â€¢ We have to remain profitable, says MD
By James Emejo in Abuja
The Chairman, House of Representatives Committee on Banking and Currency, Hon. Chukwudi Jones Onyereri, has expressed displeasure over what he described as an abysmal high interest rates on loans granted by the Nigerian Export-Import Bank (NEXIM) to Micro Small and Medium Enterprises (MSMEs).
He was particularly concerned that the development finance institution, which was created to boost non-oil exports by giving loans at low commercial rates to domestic entrepreneurs currently charges up to 16 per cent on the loans- almost at par with commercial bank rates.Â
Speaking during the 2018 budget defence session with top management of the bank, Onyereri said the development was unacceptable.Â
But the Managing Director of NEXIM Bank, Mr. Abubakar Abba Bello, tried to justify the rates, stressing that the bank might not be able to meet its overheads should the interest on loans drop below 16 percent.Â
Unimpressed by the explanation, Onyereri said: â€œI think itâ€™s absolutely wrong, by my assumption, you are trying to use interest rates to cover your gaps.
â€œThe truth of the matter is that what you should do is to go and recover loans that youâ€™ve already given out not using interest rates at the detriment of the MSMEs you are meant to help.â€
He said: â€œItâ€™s actually wrong and thatâ€™s what weâ€™ve been fighting in this country; its not really acceptable. Iâ€™m a little bit worried by what Iâ€™ve seen here; your lending rates.
â€œThe whole idea of BoI, BOA, Development Bank and NEXIM is to help MSMEs and also help them to build their businesses while you are adding to national economic outlook.â€Â
Bello, had told the committee: â€œWe have to calculate our revenues based on the 16 per cent because they are already running loans but the new loans we are booking will go for nine percent.Â
â€œAnd as we recover those that are already on our balance sheet and booking them again, theyâ€™ll go at nine percent.Â
â€œBut despite the fact that we are not a profit making organisation, in the real sense, we are not driven by profit, we have a responsibility to ensure that the organisation remains profitable because thatâ€™s the only way we can sustain it.Â
â€œSo, at some point, during the life of this bank, if we go below 16 percent, we wonâ€™t be able to even cover our overheads, – and thatâ€™s why loans were booked at 16 percent which is about half of what commercial banks are doing for small and medium enterprises.â€
However, Onyereri said: â€œFrom what Iâ€™ve seen, itâ€™s worrisome because thereâ€™s really no difference between Commercial Banks and the DMBs. With your rates at 16 per cent, thatâ€™s really unacceptable.â€