It rises like yeast
CBN has raised the interest rate for the 700th time
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CBN has done it again
States have been eating, LGs have been suffering
The Big Deal
CBN has done it again
We’re not sure what’s more predictable these days: the rising of the sun or the next move of the governor of the Central Bank of Nigeria (CBN). On Tuesday, November 26, the CBN governor, Yemi Cardoso, announced that the Monetary Policy Rate has been increased from 27.25% to 27.50%. In girl maths, this is the 700th time the MPR, which is also known as interest rate, has been increased this year, but who’s counting? (If we’re being honest, we’ve been counting, and it has been raised 6 times in 2024 alone).
They asked Cardoso why the interest rate has been rising higher than a kite these days, and he said we should blame “inflationary pressures as the headline food and core measures rose year on year in October 2024”.
The only way the interest rate will drop is if Nigeria’s inflation rate also drops. Earlier this month, the National Bureau of Statistics (NBS) announced that Nigeria's inflation rate hit 33.88% in October 2024, up from 32.7% in September. We can’t say for sure that a drop will be happening anytime soon. Based on the pattern we’ve seen play out one too many times this year, we’ll say you shouldn’t shut your mind to the thought of another hike in both inflation and MPR.
Why is this a big deal?
The interest rate affects everything from savings and loans. If you save on digital platforms like PiggyVest and Cowrywise, you must have noticed that your interest rate has increased this year. And if you borrow money from banks or digital lenders, you must have seen also that your interest rates have increased. You have the MPR to thank or hate for that. Mostly hate because these continuous hikes have consequences, particularly for business owners and essential sectors in the country.
The problem with increasing the MPR is that it makes borrowing money more expensive. While the hike is supposed to help control inflation, it’s also making life harder for key sectors of the economy that are already struggling to grow.
Muda Yusuf from the Centre for the Promotion of Private Enterprise (CPPE) explained it like this: critical industries like agriculture, manufacturing, and real estate barely grew in the last quarter. Agriculture only managed to experience 1.14% growth, and manufacturing was almost just as bad at 0.92%. Meanwhile, industries like air transport and textiles are still in recession (because of negative growth).
When you compare that to the financial services sector, which grew by a massive 32%, you’ll notice a clear disconnect: banks and financial services are booming, but the sectors that feed, house, and employ people are struggling.
Yusuf warns that hiking the MPR will only make things worse. Sectors like agriculture rely on loans to survive, and expensive loans mean they can’t expand, invest, or create jobs. What they need is support—cheaper loans and policies that actually help them grow.
If the CBN keeps focusing on raising rates instead of helping these industries, it could lead to even slower growth for the economy overall.
States have been eating, LGs have been suffering
For years, Local Governments (LGs) in Nigeria have been starved of funds meant to bring development to the grassroots. The court got so bored of watching that pattern play out that they gave LGAs financial autonomy on July 11.
But before that order, states were eating good at the expense of LGs. A special report by Premium Times shows that ₦23 trillion meant for LGs in the last 16 years ended up in state government accounts instead, leaving primary schools in ruins, health centres understaffed, and roads barely usable. Governors treated LGA allocations like their personal piggy banks, despite it being against the Constitution.
Now that the court has forced power to change hands, LGs will receive their money directly from the federal account, which could mean real progress for long-ignored communities. Better roads, improved schools, and functioning health centres are no longer far-fetched dreams if the funds are used responsibly.
You’d think it should end there, but some governors are still pissed. Oyo State Governor Seyi Makinde dismissed the ruling as a “mere distraction,” and LG chairmen in his state pulled out of the Association of Local Governments of Nigeria (ALGON) in solidarity. We don’t even know what to call this solidarity thing they did, but we move.
₦23 trillion in 16 years aren’t rookie numbers, and it makes it obvious that the financial autonomy of LGs is a win for democracy, but the road ahead isn’t without challenges. While some states are rushing to conduct LG elections to comply with the Supreme Court’s ruling, allegations of fraud and political interference in the process show that old habits die hard.
The question now is whether LGAs can rise to the occasion and prove that direct funding can truly transform grassroots governance—or whether the money will simply disappear into new pockets.
Without pressure from citizens, the autonomy could end up being just another headline with no real impact so this is your cue to keep up with the affairs of your LG.
This Week’s Big Question
“If you could change one thing about living in Nigeria, and it had to happen immediately, what would it be?”
Benny’s response - “I’ll change the president.”
You can also share your response here, and if it’s as interesting as Benny’s, we’ll feature it in the next edition.
The Big Picks
Tinubu Arrives In France: President Bola Tinubu has touched down in Paris, France, for a three-day state visit.
Shettima Departs Nigeria For Côte D’Ivoire: Vice President Kashim Shettima left Abuja on Wednesday morning for Abidjan, Côte d’Ivoire.
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