Nigeria’s monetary policy is being driven more by the need to protect macroeconomic stability than by efforts to attract foreign portfolio investors, analysts have said. The position comes as the Central Bank of Nigeria (CBN) maintains a tight monetary stance despite growing concerns over high borrowing costs for local businesses.
Wale Olusi, Director of Deals Advisory at PwC, said the CBN’s decision to keep interest rates elevated was primarily aimed at stabilising inflation, the foreign exchange market and the wider economy. According to him, the CBN’s responsibility is to ensure macroeconomic stability rather than deliberately design policies around foreign portfolio investment. He noted that the naira and FX market had become more stable, while inflation had also begun to ease.
The CBN has kept its Monetary Policy Rate at 26.5 per cent since cutting it by 50 basis points in February 2026. However, the high-rate environment continues to put pressure on businesses, with manufacturers reportedly facing lending rates of between 25 per cent and 35 per cent. At the same time, the attractive returns on Nigerian fixed-income assets have made the country’s financial market more appealing to foreign portfolio investors.
Data from PwC showed that foreign portfolio investors accounted for almost all of Nigeria’s $10.37bn capital inflows in the first quarter of 2026, highlighting the strong response from international investors to the country’s high-yield environment. Olusi, however, said this should not be mistaken for the CBN deliberately targeting portfolio investors. He explained that rate cuts could become possible when inflation is sufficiently contained, rather than simply because businesses and investors are demanding cheaper credit.
An emerging markets expert, Ike Ibeabuchi, also argued that the CBN does not necessarily face a choice between supporting businesses and attracting investors. He said the central bank’s core responsibilities include maintaining price stability, setting monetary policy and managing the naira and foreign exchange market. In his view, getting these fundamentals right naturally creates an environment where investors are more willing to participate. For now, analysts believe CBN macroeconomic stability remains the priority, even as businesses wait for lower interest rates and investors continue to watch Nigeria’s improving economic indicators.
source: punch
