The Senate on Tuesday urged the Central Bank of Nigeria
(CBN) to intervene to save the economy from rising borrowing costs that are not
compatible with the Federal Government’s effort to enhance business
transactions.
The advice comes as the CBN, the regulatory authority, has continued to insist
it cannot reduce interest rate in the country, currently at between 25 and 30
per cent, to avoid worsening the inflationary pressure on the economy.
The banking sector regulator had reenforced its position at the last Monetary
Policy Committee (MPC) meeting in Abuja where it left the benchmark lending
rate, Monetary Policy Rate (MPR), unchanged for the 7th successive time at 14
per cent.
But at the round-table between the Senate and interest groups in the country’s
financial and business sectors in Abuja on Tuesday, the Senate President,
Bukola Saraki, frowned at the decision to keep lending rate unchanged, saying
it was stifling businesses.
“The economy will not grow despite the current efforts by the Federal
Government to revive it, if interest rates charged by banks remained high,” the
Senate President said.
In attendance at the meeting held behind closed doors after the opening session
were representatives of the CBN, Deposit Money Banks (DMBs), development
finance institutions, Chartered Institute of Bankers of Nigeria (CIBN), Nigeria
Deposit Insurance Corporation (NDIC), Manufacturers Association of Nigeria
(MAN), Nigerian Association of Small and Medium Enterprises (NASME), Nigerian
Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA),
among others.
During the opening of the forum, Saraki said despite government’s new
initiatives to boost growth in the economy, Nigerians were still concerned
about the impossible interest rate regime businesses were facing to survive.
Meanwhile, despite the recent injection of millions of intervention funds into
the foreign exchange market by the Central Bank of Nigeria (CBN), manufacturers
early this week raised the alarm over the increasing liquidity constraints in
the financial system, saying the development was taking a toll on businesses.
Director General of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda
Yusuf, in a communiqué of the council meeting of LCCI, lamented that some
companies are not able to draw from facilities to fund their forex
requirements.
‘‘This is taking a toll on the business of these companies as some of them
cannot provide the cash backing for forex demands. The liquidity problem
is a consequence of the mopping of liquidity in the financial system, the tight
monetary policy stance and the increasing crowding-out effect on the private
sector by government borrowing in the financial system,’’ he said.
On ease of doing business, he said the council commended the various policy
measures put in place to improve the business environment while equally
applauding the Executive Orders and the acts on the movable collateral and
credit registry.
Yusuf noted that the initiatives would create the right environment for
business and boost investors’ confidence.
‘‘The LCCI council also applauded the National Assembly on the efforts at
providing enabling legislations to boost the inflow of private sector capital
to complement the capital budget spending of the government, especially on
infrastructure.
“Council noted the recent Business Environment forum between the National
Assembly and the private sector on legislations would boost private investment
in the economy.”
By Adewale Sanyaolu
