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Stockbroker Calls for Lower Interest Rates to Boost Manufacturing
By Goddy Egene
A capital market operator and Managing Director/Chief Executive Officer, Meristem Securities Limited, Mr. Wole Abegunde has said financial system regulators should work towards reducing interest rates so that manufacturers can have access to cheaper funds.
Speaking in an interview with THISDAY in Lagos, Abegunde said one of the variables that is used across the world to push an economy out of recession is the availability of funds.
“And interest rate is very important in this regard. Interest rate has to be low to help production. With low interest rate, production will increase because producers will have access to funds to increase production,” he stated.
According to him, the nation’s capital market can mobilise funds that will assist in jump-starting the economy, noting that this will better be done with lower interest rates.
He said: “The capital market is able to help in raising cheap funds by selling financial instruments to be able to generate funds for production. But there is a difficulty here at this time. In a time of production, people have little access to funds. Savings is being depleted and when you have insignificant amount of savings then you can’t invest in financial instruments of the capital market. However, the capital market will still make all efforts possible to mobilize funds to jump start the economy. But it is better done with low cost debt instruments. In other jurisdiction, you will see a situation where the United States government, for instance, is bringing interest rates to almost nothing for people to lend and do business so as to provide cheap liquidity. I believe that is one area that we really need to look at now.”
Speaking on the state of the capital market operators in the current challenging operating environment, Abegunde said the fortune of operators is dependent on the economy.
“We normally say that the capital market is the barometer for the economy. If the economy is down the capital market is also down and the operators in the market are also down. So I must say that the situation with operators in the market is challenging at the moment. Many operators are struggling to survive because there are no activities in the capital market as it used to be and I believe that the regulators have recognized this and some actions they had planned to take in the past in regulatory arena have softened their stance because the operating environment is difficult for everybody. But this is the time that innovation and creativity come to play. In any environment you find yourself, if you are creative, you set yourself apart,” he said.
