By Merit Ibe
The Centre for the Promotion of Private Enterprise (CPPE) is seeking a more balanced policy stance that supports growth while preserving macroeconomic stability.
The centre made the remark in its review of the leadership of Mr. Yemi Cardoso as governor of Central Bank of Nigeria (CBN) in two years, which has undertaken comprehensive reforms at restoring confidence, strengthening governance, and repositioning the financial system to support inclusive and sustainable economic growth.
While examining the achievements, challenges, and strategic priorities for the CBN in the review, the centre advised that addressing structural financing gaps and sustaining governance reforms will be critical for unlocking the financial sector’s full potential as a driver of inclusive economic development.
Director of the centre, Dr Muda Yusuf, applauded Cardoso’s efforts, noting that over the past two years, one of the most significant reforms under him has been the liberalization and unification of the foreign exchange (FX) market.
In his review, Dr Yusuf acknowledged that Nigeria’s financial system has historically faced challenges, including foreign exchange market distortions, weak corporate governance, excessive monetary financing, and limited access to affordable credit, adding that these issues contributed to macroeconomic instability, inflationary pressures, and suboptimal economic performance.
He however pointed out that though Cardoso brought about a significant transformation of Nigeria’s financial system, with gains in transparency, credibility, and stability; a fully market-based approach, while improving efficiency, has not addressed structural financing gaps.
He noted that Small and Medium Enterprises (SMEs) face limited access to affordable credit, while infrastructure, industrial, agricultural, construction, and real estate projects lack patient capital and affordable long-term funding mechanisms.
With the Monetary Policy Rate (MPR) at 27.5% and Cash Reserve Ratio (CRR) at 50%, Yusuf lamented that these have considerably pushed up the cost of funds.
“Elevated lending rates have suppressed private sector borrowing, particularly in manufacturing, Agriculture, SMEs, real estate and other sectors.
“There is a growing risk that private investment could be displaced by high-yield government instruments.”
For balanced price stability with growth, Yusuf recommended gradual easing, which entails calibrating CRR and MPR downward as inflation moderates to create a more enabling credit environment.
He also suggested a balanced policy mix of complementing monetary tightening with supply-side measures to address structural inflation drivers.”
“Address structural financing gaps targeted interventions by developing credit guarantee schemes and concessionary financing programs for SMEs and critical sectors of the economy.
“Long-Term Funding: Promote development finance instruments and deepen the domestic bond market to mobilize resources for infrastructure.
“Sustain governance and transparency gains institutionalize reforms: Entrench corporate governance standards to ensure continuity beyond current leadership.
“Independence of the CBN: Strengthen legal frameworks that protect CBN’s autonomy from political pressures.
“Enhance Policy Communication Transparency: Maintain clear and predictable policy communication to manage market expectations.
Stakeholder Engagement: Broaden consultation with industry players and development partners to foster inclusive decision-making.”
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