Unemployment Hits 5.3% As CBN Raises Interest Rate To 27.25%

The Central Bank of Nigeria (CBN) recently increased the Monetary Policy Rate (MPR) from 26.75% to 27.25%, a decision that has sparked widespread concerns among economic experts and business organizations. Experts argue that this interest rate hike is detrimental to investment and economic growth. As borrowing costs rise, businesses, particularly in the manufacturing and small business sectors, face increased financial strain, potentially leading to reduced production, higher loan defaults, and economic contraction.

Organizations such as the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Association of Small Business Owners of Nigeria (ASBON) warn that this policy will further exacerbate the challenges businesses face, including increased operational costs and reduced competitiveness. Analysts also note that despite the CBN's efforts to stabilize inflation, the high interest rate may lead to worsened inflationary pressures, especially in the supply chain.

On a related note, the Nigerian Bureau of Statistics (NBS) announced a rise in the unemployment rate to 5.3% in Q1 2024. Some experts, however, believe the real unemployment rate is much higher than reported. They highlight the need for Nigeria to shift from a consumption-driven economy to one that promotes local production and exports in order to address these economic challenges.