CBN, banks, MAN, others to discuss high interest rates at Senate panel today
Following the first shot fired by Senate President, Dr. Bukola Saraki during an interactive session with journalists in his country home recently, all is set for the Senate Committee on Banking, Insurance and Other Financial Institutions to seat in a panel today with the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC) and commercial banks to review the prevailing high interest rates being charged by financial institutions in Nigeria.
Saraki had averred in his country home that “They (banks) will tell you that they are doing business but in doing business, there must be social responsibility. We must be able to sit down and look at ourselves eyeball to eyeball, and we intend to do that; and I can promise Nigerians that we can find a solution. Hopefully with the stability in the forex market, we will now begin to address the high interest rate.
“There is no business that can make money if it is trying to borrow at 28 or 29 per cent. It cannot work and if we cannot get the banks to lend to the real sector and they carry on their money to government instruments, there cannot be growth. So, we must tackle that. I can assure you that I will lead that challenge. We must sit down and discuss it.”
“They are in business to make money but we must look at what money is reasonable in this kind of environment. You may have to reduce that profitability to allow your country to grow. It is that balancing that we need, but in doing that, there must be some incentives. We may have to tell them, ‘Listen, we may have to limit how much you put in government security’.
“What do you do with that extra amount of money? It must go to the real sector. It must go to the business that produce made-in-Nigeria products. They may say that it is too risky to do that. In doing that, we must give them some assistance. This is the kind of negotiation we must make.”
Others invited to the Committee seating include the Manufacturers Association of Nigeria (MAN) and several other bodies in both service and real sectors of the economy.
The call which stemmed from Saraki’s outpouring rode on the motion by the Chairman of the Committee, Senator Rafiu Ibrahim.
According to the Committee Chairman, “We are going to meet with them on Tuesday. We have invited the Central Bank of Nigeria, all Deposit Money Banks as well as development finance banks, the Chartered Institute of Bankers of Nigeria, the Manufacturers Association of Nigeria, the Nigerian Association of Small and Medium Enterprises and the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture”.
“Although the Lagos Chamber of Commerce and Industry is under NACCIMA, we have invited them separately because of the peculiarity of Lagos.”
Ibrahim added that the National Economic Summit Group was also invited.
“We also invited some industry experts to give us their opinions,” he added.
Business Hilights recalls that the Senate had penultimate Tuesday said Nigeria’s banking sector was being run by a cartel, a situation which was frustrating the monetary and fiscal policies of the Federal Government, adding that the group of bank owners had become strong that it was manipulating the economy.
The lawmakers noted that banks high interest rates on the SMEs are killing the sector which is suppose to drive the economy, stressing that Nigeria’s economy could not survive when it was difficult to run businesses.
