LCCI demands cheaper loans after CBN cut
By Yinka Kolawole
LAGOS — The Lagos Chamber of Commerce and Industry, LCCI, has urged banks to translate the Central Bank of Nigeria’s 350-basis-point reduction in the Monetary Policy Rate, MPR, to 23 per cent into cheaper and more accessible credit for businesses, particularly small and medium enterprises.
In a statement, LCCI Director-General, Dr Chinyere Almona, described the rate cut as a positive development, particularly for micro, small and medium enterprises, MSMEs, which have been constrained by high borrowing costs.
Almona said lower policy rates could reduce the cost of funds in the financial system, improve credit conditions and support private-sector investment and economic activity.
She, however, cautioned that a reduction in the MPR would not automatically translate into lower lending rates or improved access to credit.
“Credit transmission must be the next priority,” she said, noting that businesses continued to face significant operating risks beyond borrowing costs.
She listed high energy and logistics costs, exchange-rate risks, rising input costs, infrastructure deficiencies, insecurity and regulatory burdens as factors weakening businesses’ ability to generate the cash flows needed to access and service loans.
According to her, banks also consider borrowers’ cash flows, collateral, credit history, sectoral risks and repayment capacity when pricing and allocating credit.
She urged the CBN and financial institutions to ensure that the benefits of monetary easing were progressively reflected in affordable credit for productive businesses, particularly SMEs.
Almona also called for stronger credit and partial-risk guarantee schemes to encourage lending to viable businesses.
She urged financial institutions to expand cash-flow-based lending, credit scoring and the use of movable assets as alternatives to conventional collateral requirements.
The LCCI DG further called for complementary measures to reduce structural business risks, including high energy and transportation costs, infrastructure deficiencies and multiple regulatory charges.
She said increased liquidity should be channelled towards productive sectors, including manufacturing, agriculture, agro-processing, trade, logistics, technology, healthcare and construction.
While commending the CBN for easing financial conditions, Almona said the MPR reduction should be treated as an opportunity to improve the transmission of monetary policy to the real economy.
“The priority now should be to ensure that this window translates into credit for businesses, investment in productive capacity, jobs and sustainable economic growth,” she said.
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