The Centre for the Promotion of Private Enterprise (CPPE) has cautioned that Nigeria's continued reliance on tight monetary policy and foreign portfolio inflows risks undermining sustainable economic growth, even as recent reforms deliver measurable macroeconomic improvements.
In a statement issued on Sunday, CPPE Chief Executive Officer Dr. Muda Yusuf responded to the International Monetary Fund's latest Article IV Consultation Report on Nigeria, acknowledging progress in stabilising the economy but arguing that greater policy balance is needed.
The organisation expressed concern that foreign portfolio investments — often described as hot money — are flowing into financial assets rather than productive sectors of the economy. "Hot money can stabilise an economy temporarily; productive investment is what transforms it permanently," the CPPE said.
Lending rates in Nigeria remain among the highest globally, making it difficult for businesses to expand operations, invest in capacity, and create jobs, the group added. While monetary tightening has helped moderate inflation and stabilise the foreign exchange market, the economic costs may soon outweigh the benefits.
CPPE also warned that prolonged high interest rates are increasing the cost of domestic borrowing and worsening debt-service obligations, with a growing share of government revenue consumed by debt servicing. This limits fiscal space for investments in infrastructure, healthcare, education, and other growth-enhancing sectors.
The organisation welcomed recent government indications that it plans to refinance portions of its debt portfolio to reduce borrowing costs and improve fiscal sustainability.
CPPE defended the continued use of development finance interventions, arguing that strategic sectors such as agriculture, manufacturing, housing, and infrastructure cannot rely solely on commercial lending channels. It described Nigeria's structural financing gaps as making development finance a necessity rather than a policy distortion.
The group acknowledged significant progress in restoring macroeconomic stability, pointing to improved foreign reserves, recovering capital inflows, stronger corporate earnings, and increased policy credibility as evidence that recent reforms are yielding results. However, it stressed that economic reforms must ultimately be measured by their impact on citizens' welfare rather than improvements in macroeconomic indicators alone.
Nigeria's Monetary Policy Rate has undergone an unprecedented tightening cycle since 2023 under Central Bank Governor Olayemi Cardoso, before entering a gradual easing phase in late 2025 and 2026. The CBN raised the benchmark rate from 18.75% to 27.50% in 2024 before pausing and then cutting to 27.00% in September 2025 and further to 26.50% in February 2026.
CPPE has consistently urged the CBN to avoid further interest-rate hikes due to their impact on investment, enterprise growth, and job creation.
