.....Urges CBN To Regulate Interest Rates Of Commercial Banks
By Gbenga Sodeinde
The House of Representative has called for investigation of Bank Lending Practices in other to Protect Borrowers from Exploitative interest Rates and Promote Economic Development.
Hon. Fatoba Olusola Steve representing Ekiti Central constituency 1 in a motion presented before the House yesterday said Commercial Banks' lending interest rates presently is as high as 30%, making Nigeria one of the countries with the highest lending rates in Africa and probably the world.
Fatoba who observed that Nigeria is one of the top countries with high lending rate, specifically urged the CBN to review its MPR, with a on the National Assembly to quickly investigate the lending policies of banks in a bid to protect the borrowers from exploitative interest rates in the country.
The Federal Parliamentarian moved this in a motion at the floor of the green chamber on and was seconded by Hon. Ugonna Ozurigbo who equally called on the CBN to regulate the interest rates of commercial so as to encourage small and medium businesses development in Nigeria.
Specifically, Fatoba called on the banks to, "be sensitive to the hard economic realities and ensure they contribute to the economic diversification and entrepreneurship drive of government", adding that, “would also ensure wealth multiplication.
Also, Hon. Saidu Musa supported this motion by calling on the banks to also lend their loan services to small and medium enterprises instead of exclusively to big time businesses.
While Expatiating his points, Hon. Fatoba further noted that the MPR in Nigeria is held at 14% while that of South Africa, adding that “the longtime economic rival of Nigeria is at 6.5%, making Nigeria one of the top five countries in Africa with the highest interest rates.
Concerned that the lending interest rates of Banks restrict lending, particularly to the SMEs, manufacturers and Industrialists; all belonging to a sector which employs a large percentage of the workforce in Nigeria”
Worried that the lending rates impede economic growth as this negatively impacts the performance of the manufacturing sector due to the difficulty of accessing loans from the Banks;,
Fatoba pointed out that, “Cognizant that Banks are the primary source of capital for manufacturers and industrialists, but when the lending is at a high interest rate, profits in the manufacturing process are eroded which makes it difficult or uninteresting for manufacturers to continue in business
He also expressed concerned that the resolve of President Muhammadu Buhari to lift 100 million Nigerians out of poverty may be difficult to achieve if the issue of high lending rates and the challenges of having access to loans are not critically addressed;
Fatoba expressed worried that when interest rates are high, investors and banks are often willing to invest in government securities only which pay high returns, a phenomenon known as crowding out, as high interest rates on government securities draw investment away from other areas of the economy.
He further raised concerned that high interest rate cannot both contain inflation and stimulate economic growth at the same time, while in reality citizens, Small Medium Enterprises,manufacturers and investors are bearing the brunt of the "cut throat" lending rates where the Banks and their Directors remain the major beneficiaries of the high lending rates.
In his Resolution, Fatoba “urged the Central Bank of Nigeria to review the MPR and its implementation putting into consideration the cost of doing business by banks.
That “the Economic Council to critically consider how to reduce the cost of doing business in Nigeria in a manner that common man will feel the impact.
Hon. Fatoba also “mandate the Committee on Banking and Currency to engage commercial banks to ascertain the justification for the bid gap
between the MPR and lending rates; “among other things.
The motion moved by Hon. Fatoba was thereafter voted and adopted by the House.
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