Following a recent statement from the Central Bank of Nigeria (CBN) announcing a reduction in the monetary policy rate (MPR) from 13.5 to 12.5 per cent, some stakeholders in the agricultural sector have pointed out that the reduction is laudable but still not good for agricultural investments.
While speaking on the new MPR’s possible impact on agricultural investments and post-COVID recovery, stakeholders noted that the 1-percent change is just a starting point, but that the rate still needs to be revised downward for it to really have the desired effect on the agricultural sector.
Data released by the National Bureau of Statistics (NBS) show that agriculture contributed 21.96 per cent to the nation’s gross domestic product (GDP) in the first quarter of 2020, which was the sector’s highest first quarter contribution in the last two years.
The decision to reduce the (MPR), popularly referred to as the lending rate, was informed by the pressures exerted by COVID-19 on the economy, as well as a decline in the nation’s GDP and the manufacturing and non-manufacturing purchasing index.
Anibe Achimugu, president, of the National Cotton Association of Nigeria (NACOTAN), remarked that the pandemic has had a very negative effect on the nation’s economy, and that not only will the interest rate reduction will have a huge socio-economic impact but that it will also contributes to the GDP and job creation.
Meanwhile, Ojo Ajanaku, president of the National Cashew Association of Nigeria (NCAN) has noted that the 12.5 per cent rate will not be good enough for those in agriculture, asserting that what farmers and players in the sector really need if they must pay interest on the money given to agriculture is something around 2.5- and 3 percent.