CBN Is Likely to Retain Interest Rates Amid Economic Concerns – Coleman Wires CEO
Ahead of the next meeting of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC), industry stakeholders are projecting that the central bank will likely maintain the current interest rates. George Onafowokan, the Managing Director and CEO of Coleman Wires and Cables Industries Limited, indicated that while a small reduction of 0.25% is possible, the MPC is expected to prioritize stability rather than making drastic changes to the rates. He pointed out that high interest rates are already putting significant strain on the economy, with the current 27.5% Monetary Policy Rate (MPR) leading to commercial interest rates between 35% and 38%, which he described as unsustainable.
Onafowokan explained that businesses are struggling to manage costly loans, with borrowing N1,000 requiring businesses to generate N350 to N380 solely for interest payments. He emphasized the importance of policies that stabilize the economy and allow for gradual inflation reduction, which would, in turn, help to lower interest rates over time. The CEO also stressed the need for industrial policies that support local manufacturers as Nigeria approaches the 2025 election cycle, noting the government’s recent efforts, including appointing a Minister of State for Industry to engage with stakeholders.
Looking ahead, Onafowokan called for a comprehensive fiscal policy tailored to the industrial sector. Such policies, he argued, should address high tariff costs on raw materials and finished goods, which currently hinder businesses’ growth. He also underscored the necessity of strengthening local content policies in critical sectors like power transmission, telecommunications, and construction, as a means to drive economic growth.
On the foreign exchange market, Onafowokan expressed cautious optimism about the naira’s recent stability, which has helped businesses plan more effectively. However, he stressed the need for further stability to reduce inflation and interest rates, providing a more conducive environment for businesses. Additionally, he warned against the overuse of customs duties as a revenue-generation tool, stating that excessive tariffs could increase production costs and drive up consumer prices. He called for a more balanced approach that would support industrial growth while maintaining fiscal discipline.
SOURCE: THE SUN