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…