The Central Bank of Nigeria has been urged to introduce additional measures to lower lending rates for households and businesses.
The call follows concerns that borrowing costs have remained elevated despite the successful completion of the banking sector recapitalisation exercise.
The recommendation was contained in the personal statement of Monetary Policy Committee member Professor Murtala Sabo Sagagi following the 305th MPC meeting, where he stressed that stronger bank capital should translate into greater access to affordable credit for the real economy.
According to Sagagi, although the banking sector has become more resilient, structural weaknesses continue to hinder the effective transmission of monetary policy to lending rates.
The MPC member said the CBN should strengthen its oversight to ensure that improvements in the banking sector are reflected in more favourable lending conditions for businesses and consumers.
“The CBN should closely monitor the extent to which banking sector improvements and the current policy stance are being transmitted into affordable lending rates for households and businesses.
“Structural impediments in the credit transmission mechanism, including high risk premiums and limited credit bureau penetration, require targeted macroprudential intervention.
“Given the successful completion of the banking sector recapitalisation exercise, the CBN should proactively identify and address emerging post-recapitalisation risks, including potential shifts in risk appetite, credit concentration, and governance challenges in newly merged or enlarged institutions, to preserve financial system stability,” he said.
Sagagi also underscored the need to preserve financial stability as banks adapt to their expanded capital base.
Beyond banking sector reforms, he said stronger coordination between monetary and fiscal authorities is essential to sustain the recent progress in price stability.
The statement warned that increased government spending during election cycles could stoke demand-driven inflation and undermine recent progress in easing price pressures.
It called for sustained collaboration between the CBN and fiscal authorities to ensure a prudent and counter-cyclical fiscal spending framework.
The MPC member also observed that the key drivers of food inflation—including insecurity in farming communities, high transportation costs and inadequate rural infrastructure—require coordinated policy interventions that extend beyond monetary tightening.
According to the statement, expanding access to affordable agricultural inputs such as fertiliser, improved seeds and pesticides, alongside increased investments in rural roads and security, would help address structural food inflation and reinforce the ongoing disinflationary trend.
The MPC member also advised the apex bank to maintain prudent exchange rate management by leveraging Nigeria’s stronger external reserves to cushion short-term volatility arising from disruptions in global energy markets, while sustaining policies that promote export earnings and diaspora remittances.
The CBN retained the Monetary Policy Rate at 26.5 per cent at the conclusion of its 305th Monetary Policy Committee meeting.
