Adedapo Adesanya
By Adedapo Adesanya
Members of the House of Representatives have hinted at how operations of financial institutions in the country may hinder the plans of President Muhammadu Buhari’s administration to lift 100 million Nigerians out of poverty by 2030.
At the plenary on Wednesday, the lawmaker representing Ado Ekiti/Irepodun-Ifelodun Federal Constituency (APC, Ekiti State) at the lower chambers of the National Assembly, Mr Fatoba Olusola Steve, expressed his displeasure on the high lending rates of Nigerian banks, stating that they hinder economic growth as a result of the negative impact they have on the performance of the businesses due to the difficulty faced in accessing loans from these banks.
He took into consideration that at 30 percent, Nigeria has the one of the highest lending rates in the world. He further stated that due to this, any means of making profits are eroded, which brings about difficulty or unattractiveness for manufacturers to continue to be in business.
The House admitted that that the lending rates were largely determined by the Monetary Policy Rate (MPR) set out by the Central Bank of Nigeria (CBN), and that the higher the MPR, the higher the interest rates charged by commercial banks. Notwithstanding, it argued that there was a great need to look into commercial banks and their lending practices to protect borrowers from exploitative interest rates and promote economic development.
It was a source of worry that the lending interest rates of banks put a barrier to lending, particularly to Small and Medium Enterprises (SMEs), manufacturers and industrialists, the parliament said employ a large chunk of the workforce in Nigeria.
The Assembly noted that due to the high-interest lending rate, the country couldn’t curb inflation and stimulate economic growth at the same time and the impact is felt by citizens, Small and Medium Enterprises, manufacturers and investors. Adding that banks and their directors remain the major beneficiaries of the high lending rates.
The House then resolved to urge the CBN to review the Monetary Policy Rates (MPR) and its implementation, while not overlooking whatever disadvantages it served to the banks.
Members also committed to seeking the input of the National Economic Council to consider how they could ease the cost of doing business in Nigeria fairly to all.
