Damilola Oyedele in Abuja
The Senate President, Dr. Bukola Saraki, and Senate Committee on Banking, Insurance and Financial Institutions yesterday met with the Central Bank of Nigeria (CBN) and heads of commercial banks over the high interest rates on commercial loans.
The meeting was however held behind closed doors after a brief opening ceremony.
Addressing the bank chiefs and representatives of government financial institutions, the committee Chairman, Senator Ibrahim Rafiu, said several banking policies are not favourable to small and medium scale enterprises (SME) despite their pivotal position in national economy.
He added that the Monetary Policy Committee (MPC) of the CBN has retained the 14 per cent monetary policy rate, even though it is much lower in other developing countries.
The lending rates to the private sector hover between 28 and 30 percent, a situation which has cut access of SMEs to credit, he said.
The chairman lamented that the bulk of resources available in the economy is being channeled to purchase of government debt instruments at attractive rates of between 18 and 22 per cent, rather than to businesses.
â€œIt is pertinent to note that if we are to make the necessary reforms to make the economy work, we cannot neglect the challenges that increasing interest rates pose to the survival of businesses especially micro, small and medium enterprises, Rafiu said.
Saraki in his address, said while the Senate fully appreciates the economic complexities that determine interest rate regimes, â€œNigeria must deliberately frame its monetary policy regime towards support of business. Otherwise our economy rescue mission may not be attained.
â€œIt fully recognises that high inflation times call for interest rate hikes and such other arguments. But unless businesses are able to survive, inflation and all other market conditions alone will not make the difference. It will be profoundly improbable to genuine businesses like agriculture, production and solid minerals to survive on interest rate regime of 30 per cent,â€ the Senate president said.
â€œLetâ€™s give a chance to our poultry and cassava farmers, welders, builders, our fashion designers, filmmakers, shoemakers, furniture companies and our other numerous small and medium sized industries a chance to stay alive and make a living for their families,â€
â€œThese entrepreneurs employ 88 per cent of our work force. They have demanded and we should find a means to give them a new interest rate. If we donâ€™t, we will all be poorer for it. If we are able to, we will all ultimately benefit.â€