CBN Urged to Review High Interest Rate Policy to Avert Further Economic Crisis

A professor of Banking and Finance, Professor Sebastian Uremadu, has called on the Central Bank of Nigeria (CBN) to urgently review its high interest rate monetary policies, warning that the current regime is stifling investment and worsening Nigeria’s economic crisis.

Uremadu made the call on Wednesday while delivering the 60th Inaugural Lecture of Michael Okpara University of Agriculture, Umudike, in Abia State.

The scholar criticized the apex bank’s policy direction, particularly its benchmark interest rates, which he described as “among the highest in the world.” He said the high rates were discouraging both domestic and foreign investors from borrowing, investing, or expanding operations within Nigeria.

“These policies have made it extremely difficult for companies and individual investors to access funds or repay existing loans. Investor confidence, both local and international, continues to decline,” Uremadu stated.

He also decried the CBN’s requirement that commercial banks hold 50% of customer deposits with the apex bank, arguing that it has drastically reduced liquidity in the financial system.

“How can banks be expected to fund investment when half of their deposits are tied up at the CBN? This severely limits their capacity to lend and meet customer obligations,” he said.

According to Uremadu, these monetary policies—combined with recent economic adjustments such as the removal of fuel subsidies—have significantly contributed to inflation and a spike in the cost of living.

He warned that unless reforms are implemented, Nigeria risks pushing away Foreign Direct Investment (FDI), which he described as a “key catalyst for capital formation and economic growth.”

In his recommendations, Uremadu urged policymakers to foster a more investor-friendly environment by moderating interest rates and increasing public spending in critical sectors such as health, education, and infrastructure.

He also blamed macroeconomic challenges like fiscal deficits, unchecked money supply growth, high interest rates, and exchange rate volatility for Nigeria’s inflationary pressures. Uremadu further questioned the credibility of economic data being released by the National Bureau of Statistics (NBS), suggesting that some of the figures may not accurately reflect the country’s real economic situation.