The Lagos Chamber of Commerce has disclosed that the business community is currently plagued with increased borrowing costs, reduced investment incentives, and heightened uncertainties in the policy environment.
The President of the chamber, Gabriel Idahosa, stated this during the LCCI quarterly economic outlook, which was held in Lagos recently.
According to Idahosa, the recent hikes in the benchmark interest rate have made it more expensive for businesses to access credit for working capital, expansion, and sustainability.
He said, “We have consistently advised that rate hikes alone will not curb inflation without resolving the challenges of the real sector.
“The real sector has demonstrated the capacity to create more jobs, produce goods and services for consumption and export, and expand the economy’s GDP base.
“While we understand that high-interest rates attract foreign portfolio investments and local investors to Treasury Bills and bonds, we are concerned about the drying up of funds away from the private sector to government treasuries.”
He also noted that, with the high yields from Treasury Bills and bonds, the government was attracting investments from both local and foreign portfolio investors.
That, he averred, could significantly reduce real sector access to credit in the near term.
During the first quarter of 2024, the Central Bank of Nigeria deployed a tightening monetary policy to stabilise prices in response to the spiralling inflation rate.
The Monetary Policy Committee decided at the 293rd meeting of the MPC held on February 26-27, 2024, to raise the MPR from 18.75 per cent to 22.75 per cent, raise the CRR from 32.5 per cent to 45.00 per cent, and retain the liquidity ratio at 30 per cent.
The MPC, at its 294th meeting held on March 25–26, further raised the benchmark interest rate to 24.75 per cent, while the other parameters were unchanged.
