria Employers’ Consultative Assembly (NECA) as being in stark contrast to Tinubu’s pledged commitment to make credit accessible to people and businesses at an affordable rate.

The CBN acting Governor, Mr Folashodun Shonubi said the modest increase in the benchmark interest rate curtailed a potential uptick in inflationary pressures resulting from the policy changes.

President Tinubu promised on May 29 during his presidential inaugural address that “monetary policy needs a thorough house cleaning. Interest rates need to be reduced to increase investment and consumer purchasing in ways that sustain the economy at a higher level.”

However, the turn of events have continued to threaten the already bleak hope in the minds of Nigerians.

Experts say one of the significant implications of interest rate hike is that businesses, especially Small and Medium Scale Enterprises, must pay more to access finances.

They asked the government to take growth-focused interventions into consideration as a result.

Prof. Godwin Oyedokun, a professor of accounting and financial development at Lead City University in Ibadan, stated in an interview on Monday that it is illogical for the government to raise interest rates.

He thinks it is wrong for the CBN to keep doing the same thing that has failed in the past and expect different outcomes.

According to him, the government should currently invest in suitable infrastructure and use sound regulatory measures and other growth-oriented initiatives to stabilize the cost of goods and services.

“It does not make sense to continue to do the same thing and expect a different result.

“The CBN has been raising the interest rates over time, yet there has been no result because the fundamentals are not there.

“What the government should do is price stabilisation, work on the Consumer Price Index, and provide adequate infrastructure, especially electricity. Of Course, price monitoring is critical; if this can be done, inflation will come down,” he said.

Similarly, the Director of the Centre Centre for the Promotion of Private Enterprise, CPPE, Dr Muda Yusuf, stated that CBN’s decision to raise interest rates would hurt investors in the real economy.

“The hike in rate would hurt investors in the real economy as they are already grappling with numerous headwinds. These include the spiking energy cost, depreciating exchange rate, increasing cost of logistics, weak purchasing power, and spiralling inflation.

“The main drivers of inflation now are the twin problems of rising energy costs and the depreciating exchange rate.

“Meanwhile, the increase in MPR is unlikely to impact inflation significantly. The transmission mechanism of monetary policy instruments on inflation is fragile because of peculiarities of the Nigerian economy”, he stated.

Also, Idakolo Gbolade, Chief Executive Officer of SD & D Capital Management lamented that only little effort had been made by the government on the issue of fuel subsidy palliatives which have caused untold hardship for the people.

He urged the government to take urgent measures to assuage the people’s fears by providing immediate respite.

“The MPC’s decision to further raise interest rates was due to crippling inflation, which the new policy direction of the government has compounded.

“The subsidy removal and exchange rates measure added pressures to the inflationary trend.

“These actions have begun to have a favorable impact on government income growth, which is projected to reach about 2 trillion Naira in June 2023.

“However, little has been done on the problem of providing actual palliative care to the populace, which has led to countless hardships and increased the percentage of Nigerians who are multidimensionally poor to around 60% of the population.

The Bola Tinubu administration must act quickly to allay the public’s concerns by making sure that immediate relief is offered.

He said, “The NLC’s impending strike is a result of the perceived government’s failure to urgently address the raging economic crisis affecting the Nigerian people.”

Concerns mount over CBN interest rate hike despite hardship

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