The President of the Capital Market Academics of Nigeria (CMAN), Prof. Uche Uwaleke, has urged the Central Bank of Nigeria (CBN) to gradually reduce interest rates and revive development finance through specialised institutions, warning that persistently high borrowing costs are stifling investment, business expansion and job creation.
Uwaleke made the call on Monday in Abuja during a world press conference organised by CMAN, arguing that Nigeria’s inflation has become increasingly structural and can no longer be effectively addressed through repeated increases in interest rates alone.
He said excessive reliance on monetary tightening risks undermining productive sectors of the economy.
“CMAN respectfully advises that, as inflationary pressures become increasingly structural and cost-push in nature, monetary policy should gradually rely less on repeated increases in the Monetary Policy Rate as the primary instrument for controlling inflation. Excessively high interest rates, while helping to moderate aggregate demand, also increase the cost of borrowing, discourage productive investment and constrain business expansion.
“We therefore encourage a gradual moderation of the interest rate environment as inflation expectations continue to improve. This should, of course, be undertaken cautiously and supported by complementary fiscal measures aimed at addressing supply-side bottlenecks,” he said.
On development finance, the economist stressed that the CBN’s renewed emphasis on price stability should not come at the expense of targeted financing for key productive sectors.
“Accordingly, we call upon the Central Bank to create appropriate room for carefully designed development finance interventions through existing Development Finance Institutions. Rather than directly administering intervention programmes, the Bank can continue to provide strategic support through specialised institutions that possess the expertise to finance agriculture, manufacturing, exports, housing and small businesses,” he said.
His remarks come as the CBN, under the leadership of Governor Olayemi Cardoso, has shifted away from direct intervention lending in favour of policies aimed at restoring price stability and strengthening investor confidence. At its May 2026 meeting, the Monetary Policy Committee retained the Monetary Policy Rate at 26.5 per cent.
Despite his concerns over borrowing costs, Uwaleke commended the apex bank’s ongoing reforms, including the clearance of more than $7 billion in inherited foreign exchange obligations, the discontinuation of Ways and Means financing, banking sector recapitalisation and foreign exchange reforms.
According to him, the measures have restored confidence in Nigeria’s financial system and improved the country’s standing among investors.
He also praised the Federal Government for implementing long-delayed reforms such as the removal of fuel subsidy, the unification of the foreign exchange market and the enactment of the Nigerian Tax Acts 2025, describing them as critical steps towards restoring macroeconomic stability.
However, he noted that many Nigerians had yet to feel the positive impact of the reforms.
According to Uwaleke, economic progress should not be measured solely by stronger financial indicators.
“Economic success should not be measured solely by rising stock prices, improving reserves or favourable sovereign ratings,” he said, noting that many households and businesses continue to struggle with the high cost of living, weak purchasing power and limited access to affordable finance.
He observed that lending rates remain prohibitively high despite improvements in the banking sector, while private sector credit as a percentage of Gross Domestic Product has continued to decline.
Although headline inflation has eased to about 15.9 per cent, Uwaleke said rural inflation remains elevated due to insecurity, poor infrastructure, inadequate storage facilities and unreliable electricity supply. He added that renewed geopolitical tensions in the Middle East have also placed upward pressure on energy prices.
He acknowledged that Nigeria’s economy expanded by 3.89 per cent in the first quarter of 2026 but described the growth as modest, arguing that agriculture and manufacturing remain too weak to generate sufficient employment and significantly reduce poverty.
The CMAN president also expressed concern over Nigeria’s growing dependence on short-term foreign portfolio investment, revealing that more than 95 per cent of the over $10 billion in capital imported during the first quarter of 2026 came from portfolio investors rather than long-term foreign direct investment.
He urged the government to create conditions that would attract more productive investment through policy consistency, improved security and stronger contract enforcement.
Uwaleke further warned about the country’s rising public debt, which exceeded N159 trillion at the end of 2025, saying widening fiscal deficits and low capital expenditure could undermine infrastructure development.
He recommended greater utilisation of the capital market to finance infrastructure through project-linked instruments such as Sukuk and Green Bonds instead of relying predominantly on conventional Federal Government bonds, which currently account for nearly 80 per cent of domestic debt.
To deepen the capital market, he called on the Federal Government to encourage more indigenous and government-owned companies to list on the Nigerian Exchange by introducing incentives, including reducing Company Income Tax for listed firms from 30 per cent to 25 per cent.
He also commended the Securities and Exchange Commission and the Nigerian Exchange Group for reforms such as the introduction of the T+1 settlement cycle and longer trading hours, while urging regulators to further enhance market liquidity, promote financial technology, sustainable finance and retail investor participation.
Uwaleke welcomed the forthcoming Capital Market Master Plan and the Investments and Securities Act 2025, expressing confidence that both initiatives would strengthen investor protection and position Nigeria’s capital market for sustainable long-term growth.
He concluded that while recent reforms had strengthened macroeconomic stability, improved foreign exchange management and boosted investor confidence, their ultimate success would be measured by improvements in the lives of ordinary Nigerians.
“Our collective challenge is therefore to ensure that macroeconomic stability evolves into inclusive prosperity,” he said.