Rallying for Growth: The Call to Cut the MPR
Nigeria’s economists are pressing the federal government to rethink its monetary stance, arguing that a targeted cut in the Monetary Policy Rate (MPR) could unlock credit, stimulate investment, and accelerate economic growth. Speaking from Lagos, a group including academics, financial analysts, and business leaders contends that the MPR, if kept unnecessarily high, constrains lenders and dampens private sector expansion just as the economy attempts a broader recovery.
The argument centers on the idea that the MPR should be calibrated to support productive activity rather than serve as a blunt instrument for macro stability alone. By lowering the cost of borrowing, banks may extend credit to small and medium enterprises (SMEs) and manufacturers, sectors that have the strongest potential to create jobs and raise living standards for millions of Nigerians.
Maintaining Policy Consistency Amid Growth Imperatives
Beyond a one-off rate cut, experts stress the importance of policy consistency. They warn that prolonged uncertainty—whether due to frequent policy reversals or mixed signals from the central bank and fiscal authorities—can erode investor confidence and slow the pace of growth. A steady, predictable framework helps households plan better, while also attracting both local and foreign capital.
Consistency, according to academic researchers from Lagos Business School and other institutions, should involve clear communication about inflation targets, currency stability, and the tempo of financial liberalization. When businesses understand the policy road map, they are more likely to commit capital to long-term projects, which are essential for durable improvements in productivity and living standards.
The Link Between Monetary Policy and Living Standards
The proposed link between monetary policy and living standards hinges on credit growth and investment. A lower MPR could reduce borrowing costs for firms investing in productive assets, leading to higher output, more jobs, and improved wages over time. Conversely, keeping rates higher than necessary can starve growth and widen income disparities if job creation slows or stalls.
Critics of rate cuts often raise concerns about inflation and currency depreciation. The experts acknowledge these risks but argue that a balanced approach—gradual reductions paired with robust inflation management—offers a better path to sustainable growth. Enforcing anti-hedging measures, improving data transparency, and enhancing the independence of the central bank are cited as complementary steps to stabilize expectations during a growth-driven easing cycle.
Policy Tools Beyond the MPR
While the MPR is a focal point, analysts emphasize a suite of accompanying measures. Fiscal policy that prioritizes productive public expenditure, targeted incentives for exporters, and reforms to reduce the cost of doing business can amplify the impact of any monetary easing. Strengthening financial inclusion and credit information sharing can also reduce borrowing barriers for SMEs, enabling a wider spectrum of citizens to participate in growth.
Education, infrastructure, and healthcare investments are consistently highlighted as multiplier projects. When the government aligns monetary ease with concrete infrastructure and human-capital improvements, the overall growth trajectory becomes more resilient and more inclusive.
Conclusion: A Delicate but Necessary Balancing Act
Experts agree that cutting the MPR and preserving policy consistency is not a panacea. It is a strategic move that, if implemented thoughtfully, can catalyze private sector activity, strengthen confidence, and gradually raise living standards. The next steps involve transparent communication from the central bank, collaboration with fiscal authorities, and a shared long-term vision for Nigeria’s growth trajectory. In an economy eager for momentum, the call is clear: thoughtful easing, clear signals, and steady commitment to growth-oriented policy.
