CBN Rate Cut To 23%: Manufacturers, Businesses Demand Cheaper Loans
There Are Still Concerns Being Expressed
Reloaded News Desk
The Central Bank of Nigeria has cut its Monetary Policy Rate from 26.5 per cent to 23 per cent, prompting manufacturers and other business groups to welcome the decision while demanding that commercial banks translate the reduction into cheaper credit.
The 350-basis-point cut was announced by CBN Governor Olayemi Cardoso after the 307th meeting of the Monetary Policy Committee in Abuja.
The CBN also adjusted its standing facilities corridor to +50/-300 basis points around the new MPR while retaining the Cash Reserve Ratio at 45 per cent for deposit money banks.
The Manufacturers Association of Nigeria welcomed the decision but said the critical issue now is the interest rate manufacturers actually pay when they approach banks for loans.
MAN Director-General, Segun Ajayi-Kadir, said the rate cut signals a positive response to pressure on the real sector, but stressed that cheaper lending must follow.
The Lagos Chamber of Commerce and Industry also called for stronger transmission of monetary easing to businesses, while the Nigeria Employers’ Consultative Association said the reduction could improve access to working capital and investment financing, particularly for manufacturers and SMEs.
The groups’ concern is that a reduction in the CBN benchmark does not automatically mean a corresponding reduction in commercial lending rates.
For businesses already facing high energy, logistics, foreign-exchange and operating costs, the difference between the policy rate and the rate actually charged by banks remains critical.
The CBN has therefore changed the benchmark.
The next test is whether the cost of borrowing for Nigerian businesses will follow.
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