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OPS reacts on CBN’s interest rates reduction

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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.

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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.

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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.

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“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.

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Fani-Kayode defends Obasanjo over Nigeria Airways liquidation, read details

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A former Minister of Aviation, Femi Fani-Kayode, has defended former President Olusegun Obasanjo over the liquidation of Nigeria Airways, insisting that the airline’s collapse resulted from years of mismanagement, corruption and mounting debts before Obasanjo returned to power in 1999.

Fani-Kayode, who served as the Minister of Aviation in 2006, said Obasanjo inherited a virtually collapsed airline and had little choice but to liquidate it in 2004.

He stated this in a post on his X account on Thursday while responding to the Minister of Aviation and Aerospace Development, Festus Keyamo, who had earlier accused former Vice-President Atiku Abubakar of hypocrisy over his comments on Nigeria’s economic hardship and insecurity.

In a post published on Wednesday, Keyamo accused the administration in which Atiku served as vice-president of liquidating Nigeria Airways in September 2004, leaving thousands of workers without jobs and their pensions and gratuities unpaid.

The minister said the outstanding entitlements had remained unresolved for years, claiming that some former workers died while waiting for their benefits.

He added that President Bola Tinubu had approved and released N36bn to settle the outstanding obligations, with beneficiaries already receiving payment alerts.

Keyamo also accused Atiku of taking credit for the achievements of the Obasanjo administration when convenient while distancing himself from controversial decisions.

Responding to the debate, Fani-Kayode said it was unfair to blame Obasanjo for the airline’s collapse, arguing that its decline had begun long before his return to office.

“In fairness to President Obasanjo the Nigeria Airways ‘mess’, as you have described it, was established before he came back to power in 1999.

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“And it was indeed a mess but it was not of Obasanjo’s making!

“He met it there after he was sworn in and what he found broke his heart,” Fani-Kayode wrote.

He recalled that when Obasanjo left office as military Head of State in 1979, Nigeria Airways had 32 functional aircraft, experienced pilots and crew members, a first-class management team and an accountable board of directors.

He described the airline at the time as “the pride of the nation”.

However, Fani-Kayode said the situation had deteriorated considerably by 1999, when Obasanjo returned as a civilian president.

“By the time Obasanjo came back to power in 1999, 20 years later, there was only one plane left and it was not functional.

“The rest had vanished together with virtually all of the company’s assets,” he said.

According to him, successive management teams and boards contributed to the airline’s decline through corruption and mismanagement between 1979 and 1999.

He said the company’s liquidation followed chronic insolvency, operational collapse and unsuccessful attempts to revive its operations, including privatisation advice from the International Finance Corporation, which later withdrew.

Fani-Kayode maintained that the Obasanjo administration was justified in refusing to continue providing public funds to the struggling airline.

“This is why Obasanjo liquidated it in 2004 and I believe that he had no choice,” he said.

“There was nothing left to save even though it was a painful decision given the fact that he was one of those that had done so much for that company when he was Military Head of State.”

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The former minister said the payment of outstanding pensions became a major issue following the liquidation.

He recalled that a committee chaired by the then Head of Service of the Federation, Yayale Ahmed, recommended that funds be released to pay the pensioners.

Fani-Kayode said he subsequently presented a memo to the Federal Executive Council in 2006, advocating the payment of the outstanding entitlements.

However, he said the proposal was rejected because some cabinet members believed former management teams and board members were responsible for the airline’s destruction and did not deserve pensions.

“I did not share that view but sadly I and those that supported me were in a minority and we lost the debate,” he said.

He added that the matter was revisited under the administration of the late President Umaru Yar’Adua, which paid most of the pensioners, while the administration of former President Muhammadu Buhari also made payments.

Fani-Kayode commended Keyamo for ensuring that the remaining pension obligations were settled under the Tinubu administration.

“It is gratifying that under your leadership the remainder of the pensions have been paid. I only wish we had done that when we were in office,” he wrote.

“The pensioners suffered immensely over the years. I have always maintained that paying them was the right thing to do.”

He also referred to Atiku’s position during the Federal Executive Council deliberations on the pension payments but declined to disclose details of the former vice-president’s stance.

“As for His Excellency Waziri @atiku I know what side of the divide he was during that debate in council but I will not share that publicly because whatever decision was finally taken was a collective one,” he said.

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Fani-Kayode added that members of the administration collectively bore responsibility for the decision and its consequences.

He concluded by commending Keyamo for completing the payment of the outstanding entitlements owed to former Nigeria Airways workers.

Source: punchng.com

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FG seeks $78.5bn for 65 projects, read details

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Nigeria is seeking $78.5bn in private capital to finance 65 projects across critical sectors of the economy, as the Federal Government steps up efforts to attract investors, expand productive capacity and create jobs.

The investment opportunities were presented by Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, alongside Central Bank of Nigeria Governor, Olayemi Cardoso, at the ongoing IMF-World Bank Annual Meetings in Bangkok.

The projects cover oil and gas, electricity, manufacturing, mining, transportation, agriculture, technology, healthcare and urban development, according to details published on the Federal Ministry of Finance’s Projects Nigeria investment portal.

The government estimates that the proposed investments could generate 366,763 jobs, positioning the initiative as part of its efforts to stimulate economic growth through private-sector financing.

Oyedele said the government had established a dedicated Nigeria Deal Room to provide prospective investors with project information, financing requirements and direct access to relevant government authorities.

The energy sector accounts for the largest share of the investment pipeline, with 25 projects requiring funding, while industry, manufacturing and mining account for another 17.

Transport and maritime infrastructure have eight projects, while agriculture and agro-processing account for six. Technology, healthcare and urban services make up the remaining nine projects.

Among the proposed investments is Project Reliaxx, a crude oil evacuation and midstream infrastructure platform requiring $1.7bn.

The project is expected to address infrastructure needs in the oil industry, where evacuation constraints can affect production and revenue generation.

The proposed Lagos Greenline Railway requires $1.29bn, while the Multipurpose Industrial Platforms Limited ammonia and phosphate fertiliser project has an estimated funding requirement of $2.69bn.

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Other opportunities include the $1.25bn Premium Steel and Mines integrated steel upgrade, the $355.6m PELIA Flare-Gas AI Data Centre and a $105m agro-processing and cold-chain export hub in Giri, Abuja.

The proposed New Port City development also features in the portfolio, with an estimated capital requirement of $1.6bn.

Oyedele said the government planned further reforms to address obstacles to investment, including electricity pricing, transmission constraints, weak agricultural productivity and regulatory inefficiencies.

He also identified lower inflation, reduced borrowing costs and better coordination between fiscal and monetary policies as important conditions for sustained economic growth.

The minister highlighted the Economic Development Incentive, which provides tax credits to eligible businesses under Nigeria’s reformed tax framework, as part of the measures intended to encourage investment in productive sectors.

Cardoso, on his part, said reducing inflation remained essential to protecting household purchasing power, particularly among low-income Nigerians.

He also pointed to improvements in Nigeria’s capital market and banking system, noting that banks raised approximately N4.6tn during the recapitalisation exercise, with about 72 per cent of the funds coming from the domestic capital market.

The CBN governor said Nigeria was targeting economic growth of 7 per cent by 2027/2028, alongside higher oil production and increased infrastructure investment.

He said the country planned to raise crude oil production to three million barrels per day and increase its infrastructure stock to 75 per cent of gross domestic product.

Cardoso added that stronger external reserves had improved the country’s capacity to withstand external economic shocks.

“The country plans to raise oil production to three million barrels per day and increase its infrastructure stock to 75 per cent of Gross Domestic Product (GDP),” he said.

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The World Bank Group had earlier said it was helping mobilise up to $5.79bn in private financing for Nigeria in fiscal year 2026, with programmes expected to support about 850,000 direct and indirect jobs.

Source: punchng.com

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FG approves new grid to curb collapses, read details

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The Federal Government has approved plans to build a new Eastern-Western electricity grid as part of efforts to address Nigeria’s recurring power grid collapses.

The Minister of Power, Joseph Tegbe, disclosed this at the recent HBSAN energy conference in Lagos, where he outlined plans to address longstanding weaknesses in the country’s electricity transmission infrastructure.

Tegbe said the government is preparing to begin the procurement process for the projects, adding that Nigerians would begin to see their benefits in two to three years.

He revealed that the government has started a technical audit across the entire country to understand the issues with the power sector and to know what should be prioritised.

“We have clustered Nigeria into three energy zones. The first one is the one that demands 50 per cent. If you fix Lagos and you fix the Abuja corridors, you’ve solved more than half of the problem of Nigeria. Because you can’t do that alone based on operational efficiency, you also have to build out your grid.

The President has approved that we commence the process of building out the grid: East and Western grid. We’re going through the procurement process, but it’s something you’ll see the benefits in two to three years,” the Minister said.

The minister said the technical audit of electricity infrastructure is to identify faults and determine which facilities require urgent repairs or replacement.

He said the exercise was intended to ensure that interventions addressed the actual causes of problems rather than directing funds towards the wrong equipment.

“We have started a technical audit across the entire country to say where do we have issues, and what issues specifically do we have. I don’t want to fix transformer issues where I have conductor and relay problems. I don’t want to fix insulators where the challenges I actually have are towers. So, we will finish that technical audit in the next couple of weeks. When we finish it, we then target our prioritised areas,” he said.

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Tegbe attributed some of the challenges facing the transmission network to the age of its infrastructure, saying certain facilities dated back several decades.

He maintained that some transmission towers and lines were inherited from an era when the Electricity Company of Nigeria operated before the National Electric Power Authority.

“This government has inherited a problem of 50 years. Before I became the Minister of Power, honestly, I used to think that everybody in the power sector just didn’t know their left from right. But the reality is, some of the towers have gone down with some of the transmission lines there.

“When I went to the site, I saw some of them carrying the logo of ECN. Many people in this room might not know what ECN is. ECN predated NEPA. So, some of these things were built 50 years ago. That is the reality,” he stated.

Source: punchng.com

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