A member of the Central Bank of Nigeria’s Monetary Policy Committee (MPC) has urged the CBN to press commercial banks to translate gains from the industry’s recent recapitalisation into lower lending rates for households and businesses.
The MPC member made the call following the banking-sector recapitalisation exercise, saying stronger supervisory pressure and dialogue from the CBN are now necessary to ensure improved capital buffers result in cheaper credit for the real economy.
The member argued that despite improvements in banks’ balance sheets, credit transmission remains weak and persisted high loan rates are restricting investment and recovery across manufacturing, agriculture and small businesses.
Rather than relying solely on changes to the policy rate, the MPC member recommended that the apex bank use supervisory tools, conditional incentives and targeted macroprudential measures to encourage banks to reduce spreads and cut lending rates.
The suggestion echoes earlier warnings from some MPC members that the CBN must monitor the pass-through of policy easing closely and address structural impediments in the transmission mechanism.
The call comes as the recapitalisation programme strengthens capital buffers across the banking sector, creating theoretical scope for increased lending capacity.
Policymakers have recently debated how to convert improvements in liquidity and capital into cheaper credit without compromising financial stability, amid ongoing concerns about persistent inflation and the need for coordination between monetary and fiscal authorities.
If banks respond to supervisory nudges by cutting rates, businesses and farmers could see a meaningful reduction in financing costs that would support investment and production.
Conversely, continued resistance by banks to lower spreads would blunt the intended benefits of recapitalisation and could slow the recovery of the productive sectors, the MPC member warned.
The CBN and other stakeholders have signalled progress in the recapitalisation exercise, and MPC deliberations in recent months have focused on balancing disinflationary gains with support for growth through improved credit access.
