When 63.3 per cent of Nigerians are begging the Central Bank to cut interest rates, and the CBN’s own survey shows those same Nigerians think inflation is getting worse, something has gone badly wrong. The Monetary Policy Committee meets May 19 and 20 in what has become a familiar routine: gather, talk, and reach for the only tool the committee ever uses.
The trouble is that tool is not fixing anything.
Nigeria’s inflation is not happening because people have too much money to spend. Anyone who has bought fuel, paid a transporter, or tried to move goods from one state to another already knows this. Prices are high because energy is expensive, roads are bad, the naira remains weak, and farmers in large parts of the country cannot work safely. None of those problems cares about the policy rate. The CBN has spent the better part of two years raising and holding interest rates to fight an inflation that higher rates were never going to beat.
The data is starting to show the damage. Nigeria’s business activity index fell into negative territory in April, dropping from 53.2 to 49.4 points. That means businesses are slowing down. Loans are too expensive to take. Small businesses, which employ most working Nigerians, are being quietly strangled. The CBN’s own April survey found that micro businesses reported the highest inflation pain of any group at 69.9 per cent. These are the corner shops, the small manufacturers, the traders. There is no hedge available to them when borrowing costs are this high.
The MPC will almost certainly keep the MPR at 26.5 per cent when it announces its decision after the May 19 and 20 meeting. That call will be presented as responsible and steady. But holding a position that is not working is not steadiness. It is stubbornness dressed up in policy language.
The real issue is what has gone undiscussed while rate decisions eat up all the attention. The CBN’s own survey named the actual drivers of inflation clearly: energy costs, transport, the exchange rate, infrastructure. The MPC’s interest rate lever touches none of those. Fixing Nigerian inflation requires cheaper power, better roads, agricultural investment that reaches the people who grow food, and a government that does not flood the economy with cash every time an election approach. That is a harder conversation. It involves more than one ministry and more than one quarterly meeting.
Keeping rates where they are may be the least bad option for now, given that an election cycle is approaching and government spending is set to rise. But the problem with the expected decision is not the number itself. It is the pretence that the current approach is a strategy rather than a holding pattern.
Nigeria’s economy needs more than a committee meeting every two months. It needs someone to finally say out loud that the framework is not enough, and start working on what is.
