The House of Representatives Committee on National Planning and Economic Development has warned the Central Bank of Nigeria (CBN) against the unintended consequences of high interest rates aimed at curbing inflation in the country.
Chairman of the committee, Gboyega Isiaka, who gave the warning during a meeting with the Statistician General of the federation and chief executive officer of the National Bureau of Statistics (NBS), Adeyemi Adeniran, in Abuja.
Isiaka said the caution became necessary as the CBN prepares to hold its 300th monetary policy committee (MPC) meeting this week.
According to him, high interest rates have negatively impacted the manufacturing, agriculture, and small and medium enterprise (SME) sectors.
He said there appeared to be a general consensus that the current administration had implemented bold, market-oriented reforms that were beginning to yield positive outcomes.
Isiaka noted that the policy had delivered significant gains, with the economy showing signs of stabilisation and a gradual return of investor confidence.
According to him, Nigeria’s capital market had surged by about 100 percent in the last two years, while CBN posted its strongest external reserves level in more than three years, adding that the apex bank also reportedly recorded a profit of N38.8 billion – a significant recovery from the N1.15 trillion loss it recorded in 2023.
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The lawmaker, however, noted that the high interest rate has negatively affected the manufacturing, agriculture, and small and medium enterprise (SME) sectors – key drivers of employment in the country.
“The monetary policy rate (MPR) has been raised 10 times since January 2023 and currently stands at 27.5 percent from 16.5 percent in 2023, with the aim of curbing demand-pull inflation.
“However, it will appear that the effectiveness of this policy has been undermined by structural bottlenecks, supply chain inefficiencies, etc.
“It is, therefore, our view that considering the current economic landscape, the monetary authorities, as they meet this week, should consider a more accommodative stance that also promotes growth and employment generation,” Isiaka stated.
In his remarks, Adeniran said the NBS reported a 4.3 percent unemployment rate for the second quarter of 2024, down from 5.3 percent in the previous quarter.
He said the rate was higher 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).
The statistician-general said the unemployment rate among young people stood at 6.5 percent compared to the headline figure.
He added that 12.5 percent of youths were not engaged in employment, education, or training, with a higher rate among young females (14.3 percent) than their male counterparts (10.9 percent).
Adeniran said the third and fourth quarter reports for 2024 were being finalised and would be released to the public soon.
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