By GRACE ALEGBA

The Centre for the Promotion of Private Enterprise (CPPE), has said that the Central Bank of Nigeria (CBN)?s decision to tighten financial conditions would hurt businesses and slow down investments and the economy.

Dr Muda Yusuf, Chief Executive Officer of CPPE, made the observation in a statement on Tuesday while responding to the outcome of the Monetary Policy Committee (MPC) meeting of the CBN.

The News Agency of Nigeria (NAN) reports that the MPC of the CBN further increased the Monetary Policy Rate (MPR) by 50 basis points to 27.25 per cent from 26.75 per cent.

According to Yusuf, it is sad that CBN further tightened monetary policy at a time manufacturers, entrepreneurs and other investors in the economy are struggling and need succour.

He said that the latest decision was at variance with the mood of most economic players at this time.

?What manufactures and other investors need at this time is some oxygen and stimulus, not policy measures that will worsen an already suffocating situation.

?The MPR at 27.25 per cent; CRR at 50 per cent, and asymmetric corridor at +500 and -100 are very difficult monetary condition to bear for most businesses.

?This is given the prevailing macroeconomic and structural conditions,? he said.

Yusuf said that the second quarter GDP numbers showed clearly that the economy was still in a floundering mode, adding that many critical sectors of the economy slowed during the quarter.

He listed the sectors to include manufacturing and its other sub sectors such as cement, food and beverage, chemicals and pharmaceuticals, trade, ICT and real estate.

He said that the road transport, motor assembly, publishing and motion pictures sectors contracted during the quarter while aviation, oil refining, textile, livestock and quarry and minerals sector were still in recession.

?Tightening financial conditions in the circumstances does not seem appropriate.

?The private sector should not be made to pay the price of liquidity growth which it was not responsible for. Issues of excess liquidity should be addressed within a causative context.

?The injection of liquidity into the system are largely public sector driven, as rightly noted by the CBN Governor.

?Therefore, the focus of resolving it should be within that context. Stifling the financial conditions to address liquidity issues is detrimental to investment and growth of the economy,? he said.

According to Yusuf, the implication of the latest MPC decision for investors are quite concerning as cost funds would be further exacerbated.

He said that the situation was made worse by the increase in CRR to 50 per cent and retention of asymmetric corridor of +500 and -100.

?We believe that the policy decisions of the CBN are most inappropriate for the prevailing economic conditions and the challenges faced by entrepreneurs in the country.

?The operating and production costs of businesses will be further exacerbated by the latest monetary policy tightening,? he added.

However, Prof. Uche Uwaleke, Financial Economist and Director Institute of Capital Market Studies at the Nasarawa State University, Keffi told NAN that CBN?s decisions would have been for public good.

?In matters like this, the CBN usually has information that may not be at the disposal of the public.

?I want to believe that the members of MPC mean well for the economy.

?They must have taken the decision to further tighten monetary policy based on strong evidence of major threats to exchange rate and inflation.

?All said the task of taming inflation must be jointly tackled by both the monetary and fiscal authorities.

?So, the government has to play its part by controlling recurrent spending and focusing on productivity,? Uwaleke said. (NAN)

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