An investment banking firm, Comercio Partners, has anticipated that the further increase in the Monetary Policy Rate, MPR to 17.5 per cent may likely mean that Small and Medium Enterprises, SMEs, will have to pay more when it comes to funding their enterprises.
Consumertics recalls that in a bid to wrestle the high inflation rate, which stood at 21.34 per cent in December, the Monetary Policy Committee, MPC, of the CBN, increased the MPR for the fifth consecutive time.
Commenting on the rate hike, Steve Osho, Co-Managing Partner and Head of Advisory and Investment Banking, Comercio Partners Limited, noted that while it is understandable why the MPC jerked up the MPR by 100 basis points, banks and other lenders will respond by adjusting their interest rates to reflect the hike.
He said, SMEs will pay more to borrow funds needed for their businesses, and this increased cost will translate to higher price of goods and services for consumers.
Osho said: “From the banking and consumer lending point of view, banks/lenders typically would adjust their rates to reflect the hike.
“Although the recent upward trajectory on inflation has anchored majorly on the exchange rate volatility/naira depreciation, the astronomical cost of energy and food insecurity amidst many other factors.
“So, it is yet to be seen how this will impact the real sector but the likely impact will be felt by SME and other consumers on the cost of borrowing to finance business and likely increase in cost of living for an average Nigerian,”
On how the MPR hike will impact the financial markets, Osho said yields on fixed-income securities will continue to trend upwards and thus encourage more investors’ shift from the equity market to the fixed-income market.
Located in the heart of Lagos, Comercio Partners, is a limited-liability company with core business in trading fixed income securities and equities as well as providing financial advisory and assets management services to domestic and international investors in the Sub-Saharan African Capital Market.
According to the investment company: “From the financial markets to real estate, we aim to build an investment ecosystem of choice with the strategic intent of empowering minds in Africa while creating and delivering professionally, superior value across all asset classes to all our stakeholders.”
