MPR at 27% has hit Sharon Nwosu’s Abuja factory hard, slowing her production line sharply.
Consequently, she struggles to maintain operations.
“Expansion is impossible.
We’ve cut production and postponed investments,” she explains, highlighting the pressure high rates impose on businesses.
The Central Bank of Nigeria (CBN) kept the rate unchanged to control rising inflation.
Meanwhile, Governor Olayemi Cardoso emphasised that price stability remains the bank’s top priority.
Although inflation eases slowly, she insists that it remains too high to justify policy easing.
As a result, analysts warn that the prolonged tight stance could harm economic growth in the coming months.
MPR Soars, Credit Crunch Persists
CEO of CPPE, Dr. Muda Yusuf, believes a small reduction could have supported businesses.
“By holding at 27%, the CBN risks prolonging the credit crunch in the real sector,” he argues.
Read Also: CBN Holds MPR At 27% Amid Inflation Battle
Nigeria’s inflation rate stands at around 16%, creating a 10-point gap with the MPR.
Accordingly, CEO of Kwik Consulting, Thomas Amusan, calls this gap “economically distortive” for lending.
Credit to private businesses fell from ₦75.9 trillion in August to ₦72.5 trillion in September.
At the same time, government borrowing rose by over ₦1.2 trillion, reflecting banks’ preference for safer returns.
SMEs, which represent 96% of Nigerian businesses, feel the strain most acutely.
Consequently, high borrowing costs delay expansion, reduce industrial output, and threaten job creation.
Balancing Stability And Growth
Some economists defend the CBN, arguing that inflation dynamics limit the bank’s flexibility.
Dr. Hassan Oyeleke adds that maintaining rates may boost investor confidence, stabilise the exchange rate, and signal disciplined policy-making amid uncertainty.
Meanwhile, banks enjoy higher margins, but private-sector lending slows.
Consequently, credit increasingly flows toward government projects rather than productive, job-creating sectors.
Key Points
- The CBN retains MPR at 27% to focus on controlling inflation and stabilising the forex market.
- The Cash Reserve Ratio remains 45% for deposit banks and 16% for merchant banks.
- The Liquidity Ratio stays at 30%, and the Asymmetric Corridor adjusts to +50/-450 basis points.
- For businesses like Sharon’s, navigating high borrowing costs and slowing growth remains a daily challenge.
