By Adewale Sanyaolu
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.”