Abuja: The House of Representatives Committee on National Planning and Economic Development has issued a caution to the Central Bank of Nigeria (CBN) regarding the potential unintended consequences of maintaining high interest rates aimed at controlling inflation in the country. Chairman of the committee, Rep. Gboyega Isiaka (APC-Ogun), expressed these concerns during a meeting in Abuja with the Statistician-General of the Federation and Chief Executive Officer of the National Bureau of Statistics, Mr. Adeyemi Adeniran.
According to News Agency of Nigeria, the caution comes ahead of the CBN’s 300th Monetary Policy Committee (MPC) meeting scheduled for next week. Rep. Isiaka highlighted a prevailing opinion that the current government had implemented bold market-driven reforms, which had begun producing positive outcomes. He noted that these policies contributed to economic stabilization and the restoration of confidence.
Rep. Isiaka pointed out that Nigeria’s capital market experienced a significant surge of approximately 100 percent over the past two years, and the CBN recorded its highest level of external reserves in more than three years. Additionally, the apex bank reported a profit of N38.8 billion, marking a substantial recovery from a N1.15 trillion loss in 2023. However, he emphasized that high interest rates had adversely affected sectors such as manufacturing, agriculture, and small and medium enterprises (SMEs), which are crucial for employment.
He further explained that the Monetary Policy Rate (MPR) had been increased ten times since January 2023, rising from 16.5 percent to the current 27.5 percent to curb demand-pull inflation. Nonetheless, structural bottlenecks and supply chain inefficiencies appeared to undermine the policy’s effectiveness. Rep. Isiaka urged the monetary authorities to consider a more accommodative approach that fosters growth and employment in light of the current economic landscape.
In his presentation, Mr. Adeniran reported that the latest figures from the Bureau for Q2 2024 indicated a decline in the unemployment rate to 4.3 percent from 5.3 percent in the previous quarter. He noted that unemployment was more prevalent among females (5.1 percent) than males (3.4 percent) and higher in urban areas (5.2 percent) compared to rural areas (2.8 percent). Young people faced a relatively higher unemployment rate of 6.5 percent compared to the headline figure, with 12.5 percent of youths not engaged in employment, education, or training. This rate was higher among young females (14.3 percent) compared to young males (10.9 percent). Mr. Adeniran added that the reports for Q3 and Q4 2024 were being finalized and would soon be made public.