Nigeria’s monetary policy should not be viewed as a choice between attracting foreign portfolio investors and supporting local businesses, according to PwC’s Director of Deals Advisory, Wale Olusi.
Olusi said the Central Bank of Nigeria’s decision to maintain relatively high interest rates is primarily aimed at preserving macroeconomic stability, particularly by controlling inflation and stabilising the foreign exchange market, rather than deliberately attracting foreign portfolio investments.
“That is the job of the central bank. They target job stabilisation of the macroeconomy, which they have achieved,” Olusi said.
He noted that the CBN had made progress in easing pressure on the foreign exchange market after Nigerians and businesses initially faced intense demand for dollars.
“Initially, people were searching for dollars, but the CBN has stabilised the FX market. It has now reduced inflation,” he added.
High Interest Rates Continue to Pressure Businesses
The CBN has kept its Monetary Policy Rate at 26.5 per cent since reducing it by 50 basis points in February, even as inflation has continued to moderate.
While the tight monetary policy has supported efforts to stabilise the economy, it has also kept borrowing costs elevated for businesses.
Manufacturers, in particular, continue to face lending rates ranging from approximately 25 per cent to 35 per cent, increasing the cost of financing operations and expansion.
At the same time, Nigeria’s relatively high domestic interest rates have made naira-denominated fixed-income securities more attractive to foreign portfolio investors seeking higher returns.
PwC data showed that foreign portfolio investors accounted for almost all of Nigeria’s $10.37bn in capital inflows during the first quarter of 2026.
Rate Cuts May Come as Inflation Eases
Olusi argued that the CBN’s objective should not be to reduce interest rates simply to make borrowing cheaper or to deliberately attract foreign portfolio investors.
“When the current administration came to power, people were complaining about inflation. What they have done is to reduce inflation and achieve macroeconomic stability,” he said.
He suggested that the CBN could consider further monetary easing once inflation is brought under sufficient control.
“Maybe when the inflation is reduced, CBN can decide to cut rates. But for now, the interest is neither to attract portfolio investments nor cut rates,” Olusi said.
Investors Will Follow Macroeconomic Stability
Emerging markets expert Ike Ibeabuchi also rejected the idea that the CBN faces a fundamental dilemma between maintaining economic stability and attracting investors.
He explained that the central bank’s core responsibilities include maintaining price stability, setting monetary policy and managing the naira and foreign exchange market.
According to Ibeabuchi, achieving these objectives would naturally improve investor confidence.
“The role of the CBN is to maintain price stability, set monetary policy, and manage the naira and FX market to achieve stability. Once you do all these, investors will come. It is not rocket science,” he said.
He added that central banks generally do not formulate monetary policy specifically to target portfolio investors.
“Maybe that can happen on the fiscal side. But it is difficult for you to target portfolio investors or other types of investors without doing the basic jobs of the central bank,” he said.
The comments highlight the delicate balance facing Nigeria’s monetary authorities: maintaining tight enough policy to consolidate gains in inflation and foreign-exchange stability while avoiding excessively high borrowing costs that could constrain businesses and economic growth.
