No business, entrepreneur can make profit borrowing at 28 or 29 per cent—-Saraki
More facts have emerged on why the Senate president, Dr. Bukola Saraki has began a move to lower banks’ interest rate to borrowers.
The lawmaker and former Governor of Kwara State had weekend raised serious concerns on the high interest rates on loans, saying the Senate will this week discuss the issue with the Central Bank of Nigeria (CBN) and the commercial banks chiefs.
Currently, whereas banks are in the regime of making astronomical profits via high interest rates in the region of 28 and 29 per cents, the same banks only give droplets of interests on deposits in the paltry region of two to five percents.
Looking at this scenario, Bukola said “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 (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.
In his submission, he averred that “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’.
The former Governor of Kwara State queried “What do you do with that extra amount of money? It must go to the real sector. It must go to the businesses 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.”
However, finance analyst argued that the CBN has a good question to answer on why it has not turned its attention to the lopsided regime of interest system in the banking systems.
