The Centre for the Promotion of Private Enterprise (CPPE) has cautioned that extreme monetary orthodoxy and an over-reliance on short-term portfolio flows could choke productive investments and worsen the nation’s poverty crisis.
In a response to the International Monetary Fund’s (IMF) Article IV Consultation Report on Nigeria, the think-thank welcomed the IMF’s positive assessment of the nation’s recent economic reforms.
In a statement released on Sunday by CPPE Chief Executive Officer, Dr. Muda Yusuf, the center acknowledged that three years of aggressive stabilization measures have successfully reduced exchange rate volatility, boosted foreign reserves, and restored a measure of policy credibility.
However, Dr. Yusuf stressed that the true test of any economic reform lies not in macroeconomic statistics, but in tangible welfare gains for ordinary citizens.
The CPPE expressed deep concern over the IMF’s continued advocacy for aggressive monetary tightening.
According to the center, Nigeria’s current interest rates have climbed to levels that are practically prohibitive for business expansion and job creation.
This high-interest-rate environment has triggered a severe crowding-out effect within the financial sector. With government securities offering exceptionally high yields, commercial banks are increasingly channeling capital into treasury bills and government bonds rather than financing the real sectors of the economy.
Dr. Yusuf warned that an economy cannot achieve sustainable development when financial capital earns higher returns from government instruments than from enterprise, innovation, and industrialization.
Prolonged monetary tightening is taking a heavy toll on public finance. High bond yields have inflated the government’s domestic debt-servicing obligations, shrinking the fiscal space available for critical public sectors like healthcare, education, and infrastructure. While the CPPE applauded recent indications from the Minister of Finance to refinance portions of the domestic debt portfolio to lower costs, it urged closer collaboration between monetary and fiscal authorities to chart a more sustainable path forward.
A major point of divergence between the CPPE and the IMF lies in the role of development finance. The think-tank argued that the IMF fails to grasp the structural realities of the Nigerian economy, where commercial lending is predominantly short-term and risk-averse.
Strategic sectors such as agriculture, manufacturing, and infrastructure require long-term, patient capital that market-driven channels cannot efficiently provide.
Describing development finance as a necessary response to market failure rather than a market distortion, the CPPE maintained that agriculture cannot survive on credit priced at prevailing commercial market rates.
The report also raised alarms over Nigeria’s growing dependence on hot money, foreign portfolio investments. While these flows offer temporary liquidity to stabilize the naira, their high volatility leaves the country vulnerable to sudden shifts in global risk sentiment.
The CPPE insisted that permanent economic transformation must instead rely on robust exports, structural productivity, and foreign direct investment.
Turning to social safety nets, the CPPE openly questioned the federal government’s reliance on conditional cash transfers as the centerpiece of its poverty alleviation strategy.
Citing persistent challenges with data integrity, transparency, and beneficiary identification, the center urged policymakers to shift focus toward direct investments that structurally lower the cost of living. Funding should instead be directed toward boosting agricultural output to fight food inflation, expanding mass transit infrastructure to lower logistics costs, and upgrading rural infrastructure.
The CPPE also pointed out a critical omission in the IMF’s diagnosis: the role of sub-national governments. Following recent adjustments in federation revenue allocations, Nigeria’s state governments now control significantly larger fiscal resources.
“Macroeconomic stability may rescue an economy from crisis but shared prosperity is what secures public confidence in reform. That should be the defining objective of the next phase of Nigeria’s economic journey,” Dr. Yusuf concluded.