Major stakeholders in Nigeria’s economic sector have criticized the Central Bank of Nigeria for retaining the two-digit interest rates at 27.5 per cent, saying the policy would stifle businesses in the country.
The stakeholders who include industrialists, entrepreneurs and business owners suggested that instead the CBN should by either bring down interest rates to single digits or create a special intervention fund for Micro, Small and Medium Enterprises (MSMEs).
They made the call yesterday while reacting to the retention of interest by the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC).
Founder and Managing Director of L and Z Ltd, Mohammed Damakka Abubakar, lamented that the current rate was unrealistic for any micro or medium business to borrow
“The current lending rate by commercial banks is too high and it will be suicidal for any business man to go and borrow from them. Secondly, you cannot repay it because they only give short term loans and what we need is long term loans,” he said.
He said “In the case where the interest rate cannot be brought down to single digits, the CBN should create a special intervention fund for MSMEs.”
Similarly, the Managing Director of Fumtee Ventures, Fumen Makama, said with inflation slowing, the expectations of businesses were for lending rates to reduce which did not happen.
“We were expecting significant rate cuts after a long time of tightening especially now that inflation is reducing, but it didn’t happen and businesses want respite because we can’t go to banks to borrow.
“Banks borrow at over 30 per cent and no MSME can survive through that, we really want the government to do something,” he said.
According to an exporter, Iliya Abubakar, despite some interventions for exporters by the Federal Government, the CBN should cut down the rates significantly.
He said: “Exporters want to expand their business but can’t borrow from Banks because of the high rates. At over 30 per cent, no business can survive with such rates.
“If that won’t work, then we need an intervention fund to ensure that MSMEs improve and contribute meaningfully to Gross Domestic product,”
The Managing Director, POMA Point Limited, Paul Oyewusi, expressed worry over the retained interest rate, saying SMEs are overwhelmed by the interest rates, adding that their cost of business was further pushed up by the increased electricity tariff, telecoms, and other necessary items for business.
“Retaining the CBN MPC interest rate at 27.5 is a lot because it makes access to credit very difficult for SMEs in Nigeria. It is obvious that many businesses don’t have access to finances from investors, especially when they are not from the tech industry.
“So, what some small businesses use to hold, keep moving and contributing to the economy is the credit, and it is as high as it is that will cripple many businesses.
“I don’t know why the government is going this route because the tariff of basic amenities has been increased, this further cripples the economy,” he said.
He described SMEs as the backbone of the country’s economy by creating employment opportunities.
“If you look at the percentage they contribute to the economy, the jobs created by SMEs, they contribute 50 per cent to the economy. How many big firms are employing people? It is these start-ups, both SMEs and MSMEs that provide the largest employment in the country. If Nigeria must stand, small businesses must be supported,” he added.
The President of the Premium Breadmakers Association of Nigeria (PBAN), Engr Emmanuel Onuorah, to the FG to reduce the interest rates.
“How can any economy survive on double-digit? It cannot work. I even thought it was going to come down.
“They should just look inward, continue to work as hard as they are doing, and see how they can bring this thing down so that businesses can begin to thrive because without credit facilities, what are you doing?
“If they are saying 27.5, what will be the lending rate from the commercial banks because you have to look at those things twice again? It has been double-digit for too long.”
