The Centre for the Promotion of Private Enterprise, CPPE, has said the Central Bank of Nigeria, CBN, prolonged monetary policy tightening has worsened the country’s development finance gap, which it estimates at over N50 trillion.
The Chief Executive Officer of CPPE, Muda Yusuf, disclosed this in a statement issued at the weekend, warning that an overreliance on conventional monetary policy risks undermining investment and growth in key productive sectors.
According to the economic think tank, Nigeria cannot depend solely on commercial banks to finance industrialisation and agricultural transformation, given the country’s huge financing needs.
CPPE urged the CBN to rethink what it described as its retreat from development financing and called on both the apex bank and the Federal Government to significantly recapitalise the Bank of Industry and the Bank of Agriculture to bridge the funding gap.
“CPPE estimates a conservative current real-sector financing gap of over N50 trillion when account is taken of unmet financing needs across manufacturing, agriculture, agribusiness, MSMEs, supply chains and export-oriented enterprises,” it said.
The group noted that the current monetary policy environment has compounded the financing challenge.
“The prevailing monetary environment compounds the problem. With the Monetary Policy Rate at 26.5 percent and the Cash Reserve Requirement for deposit money banks at 45 percent, commercial lending rates are generally incompatible with the expected returns on many productive investments,” it added.
While acknowledging the CBN’s efforts to restore monetary policy credibility, CPPE said the tightening measures have produced positive outcomes, including improved exchange-rate stability and moderation
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