Connect with us

Business

OPS reacts on CBN’s interest rates reduction

Published

on

The Monetary Policy Committee of the Central Bank of Nigeria has reduced the country’s benchmark interest rate to 27.00 per cent, the first cut in 2025 after three consecutive pauses, signaling a shift in policy towards supporting economic recovery.

While welcoming the move, members of the Organised Private Sector argued that the reduction remains marginal and insufficient to ease the credit squeeze on manufacturers and small businesses.

Announcing the decision at a press briefing on Tuesday in Abuja after the committee’s 302nd meeting, CBN Governor Olayemi Cardoso said all 12 members voted in favour of a 50-basis point cut from 27.5 per cent.

The committee also adjusted the Standing Facilities corridor to +250/-250 basis points, raised the Cash Reserve Requirement for commercial banks to 45 per cent while retaining merchant banks at 16 per cent, and introduced a 75 per cent CRR on non-TSA public sector deposits. The Liquidity Ratio was left unchanged at 30 per cent.

Cardoso explained that the decision was underpinned by “sustained disinflation recorded in the past five months, projections of declining inflation for the rest of 2025, and the need to support economic recovery efforts.”

The MPC noted that headline inflation slowed to 20.12 per cent in August from 21.88 per cent in July. Food inflation fell to 21.87 per cent from 22.74 per cent, while core inflation eased to 20.33 per cent from 21.33 per cent. On a month-to-month basis, inflation dropped sharply to 0.74 per cent in August compared with 1.99 per cent in July.

“This reduction is the first under my leadership and the first in five years,” Cardoso noted. The last time Nigeria cut its policy rate was in September 2020, when it dropped from 12.5 per cent to 11.5 per cent.

Across Africa, a similar trend is unfolding. Just last week, Ghana slashed its policy rate by 350 basis points to 21.5 per cent, while Kenya reduced its benchmark to 9.5 per cent in August. Nigeria’s cut, however, still leaves it with one of the highest rates on the continent.

The MPC also highlighted positive macroeconomic trends, particularly Nigeria’s second-quarter GDP growth of 4.23 per cent, up from 3.13 per cent in the first quarter.

The rebound was largely driven by the oil sector, which expanded by 20.46 per cent compared with just 1.87 per cent in the previous quarter.

See also  U.S terminates all trade talks with Canada

The committee commended the Federal Government for improved security in oil-producing regions, noting that sustained production growth would strengthen external reserves and stabilize the naira.

Foreign reserves rose to $43.05bn as of September 11, 2025, up from $40.51bn at the end of July, providing an import cover of 8.28 months. The current account balance also recorded a surplus of $5.28bn in Q2, up from $2.85bn in Q1.

Cardoso disclosed that 14 banks had already met the new recapitalisation requirements, with the sector remaining resilient and financial soundness indicators within prudential benchmarks.

Looking ahead, the MPC projected continued disinflation, supported by exchange rate stability, declining petrol prices, and the harvest season. The next MPC meeting is scheduled for November 24–25, 2025.

 

 

OPS reacts

While the rate cut was widely acknowledged as a step in the right direction, members of the Organised Private Sector argued that the reduction remains marginal and insufficient to ease the credit squeeze on manufacturers and small businesses.

Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, described the cut as welcome but inadequate. “Virtually every time the MPC meets, what we anticipate is a reduction in rates. This is welcome, but it has not gotten us anywhere near our expectations. Manufacturers need to borrow at no more than five per cent for that borrowing to be supportive of production,” he said.

Ajayi-Kadir emphasised that no bank would lend at a rate below the MPR, meaning credit costs remain unaffordable. “It signals a rethinking by the CBN, but manufacturers still await a time when rates will be significantly lower,” he added.

Similarly, the Director-General of the Nigeria Employers’ Consultative Association (NECA), Adewale Oyerinde, warned that the cut’s impact might be undermined by other restrictive measures such as the high CRR. “If credit costs are lowered, businesses can access affordable financing, expand investments, and create jobs. But the persistently high CRR and liquidity restrictions risk limiting these outcomes,” Oyerinde said.

He pointed out that while inflation moderated in August, food inflation at 21.87 per cent continues to erode disposable incomes. “Macroeconomic stability must translate into tangible relief for Nigerians,” he added, urging the government to complement monetary policy with structural reforms.

The President of the Association of Small Business Owners of Nigeria, Dr Femi Egbesola, called the rate cut a “good start” but “insignificant” in the broader context. “Compared to other developing countries, ours still ranks among the highest. Access to finance remains the number one challenge of SMEs. A 0.5 reduction is insignificant compared to the pressure on the real sector,” he said.

See also  Iran-US conflict may raise Nigeria’s fuel prices

Egbesola called for special credit windows at single-digit rates for small businesses, stressing that alternative funding sources beyond banks must also be explored.

The Centre for the Promotion of Private Enterprise echoed similar sentiments, commending the MPC’s move but stressing the need for complementary fiscal reforms.

Its Director, Dr Muda Yusuf, described the rate cut as “a welcome and timely intervention,” adding that the lower MPR combined with a reduced CRR should expand banks’ capacity to create credit and lower lending rates. This will support business expansion, stimulate output growth, and create jobs,” Yusuf said.

He, however, stressed that monetary easing alone is not enough. “Fiscal authorities must prioritise infrastructure to reduce production costs, strengthen the regulatory framework, and sustain fiscal consolidation to ensure macroeconomic stability and investor confidence,” he said.

Yusuf further urged the government to address insecurity, which continues to threaten private investment and rural productivity.

Observers agree that the CBN’s decision marks a significant shift in monetary policy, moving from stabilisation towards growth acceleration. Analysts note that while inflation remains elevated, the trend of disinflation provides room for cautious easing to support recovery.

For manufacturers, small businesses, and employers, the cut is a signal of intent but falls short of delivering immediate relief. The consensus across the OPS is that credit costs must drop significantly further, ideally into single digits, to unlock the full potential of Nigeria’s productive sectors.

As Yusuf summed it up: “If sustained and backed by fiscal and structural reforms, the new stance could stimulate growth, improve private sector performance, boost revenues, and moderate inflation sustainably in the medium to long term.”

On its part, the Nigeria Labour Congress described the CBN’s reduction of the Monetary Policy Rate from 27.50 per cent to 27 per cent as a step in the right direction, but cautioned that borrowing costs remain prohibitively high for businesses.

The Assistant Secretary-General of the NLC, Onyekachi Christopher, told The PUNCH that while it is encouraging that policymakers are considering rate reductions, the current level of 27 per cent remains very high.

See also  14 banks have met CBN’s new capital requirement

“As an organisation advocating for the welfare of workers, we hope to see manufacturers gain better access to financing, produce more goods, hire additional employees, and contribute more meaningfully to the economy,” Onyekachi said. “Easier access to bank loans would support these goals, creating long-term benefits for both businesses and workers.”

Professor of Economics and former Vice-Chancellor of Crescent University, Abeokuta, Sheriffdeen Tella, said while interest rate theory is more applicable in advanced economies, it remains relevant for Nigeria.

“The CBN likely felt it could reduce rates now that inflation is coming down. High interest rates increase borrowing costs, which in turn raise production costs for businesses. At current levels, borrowing is still unattractive because profits rarely exceed 20–30 per cent annually, making loans hard to justify. Although the reduction is a positive start, rates remain relatively high,” he said.

Former Zenith Bank Chief Economist Marcel Okeke said the rate cut signals the beginning of a loosening in the CBN’s tight monetary stance. “The Monetary Policy Rate is largely indicative. It signals to commercial banks that they may start easing their lending rates rather than keeping them high continuously. Essentially, it shows that the CBN is beginning to loosen its tight monetary stance,” he said.

Okeke noted that historically, high lending rates were driven by the CBN’s tight policy, which pushed the MPR to around 27.5 per cent. “This reduction is the start of reversing that trend. Even if banks only reduce rates by 1–2 per cent, it is symbolic but meaningful. In the next CBN meeting in November, further reductions could follow if inflation continues to decline,” the economist added.

He highlighted that inflation has fallen from almost 35 per cent in December 2024 to about 20.13 per cent in August 2025. “If it continues to fall to around 17–18 per cent, the CBN is likely to reduce the NPR further.

“Lower interest rates make loans more affordable, increasing access to credit and stimulating economic activity. However, the effect isn’t immediate; there is a time lag between policy implementation and visible impact. Further cuts will also depend on exchange rate stability and inflation trends,” Okeke said.

punch.ng

FOLLOW US ON:

FACEBOOK

TWITTER

PINTEREST

TIKTOK

YOUTUBE

LINKEDIN

TUMBLR

INSTAGRAM

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Tax revenue hits N27tn after 113% surge – Report

Published

on

Nigeria’s tax collections have surged by 113 per cent in less than three years, rising from N12.3tn in 2023 to N27.1tn as of July 2026, the Nigeria Revenue Service has said.

The revenue authority attributed the sharp increase to the digitisation of the tax system, the enactment of four new tax reform laws, the transformation of the revenue service and an executive order aimed at closing loopholes in the tax system.

The NRS, in an internal report on the state of the Nigerian economy obtained by The PUNCH on Sunday, insisted that the country was moving from a period of severe macroeconomic distress towards a more stable and resilient economy following the implementation of a series of difficult reforms by the President Bola Tinubu administration.

“Tax collections more than doubled from N12.3tn in 2023 to N27.1tn as of July 2026 with the “digitisation of tax systems, four new tax reform laws, the transformation of the revenue service and an executive order that closed loopholes in the system.

“The Nigerian economy has moved decisively from acute macroeconomic distress toward a more stable and increasingly resilient footing,” the revenue service said.

The NRS attributed the development to what it described as Tinubu’s economic management acumen and determination to implement reforms under his administration’s Renewed Hope Agenda.

According to the report, the administration inherited four major economic distortions which had continued to undermine government revenue and economic growth.

It identified the challenges as “a fiscally unsustainable fuel subsidy regime, an opaque forex system that discouraged investment, a non-performing oil sector, and a tax base ‘far below its potential’.”

The revenue authority said the initial impact of the reforms created significant economic difficulties but maintained that the country’s major economic indicators had subsequently begun to improve.

It cited falling inflation, a turnaround in the balance of payments, increased crude oil production, the emergence of Nigeria as a net exporter of petroleum products and the more than doubling of tax collections as evidence of the recovery.

See also  14 banks have met CBN’s new capital requirement

The report also highlighted an increase in the minimum wage, saying it had doubled between 2023 and 2026.

It further cited estimates by the United Nations Children’s Fund showing that the number of out-of-school children had declined from 20 million to 18.3 million following government policies and incentives.

The NRS said the government’s naira-for-crude arrangement with the Dangote Petroleum Refinery and other domestic refineries had contributed to a major shift in Nigeria’s petroleum trade position.

According to the report, the arrangement had helped Nigeria move from being a net importer of petroleum products to becoming a net exporter after decades of dependence on imports.

It noted that Ghana had recently decided to pursue a similar policy in its petroleum sector. The report also said crude oil production had increased from about 1.2 million-1.3 million barrels per day in 2023 to 1.73 million barrels per day by July 2026.

It said the latest output was equivalent to 104 per cent of Nigeria’s OPEC quota. The increase in production is significant for government revenue because crude oil remains the country’s largest source of foreign exchange and a major contributor to public finances.

The NRS also pointed to developments in the capital market as another indication of improving economic confidence. It said the market capitalisation of the Nigerian Exchange had risen from N30.36tn in 2023 to N161tn in 2026, describing the increase as a source of wealth creation for millions of Nigerians who invest in the stock market.

The report attributed the market rally partly to improved macroeconomic credibility, the recapitalisation of banks and a growing pool of domestic institutional investment.

Nigeria’s external reserves also rose sharply during the period under review. According to the NRS report, reserves increased from an unrestricted $3.99bn in 2023 to $51.9bn as of July 2026, which it described as a 17-year high.

See also  US now has 44% more home sellers than buyers

The country’s balance of payments also moved from a $3.34bn deficit to a $2.38bn surplus in the first quarter of 2026, the report stated. Nigeria’s trade position similarly recorded a significant improvement, moving from a marginal surplus of N44.7bn to N7.55tn in the first quarter of 2026.

The composition of exports also showed some changes, with exports of other oil products, excluding crude, rising by 51 per cent year-on-year to N6.78tn during the first quarter.

The revenue service said improved investor confidence was also reflected in capital importation. Annual capital importation rose from $3.9bn in 2023 to $23.22bn in 2025, while inflows reached $10.37bn in the first quarter of 2026 alone.

The report said foreign portfolio investment had been particularly strong, while foreign direct investment had also improved. The increase in capital inflows, according to the NRS, reflected stronger investor confidence as economic reforms reshaped the operating environment.

The revenue service further highlighted the expansion of the compressed natural gas programme as part of the government’s response to the removal of the petrol subsidy.

According to the report, Nigeria had no large-scale CNG programme three years ago and depended heavily on imported petrol and diesel. By 2026, however, more than 100,000 vehicles had reportedly been converted to CNG, with more than $2bn in investment mobilised and over 10,000 jobs created.

The NRS estimated that CNG could reduce running costs by between 40 and 60 per cent compared with petrol. It said some commercial drivers had seen their monthly fuel bills fall from about N50,000 to N18,000 after converting their vehicles.

On agriculture and food security, it recalled that the administration declared a state of emergency on food security in July 2023 and subsequently introduced measures including the release of strategic grain reserves, the establishment of a N100bn National Agricultural Development Fund, fertiliser distribution and an agricultural mechanisation programme.

See also  U.S terminates all trade talks with Canada

Federal agricultural allocation rose from N228.4bn in 2023 to N826.5bn in the 2025 budget, according to the report. The NRS said food prices had fallen by about 50 per cent by March 2026, citing the Ministry of Agriculture.

However, it acknowledged that agriculture would require several planting seasons before increased government support could translate fully into higher production.

On public debt, the NRS acknowledged that Nigeria’s total debt stock had increased substantially, from N87.4tn in 2023 to N159.28tn in late 2025. However, it argued that the more important measure was the country’s debt relative to the size of its economy.

According to the report, the debt-to-GDP ratio declined from 38 per cent in 2023 to 35.5 per cent in 2025 and 32.3 per cent in 2026. The revenue service described the decline as the first sustained reduction in the ratio in more than a decade.

It also said debt servicing as a proportion of government revenue had declined from 68 per cent to an International Monetary Fund-projected 53 per cent.

The NRS said the combination of higher tax collections, increased oil production, stronger capital inflows, rising reserves and improved trade and balance of payments positions pointed to an economy that was gradually emerging from the severe pressures that followed the government’s early reforms.

The report nevertheless acknowledged that the gains came after what it described as “painful” adjustments and stressed that continued implementation of the reforms would be required to consolidate the recovery.

Source: punchng.com

FOLLOW US ON:

FACEBOOK

TWITTER

PINTEREST

TIKTOK

YOUTUBE

LINKEDIN

INSTAGRAM

Continue Reading

Business

NLC demands N500k minimum wage, says current N70k minimum wage is no longer sustainable

Published

on

The Nigeria Labour Congress (NLC) says it will soon begin negotiations with the Federal Government for a new national minimum wage, insisting that the current N70,000 wage is no longer sustainable.

Speaking at the Rights of Workers Summit in Birnin Kebbi on Thursday, NLC President Joe Ajaero, represented by Deputy President Audu Titus Amba, said workers should prepare for fresh negotiations.

He argued that the current minimum wage could no longer meet workers’ basic needs amid rising inflation and the increasing cost of living.

“Anything less than N500,000 cannot cater for workers. The current minimum wage is due for review, and we will soon begin negotiations with the government,” he said.

Also speaking, Trade Union Congress (TUC) President Festus Osifo, represented by Secretary-General Nuhu Toro, said worsening economic conditions had eroded workers’ purchasing power.

He cited rising food prices, transport fares, rent and inflation as factors making the current wage inadequate.

President Tinubu signed the current national minimum wage bill into law on July 29, 2024, raising it from N30,000 to N70,000 per month. The legislation followed negotiations with organized labor and included a provision to review the wage structure every three years.

FOLLOW US ON:

FACEBOOK

TWITTER

PINTEREST

TIKTOK

YOUTUBE

LINKEDIN

INSTAGRAM

See also  14 banks have met CBN’s new capital requirement
Continue Reading

Business

Ondo artisans beg FG for inclusion in empowerment programmes

Published

on

Artisans and skilled workers in Ondo State have appealed to the Federal Government to include them in various empowerment programmes under President Bola Tinubu’s Renewed Hope Agenda.

The artisans, under the aegis of the Artisan Defender and Empowerment Foundation, said over 25,000 members of the group had been neglected despite their support for the re-election of the President.

This was contained in a statement issued on Friday by the Chairman and General Secretary of the association, Engr. Ogundipe James and Adebayo Olugbenga, respectively.

According to the statement, the group was founded and registered with the Federal Government to promote the interests of Niger Delta artisans and skilled workers, adding that its members needed government support through empowerment initiatives.

The statement read, “It was evident, the neglect of the welfare and empowerment of over 25,000 artisans that this organisation controls, for which we are advocating better welfare, skills and vocational training, empowerment, workshops and recognition of political strength and weight the coalition commands in the voting structure.

“The deteriorating situation of artisan welfare, particularly in Ondo State, is why the body is seeking immediate attention, mostly empowerment and skills upgrading from the primary concerned government agencies—the Federal Ministry of Trade and Investment, Directorate of the Office of Humanitarian Affairs and Poverty Reduction, Small and Medium Enterprises Development Agency of Nigeria, Presidential Amnesty Programme, among others.

“The neglect of this very important organisation, which plays a vital role in employment and the growth of the national economy, will cause disagreement and affect political support that comes from this coalition group.”

See also  NNPC eyes 20% stake in Dangote refinery

The statement urged the concerned Federal Government agencies to consider the proposals earlier submitted by the group to enhance the support of its members for the President’s administration.

The group stated, “We call on the agencies mentioned above, demanding immediate attention to the proposals that have earlier been sent to this parastatal.

“This is a public warning and general awareness that failure to listen to Niger Delta Artisan Forum’s demands will lead to a national protest and have huge political support consequences for the continuation of the Renewed Hope Agenda of President Bola Ahmed Tinubu come the 2027 election, if attention is not immediately given to the demands.”

punch.ng

FOLLOW US ON:

FACEBOOK

TWITTER

PINTEREST

TIKTOK

YOUTUBE

LINKEDIN

Continue Reading

Trending