The Senate fully appreciates the economic complexities that determine interest rate regimes.
The Nigerian Senate has called for the downward review of interest rates, noting that business enterprises could not survive under the current interest rates being charged by financial institutions. It is learnt that current interest rates range between 25 and 30 per cent.
According to the Senate which held a round-table between the Senate and stakeholders in the country’s financial and business sector in Abuja on Tuesday, the economy would not grow despite the current efforts led by the Federal Government to revive it if the interest rates remained high.
The President of the Senate, Bukola Saraki, who declared the forum open, said that in spite of Nigerians’ commendation of the government’s new initiatives for growth, “they are also worried and have complained to us bitterly about the impossible interest rate regime our businesses face today to survive.”
Saraki said, “It is inconceivable that businesses anywhere can survive on a 25 to 30 per cent interest rate regime. How can investors anywhere survive on these rates? How can they create jobs and make returns? But this is the situation our businesses currently live with.
“The Senate fully appreciates the economic complexities that determine interest rate regimes. It 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.”
In its contribution, the CBN said it would increase its intervention to the manufacturing and agriculture sectors to make more funds available for business. A central bank official who stood in for the CBN Governor, Godwin Emefiele, told the committee that while the apex bank shared the sentiments about high interest rates, he maintained that there was a need to consider the current economic climate in which the banks were operating.
According to him, the CBN was mindful of this, adding that this was why it has set aside special intervention funds at nine per cent for key sectors of the economy.
The round-table, which was held behind closed doors, had in attendance the Central Bank of Nigeria; Deposit Money Banks; development finance institutions; Chartered Institute of Bankers of Nigeria; Nigeria Deposit Insurance Corporation; Manufacturers Association of Nigeria; Nigerian Association of Small and Medium Enterprises; Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, and several other stakeholders.