The Centre for the Promotion of Private Enterprise (CPPE) has urged the Central Bank of Nigeria (CBN) to adopt a more flexible monetary policy stance that will ease access to credit for small and medium enterprises (SMEs) and critical sectors of the economy.
In a policy advisory issued on Sunday, CPPE’s Chief Executive Officer, Dr. Muda Yusuf, said the apex bank must recalibrate its approach by reducing both the Cash Reserve Ratio (CRR) and the Monetary Policy Rate (MPR) in line with recent signs of moderating inflation.
“Calibrate CRR and MPR downward as inflation moderates to create a more enabling credit environment. Complement monetary tightening with supply-side measures to address structural inflation drivers,” Yusuf advised.
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The CPPE call comes on the back of fresh inflation data showing consumer prices eased in August to 20.12%, continuing a recent trend of moderation for the fifth month. The development has fueled growing calls from economists, business leaders, and market analysts for the CBN to review interest rates downward to stimulate investment and support economic activity.
Analysts argue that while inflation remains elevated, the steady decline offers the apex bank an opportunity to shift focus toward growth, particularly as businesses and households remain weighed down by high borrowing costs.
Yusuf noted that the CBN’s current tight monetary policy—designed to contain inflation—has come at a cost, inadvertently restricting the flow of affordable credit to businesses and households. SMEs, which account for a majority of Nigeria’s employment and economic activity, have been particularly squeezed by high interest rates and limited financing options.
To bridge the financing gap, Yusuf called for the introduction of innovative funding models. He proposed credit guarantee schemes and concessionary financing programs tailored to small businesses and key sectors such as agriculture, manufacturing, and renewable energy.
“Develop credit guarantee schemes and concessionary financing programs for SMEs and critical sectors of the economy. Promote development finance instruments and deepen the domestic bond market to mobilize resources for infrastructure,” CPPE stated.
Commendation for CBN reforms under Cardoso
Despite its call for a policy shift, CPPE commended CBN Governor Yemi Cardoso for what it described as a “significant transformation of Nigeria’s financial system, with gains in transparency, credibility, and stability.”
The group noted that under Cardoso’s leadership, the CBN has rolled out broad reforms aimed at restoring confidence, improving governance, and repositioning the financial system to drive inclusive growth.
One of the most notable reforms, according to CPPE, has been the liberalization and unification of Nigeria’s foreign exchange (FX) market. By eliminating multiple FX windows, the CBN closed off avenues for arbitrage and rent-seeking, a move that market analysts say has helped strengthen credibility in currency management.
At its 301st Monetary Policy Committee (MPC) meeting in July, the CBN held the benchmark MPR at 27.5%. All 12 MPC members voted unanimously in favor of retention.
However, with inflation now trending lower, analysts predict that the MPC may cut the MPR by between 25 and 50 basis points at its 302nd meeting this week. They cite easing inflationary pressures, relative naira stability, and global monetary trends as key factors.
Economists say such a move could give Nigeria’s struggling real sector some breathing space by reducing borrowing costs and unlocking liquidity for SMEs that have been starved of credit.