LCCI laments continuous interest rate hike

The Lagos Chamber of Commerce and Industry (LCCI), has expressed concern over the negative effect of continuous hike in the Monetary Policy Rate (MPR) in a move to tame inflation.

LCCI in a statement noted that despite the continuous increase in MPR over the past two years from 11.5 percent in May 2022 to 26.75 percent in July 2024, inflation had remained persistently high, reaching a staggering 34.19 percent in June, the highest rate since March 1996.

Chinyere Almona, director general at Lagos Chamber of Commerce & Industry said the chamber is deeply concerned about the broader implications of the continuous interest rate hike on businesses and the overall economic landscape.

She noted that to support businesses in surviving the accelerating inflation amid low consumer purchases and high costs of doing business, the chamber recommends that the government sustain the waivers and tax exemptions in the mid and long term to allow for a more significant impact on price pressures and the cost of doing business.

“The LCCI urges the government and the CBN to consider a more balanced approach to monetary policy. While controlling inflation is crucial, mitigating adverse effects on business operations and economic growth is imperative,” she said.

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According to her, the chamber proposes the following; the government should release more capital expenditure to reflate business activities and support the contribution to economic growth.

She noted that the capital expenditure released so far is too small in the face of the magnitude of the infrastructural deficit that businesses suffer from, saying that with the new capital expenditure component of N12.2 trillion and a release of only N1.84 trillion at mid-year, there is an urgent need to speed up the release of funds for capital projects in the next quarter to boost economic growth.

Also, she said the chamber urged the government to be faithful to deploying the supplementary budget funds on business-boosting infrastructure as proposed to the National Assembly.

She called for the diversification of the country’s approach to controlling inflation beyond interest rate hikes. “Policies that directly address supply-side constraints, such as improving agricultural productivity and stabilising energy prices, can help reduce inflationary pressures more effectively.”

The LCCI director general stressed the need for increased investment in infrastructure, noting it will help alleviate production bottlenecks and reduce business costs.

“This will enhance productivity and competitiveness, helping to tame inflation from the supply side,” she said.

“LCCI remains committed to working with the government and the CBN to ensure policies that foster a conducive environment for business growth and economic stability. A holistic approach, balancing inflation control with support for businesses, will pave the way for sustainable economic development in Nigeria,” she added.