Business
CPPE cautions CBN against monetary tightening ahead of the MPC meeting
The Centre for the Promotion of Private Enterprise (CPPE) has warned the Central Bank of Nigeria (CBN) against excessive monetary tightening ahead of the 305th meeting of the Monetary Policy Committee (MPC).
The group cautioned that higher interest rates could weaken economic growth, private-sector investment, industrial productivity, and employment.
The warning came in a statement signed by the Chief Executive Officer of CPPE, Muda Yusuf, on Sunday.
At the February MPC meeting, the committee reduced the borrowing rate by 50 basis points to 26.5 per cent, and scheduled the 305th meeting for 19 and 20 May.
CPPE said expectations ahead of the MPC meeting should be viewed in the context of growing domestic macroeconomic pressures, geopolitical tensions, and rising fiscal liquidity risks.
According to the think tank, escalating geopolitical tensions involving the United States, Israel, and Iran have already triggered volatility in the global energy market, with implications for inflation, energy costs, and business operations in Nigeria.
“Of immediate significance are the escalating geopolitical tensions involving the United States, Israel, and Iran, which have triggered renewed volatility in the global energy market.
“The resulting surge in crude oil prices is already transmitting into higher domestic energy costs, with significant implications for inflationary pressures, production costs, transportation, logistics, and overall business operating conditions within the economy,” CPPE said.
Concerns
CPPE also raised concerns over increasing liquidity injections linked to political activities ahead of the 2027 general elections, warning that rising political spending and improved Federation Account Allocation Committee (FAAC) disbursements to states could worsen inflationary pressures.
“At the domestic level, early signs of election-related liquidity injections ahead of the 2027 electoral cycle are also becoming increasingly evident.
“Rising political spending by aspirants and political parties, increased election-related expenditures, and substantially improved Federation Account Allocation Committee [FAAC] disbursements to subnational governments present material risks to liquidity management and inflation containment,” the group stated.
It said recent engagement by the CBN with state governments on inflationary risks associated with fiscal injections reflects growing official concerns over excess liquidity in the economy.
CPPE noted that the MPC may therefore adopt a cautious tightening stance or maintain its current restrictive monetary policy position to manage inflation expectations and sustain investor confidence.
“Accordingly, there is a strong possibility that the Committee may be inclined towards a cautious tightening bias or a prolonged retention of the current tight monetary stance in order to contain inflation expectations, reinforce policy credibility and sustain investor confidence,” CPPE said
Warning
The CPPE warned that additional monetary tightening could significantly hurt the productive sector and undermine economic recovery.
“The Nigerian economy remains fragile and structurally constrained. Further tightening of monetary conditions could significantly weaken credit expansion, dampen investment appetite, and undermine the fragile momentum of the real-sector recovery.
“Excessively elevated interest rates also heighten the risks of loan defaults, weaken the financial sustainability of businesses, and exacerbate sovereign debt service pressures,” it said.
The think tank argued that Nigeria’s inflation challenge remains largely structural and supply-side driven, making aggressive monetary tightening less effective in addressing the root causes of inflation.
“It is equally important to recognise that the current inflationary pressures are predominantly cost-push and supply-side driven. The major inflation drivers remain energy costs, transportation expenses, logistics bottlenecks, and structural inefficiencies within the production environment.
“Monetary tightening is generally more effective in addressing demand-pull inflation arising from heightened aggregate demand and liquidity expansion. Its effectiveness in addressing supply-side inflation shocks is considerably more limited,” the group explained.
According to CPPE, further tightening under current economic conditions could raise the cost of capital, weaken manufacturing competitiveness, suppress SME growth, constrain household consumption, and slow investment expansion.
“Further tightening under prevailing conditions, therefore, risks imposing disproportionate costs on the productive sector without necessarily delivering commensurate gains in inflation moderation.
“Higher interest rates would increase the cost of capital, weaken manufacturing competitiveness, suppress SME growth, constrain household consumption, and slow investment expansion at a time when the economy urgently requires productivity-enhancing investments and job creation,” CPPE stated.
Advocacy
The think tank called for a balanced, carefully calibrated monetary policy framework that supports growth while maintaining macroeconomic stability and controlling inflation.
“The CPPE therefore advocates a carefully calibrated and balanced monetary policy stance that preserves macroeconomic stability while avoiding excessive tightening capable of undermining economic recovery and private sector resilience.
“The overarching policy priority should be to sustain investor confidence, support productive investments, stimulate output growth, and strengthen the economy’s supply-side capacity while maintaining vigilance on inflation management.”
READ ALSO: CPPE speaks on capital importation surge, raises structural concerns
The statement concluded that Nigeria’s long-term disinflation process would depend more on structural reforms and productivity improvements than on aggressive monetary tightening.
The group urged the monetary authorities to avoid excessive reliance on monetary policy orthodoxy in managing what is fundamentally a structurally-driven inflation environment.
“Sustainable disinflation in Nigeria will depend far more on improvements in productivity, energy security, logistics efficiency, exchange rate stability, domestic petroleum refining capacity, and overall supply-side reforms than on aggressive monetary tightening,” CPPE stated.
Bolt has been cleared to resume operations at airports managed by the Federal Airports Authority of Nigeria (FAAN), following an intervention by the Minister of Aviation and Aerospace Development, Festus Keyamo.
Mr Keyamo, in a statement on Thursday, said he had directed FAAN to urgently address concerns over what passengers described as exorbitant increases in airport taxi fares following the disruption of e-hailing services.
After the minister’s intervention, FAAN announced that it had reached an “agreeable operational framework” with Bolt, clearing the company to resume its services at FAAN-managed airports immediately.
The development followed days of controversy over the operation of e-hailing platforms at Nigerian airports, with passengers complaining about higher transportation costs after they were unable to access services they had previously relied on.
FAAN also apologised to passengers for the inconvenience caused by the temporary interruption of e-hailing services.
How the dispute started
The controversy followed FAAN’s efforts to establish a new operational framework for commercial and e-hailing vehicles operating within airport premises.
An internal FAAN memo dated 30 July directed airport managers to ensure that Bolt and Uber ceased commercial operations at FAAN-managed airports pending the finalisation of licence agreements with the e-hailing companies.
However, on 20 August, FAAN said it had not imposed a blanket ban on Uber, Bolt or other e-hailing platforms, but said discussions were ongoing with operators to establish a workable framework for their operations.
The clarification followed reports of restrictions affecting e-hailing services at some FAAN-managed airports, including the Murtala Muhammed International Airport, Lagos, and the Nnamdi Azikiwe International Airport, Abuja.
FAAN said its concern was not to limit passengers’ transportation choices but to ensure that commercial transport services operating within airport premises complied with safety, security and accountability requirements.
The authority said airports were highly regulated environments and that it needed adequate visibility of vehicles, drivers and operators working within them.
FAAN said it had been dealing with problems associated with commercial and e-hailing vehicles at airports for nearly a decade, including passenger solicitation, touting, unregulated operations and random pick-ups.
It said the challenges had made it necessary to strengthen the management of commercial transportation within airport premises.
Fare controversy
The dispute became more contentious after passengers began raising concerns about the cost of airport taxis.
A recent video by travel content creator Chris Joondeph, popularly known as Authentic Travelling, showed an airport taxi operator quoting N30,000 for a journey from the Lagos airport to Ikeja.
The fare generated widespread criticism, particularly after comparisons showed significantly lower prices on e-hailing platforms for the same journey. Bolt listed the trip at about N6,900, while Uber quoted N4,200 for UberX and N5,800 for its Priority option.
The controversy heightened concerns among passengers who had become accustomed to using e-hailing platforms for relatively cheaper airport transportation.
FAAN, however, said the fares that attracted public criticism were not newly imposed by the authority or introduced through its Airport Car Hire Rank Management System (ACHRAMS).
According to the authority, the rates existed before ACHRAMS and were not substantially different from those previously applicable.
FAAN said ACHRAMS only brought greater visibility to the prevailing airport taxi rates.
ACHRAMS, which stands for Airport Car Hire Rank Management System, was introduced by FAAN as a system for managing airport car-hire ranks and authorised transportation operations.
The authority stressed that ACHRAMS was not an e-hailing application and was not created to compete with Bolt, Uber or other mobility platforms.
Keyamo orders urgent action
Amid the controversy over fares and the disruption of e-hailing services, Keyamo directed FAAN to urgently resolve the issue.
The minister’s intervention came as complaints from passengers continued to draw attention to the difficulties faced by travellers seeking affordable transportation from airports.
Following the directive, FAAN said it had engaged Bolt and reached an operational agreement that would allow the platform to resume services immediately.
The authority said the agreement showed that airport regulation and security could coexist with passengers’ access to e-hailing services.
“The resolution demonstrates that it is possible to protect the integrity and security of the airport environment while preserving the convenience and freedom of choice that e-hailing services provide to passengers,” FAAN said.
FAAN also apologised for the disruption.
“We sincerely apologise for the difficulties this caused our passengers,” the authority said.
The authority acknowledged that although its actions were driven by regulatory, safety and security considerations, the immediate impact on passengers had been significant.
Bolt resumes, others still in talks
With the agreement reached, Bolt has been cleared to resume operations at all FAAN-managed airports.
FAAN said it was also engaging other e-hailing operators and expected the outstanding discussions to be concluded in the coming days.
READ ALSO: Keyamo directs airlines, unions to agree repayment plans over TSC debt
However, the authority did not give details of the specific operational terms agreed with Bolt.
It said passengers remained free to choose from available transportation options that best met their needs, provided the services were authorised to operate within the airport environment.
The authority noted that its responsibility was to ensure that whichever transportation service passengers chose operated in a safe, secure, orderly and accountable manner.
The resolution comes after FAAN had initially maintained that its engagement with e-hailing operators was aimed at establishing an appropriate framework rather than eliminating the services.
The latest development restores Bolt as an option for passengers using FAAN-managed airports, while the authority continues discussions with other operators.
For passengers, the immediate significance is the return of a familiar alternative to airport taxi services at a time when transportation costs have become a major part of the airport travel experience.
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