Why CBN, Aviation Ministry talks to crash interest rate to 9% can’t work
Indications that the federal government may have not been well prepared, or studied the terrain before unveiling plans to concession four major airports, have emerged.
This is based on the fact that top officials of the Federal Ministry of Aviation have just begun negotiations with the Central Bank of Nigeria (CBN), with a view to getting interest rates on loans for prospective investors in the industry reduced to 9 per cent.
Analysts’ say if interest rates remain as high as it is now, chances are that local investors will be knocked out of the ownership of key Nigerian airports and that will amount to security risks if foreign investors cashes in and take over the four airports.
Again, banking pundits say if the CBN fails to the trick to lower rate to one digit (9) just for local investors to join in the concession deal, the ripple effects will take years to resolve, because such act is a serious infraction and undoing of the fragile economy.
According to experts, if the current interest rate cannot encourage the investors, government should wait until a certain level of stability is achieved to avoid landing the airports to where the power sector is now.
Business Hilights recalls that CBN had left the country’s key interest rate unchanged at 14 per cent for more than a year, but ahead of plans to concession key airports to private firms, aviation ministry’s policymakers believe there is need to cut down interest rate to single digit and provide a special funding window particularly for local investors interested in the airports. The government’s vision is to create one or two hubs from the concessioned airports.
According to the Commissioner/CEO of the Accident Investigation Bureau (AIB), Mr. Akin Olateru, the ongoing meetings between the CBN and the aviation ministry are to create a window for local investors willing to buy in to the airports.
He said a reduction in interest rate would go a long way in boosting standards in the industry, stressing that “Sirika is working with CBN to ensure that interest rates on loans to investors in the sector was not more than 9 per cent. This would go a long way in improving standards in the sector”.
