Nigeria requires a comprehensive monetary policy approach -says Presidency

.By Philippine Duru

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Presidential Economic Adviser, Tope Fasua, has called for a comprehensive review of Nigeria’s monetary policy framework, warning that the sustained high-interest-rate environment is constraining the growth of micro, small and medium-sized enterprises (MSMEs), limiting investment, and slowing job creation.

Fasua stated that Nigeria requires a monetary policy approach that reflects the realities of its economy, rather than relying predominantly on aggressive interest-rate increases to curb inflation. He noted that while price stability remains a critical objective, monetary policy must also support business expansion, industrial development, and inclusive economic growth.

He argued that the prevailing high-interest-rate regime has significantly raised the cost of borrowing, making it increasingly difficult for businesses—particularly MSMEs—to access affordable credit needed to expand operations, invest in equipment, and create employment opportunities.

The presidential adviser emphasised that MSMEs form the backbone of Nigeria’s economy, accounting for the vast majority of businesses and providing millions of jobs across various sectors. He stressed that this strategic role necessitates greater consideration of the sector’s financing needs in monetary policy formulation.

According to Fasua, while monetary tightening can be an effective tool for managing inflation, persistently high lending rates may also suppress private sector investment and weaken overall economic activity when maintained over extended periods.

He therefore advocated a more balanced monetary policy framework that simultaneously supports sustainable economic growth and maintains price stability. Such an approach, he said, should reflect Nigeria’s unique economic structure, including its large informal sector, the financing constraints faced by small businesses, and broader national development priorities.

Fasua urged monetary authorities to adopt policies that better balance inflation control with the need to create an enabling environment for businesses to thrive, noting that elevated borrowing costs have become a significant barrier to entrepreneurship and productivity.

His remarks come at a time when many Nigerian businesses continue to face significant operational challenges, despite indications of easing inflationary pressures. Manufacturers, traders, and service providers have consistently identified high lending rates as a major constraint to expanding production, increasing capacity, and improving competitiveness.

Business groups have also maintained that while tight monetary policy may help contain inflation, prolonged high interest rates can discourage investment, reduce consumer spending, and slow economic growth—particularly in an environment where access to affordable financing remains limited.

The comments are expected to intensify ongoing discussions among policymakers, economists, and private sector stakeholders on the appropriate balance between inflation control and economic growth stimulation.

The debate has gained renewed relevance as Nigeria seeks to strengthen its private sector, attract greater domestic and foreign investment, diversify its economy beyond oil, and generate employment through expanded industrialisation and enterprise development.

Analysts note that any future adjustment to the country’s monetary policy framework will require a careful balancing act—ensuring inflation remains under control while guaranteeing that businesses have adequate access to affordable financing to drive productivity, innovation, and long-term economic growth.