James Emejo in Abuja
The Vice-Chairman, Manufacturers Association of Nigeria (MAN) Abuja Chapter, Mr. Odun Emasealu has said that the impact of ongoing measures by the government to reposition the economy would be limited unless the problem of high interest rates from commercial banks is addressed.
He, describe the current interest rate regime as a “major killer” of businesses and obstacle to economic development.
Speaking in an interview with THISDAY in Abuja, he said crashing the deposit rate was a sure way to reducing interest adding that “if deposit rate is low, interest rate will be low.”
He said: “For me, interest rate is a major killer, not exchange rate per se because we have a huge population and people can do business. We are talking of increasing productivity- any attempt to increase productivity of a nation either by business opening, commerce, manufacturing involves raising capital.
“And when capital is 27 percent, it means there will be no capacity increase and if that doesn’t happen, we will remain where we are. So what government has to face is how do we ensure that everybody is workings? To me interest rate is the major problem.”
Emasealu, who is also Managing Director, Interior Woodwork Limited said interest rate cut had to be fixed as a constant and not a variable “for us to have meaningful development” adding that “businesses have to be funded and we have a population that cannot buy, the income is low but cost of fund is high and cost of products will be very high as well.”
He said several businesses have paid so much in bank loans without any business in return adding that so many companies have been unable to pay salaries and have had to shut down as well as lay off staff as a result.
While however, commending the introduction of a new flexible exchange rate policy by government, he maintained that other initiatives were required to address the capacity of people to buy and spend.
He said: “Our inflation is sometimes artificial. It may not be too real because people refuse to adjust to the changing indices. But even with this, it will take a while for it to begin to affect the inflationary figures.
“Let’s be sure that other things which need to be done are done so that in two years’ time, we can say okay, we have arrived. But if you do only one and you don’t do the others, we end up not achieving much.”