Daniel Akeju, an advisor and treasury manager, has criticized the Central Bank of Nigeria’s (CBN) recent increases in the Monetary Policy Rate (MPR), intended to curb inflation and stabilize the economy.
Akeju, a member of the Chartered Institute of Treasury Management (CITM), voiced his concerns during a press briefing in Abuja on Thursday.
The MPR, which is the rate at which the CBN lends to commercial banks, was raised by 400 basis points to 22.75% in February 2024, by 200 basis points to 24.75% in March, and by 150 basis points to 26.75% in May.
Akeju argued that Nigeria’s economic challenges require more than the simplistic approach of raising the MPR. He emphasized that while controlling inflation is important, it must be done in conjunction with measures addressing the root causes of economic instability.
“By adopting comprehensive measures, Nigeria can build a resilient economy that provides prosperity and security for all its citizens. The time for such a transformative approach is now,” Akeju stated.
He advocated for a balanced and holistic strategy combining supply-side interventions, enhanced security, economic diversification, and social safety nets to effectively stabilize prices, improve food availability, reduce terrorism, and alleviate poverty.
Akeju criticized the strategy of consistently increasing the MPR, noting it has been counterproductive, as evidenced by rising prices, food scarcity, escalating terrorism, and growing poverty rates.
“The disconnect between the intended outcomes of these monetary policies and the harsh realities faced by Nigerians necessitates a critical reassessment of the CBN’s approach,” Akeju added.
He explained that while raising the MPR aims to control inflation by making borrowing more expensive, thus reducing spending and slowing price increases, it has not yielded the desired results in Nigeria.
Akeju attributed this to factors such as cost-push inflation driven by high production and distribution costs, insecurity, infrastructural deficits, limited access to credit, imported inflation, and government borrowing.
He urged the CBN to focus more on agricultural interventions, enhanced security, industrialization, monetary and fiscal coordination, and targeted social programs. He added that the persistent MPR hikes have had severe socioeconomic repercussions, including rising food prices, increased poverty, escalating terrorism, and inadequate social safety nets.
