The Lagos Chamber of Commerce and Industry (LCCI) says rate hikes alone will not curb inflation without first resolving the challenges in the real sector.
President, LCCI, Mr Gabriel Idahosa, made this known at its quarterly State of the Economy news conference on Thursday in Lagos.
Idahosa said the real sector had demonstrated the capacity to create more jobs, manufacture products for consumption and export, and form the economy's industrial base.
He noted that while high interest rates attracted Foreign Portfolio Investments, and local investors to treasury bills and bonds, the development was drying up funds away from the private sector to government treasuries.
He stated that the private sector, which served as the engine of growth and employment generation in Nigeria, was currently plagued with increased borrowing costs and reduced investment incentives amongst others.
"Recent hikes in Monetary Policy Rate have directly translated to higher interest rates, making it more expensive for businesses to access credit for working capital, expansion, and sustainability.
"The latest uptick in inflation may sustain an upward trend in the coming months due to the current crises with petroleum pricing and an attendant burden that is unprecedented in Nigeria's economic history.
"Government must remain focused on boosting food production through ongoing policy reforms, targeted fiscal interventions, and better management of Nigeria's floating exchange rate regime.
"If government harmonises its fiscal and monetary instruments to tackle cost of agricultural production, enhance food processing, and sustain the fight against insecurity, inflationary pressures may soon begin to abate," he said.
Idahosa also urged government to be more vigorous regarding ongoing interventions such as removing some taxes, transition to Compressed Natural Gas mobility, Crude for Naira scheme, and suspension of some import duties
He, however, cautioned against abandoning agreements heralding the approval and implementation of the new minimum wage of N70,000.
He said that while most recent cost templates had already undermined a monthly wage of N70,000, government must remain faithful in extending all benefits to its workers.
