LCCI demands cheaper loans after CBN cut

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LCCI

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By Yinka Kolawole

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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.

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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.

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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.

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She, however, cautioned that a reduction in the MPR would not automatically translate into lower lending rates or improved access to credit.

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“Credit transmission must be the next priority,” she said, noting that businesses continued to face significant operating risks beyond borrowing costs.

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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.

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According to her, banks also consider borrowers’ cash flows, collateral, credit history, sectoral risks and repayment capacity when pricing and allocating credit.

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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.

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Almona also called for stronger credit and partial-risk guarantee schemes to encourage lending to viable businesses.

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She urged financial institutions to expand cash-flow-based lending, credit scoring and the use of movable assets as alternatives to conventional collateral requirements.

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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.

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She said increased liquidity should be channelled towards productive sectors, including manufacturing, agriculture, agro-processing, trade, logistics, technology, healthcare and construction.

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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.

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“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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