New growth-focused policy direction urged for Nigeria
Leading voices in Nigerian economics are calling the federal government to pivot from a strict emphasis on macroeconomic stability to a more robust strategy aimed at stimulating real growth. Professor Bongo Adi of Lagos Business School argues that the country’s living standards could improve more quickly if policy makers shift away from a sole focus on the Monetary Policy Rate (MPR) and other macro targets toward concrete growth-enhancing measures.
In many economies, including Nigeria, monetary policy tools like the MPR are used to control inflation and stabilize the currency. However, critics say that overly tight policies can dampen investment, job creation, and productive capacity—especially in a period of post-pandemic recovery and global uncertainty. The call from Prof. Adi and other economists centers on balancing price stability with deliberate action to stimulate enterprise, credit access, and productive investments.
Why trimming the MPR could support growth
Advocates for a cut or gradual easing of the MPR argue that lower policy rates reduce borrowing costs for businesses and households. This can support a wider range of activities, from small and medium enterprises expanding payrolls to manufacturers investing in plant and equipment. When credit conditions loosen, the multiplier effect can boost domestic demand, raise output, and potentially lower unemployment—key indicators of growth-focused policymaking.
Professor Adi emphasizes that a growth-oriented approach does not imply reckless inflationary risk. Instead, it requires careful calibration: a credible framework that blends inflation targeting with growth-oriented lending and investment incentives. The aim is to sustain investor confidence while unlocking capital for sectors with high employment potential, such as agribusiness, manufacturing, and technology-enabled services.
Policy consistency as a growth pillar
Beyond a one-off rate adjustment, experts stress the importance of policy consistency. Businesses thrive when policies are predictable, reducing the risk premium that often accompanies frequent shifts in macro assumptions. Consistency includes clear communication of regulatory expectations, steady fiscal discipline, and a transparent framework for monetary policy that aligns with long-term growth goals.
Nigeria’s policymakers face a delicate balancing act. While inflation pressures persist, they also must avoid stifling productive activity. Economists contend that a well-communicated, gradual easing of the MPR could coexist with robust supply-side reforms, such as improving the ease of doing business, expanding access to affordable credit, and targeting subsidies away from broad-based price distortions toward productivity-enhancing investments.
Economic momentum and living standards
Proponents of a proactive growth strategy point to the potential for higher living standards as a primary measure of policy success. When growth accelerates, incomes tend to rise and more jobs are created. The challenge is ensuring that growth is sustainable and inclusive, benefiting a broad spectrum of Nigerians rather than a narrow segment of the economy. That requires complementary structural reforms, effective public investment, and a social safety net to cushion vulnerable groups during transition periods.
Implementation considerations for the FG
Implementing a growth-centric strategy would involve a phased approach: a transparent review of the MPR stance, a clear roadmap for credit expansion in priority sectors, and a reinforced framework for macroprudential supervision to prevent overheating. Coordination between the Central Bank of Nigeria, the Ministry of Finance, and the fiscal authorities will be essential to maintain policy coherence and minimize conflicting signals.
Additionally, data-driven monitoring will be crucial. Regularly publishing growth indicators, inflation expectations, and credit metrics can build market confidence and help adjust policy in real time. In the end, the objective remains simple: create a policy environment where Nigerian businesses can invest with confidence, hire more workers, and contribute to sustained economic expansion.
Looking ahead
As Nigeria contends with global volatility and domestic development needs, the call to combine a thoughtful MPR stance with growth-oriented reforms could offer a path toward improved living standards. Whether the government chooses to cut the MPR, implement gradual easing, or pursue a different mix of policy instruments, the focus on consistent, credible, and transparent policy will be essential to long-term success.
