High Interest Rates: Senate to Confer with CBN


The Nigeria's Senate
The Senate
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Hello Reader,

In what seems a positive response to the concerns of business operators regarding high interest rates charged by the banks in the country, the Senate President, Dr Bukola Saraki has assured that the Senate would look into the issue:

“It is likely that we will debate it this week,” the Senate president said in the course of an interactive session with journalists in Ilorin on Sunday.

Dr Saraki said the high interest rate was not good for the economy, even as the nation takes pressure out of recession and targets growth:

“This week we will debate it, have a round table discussion with the Central Bank of Nigeria and other commercial banks and talk frankly to ourselves,” Saraki said.

Saraki added that it was not fair for the banking sector to be making sky-high profit while companies lose money and retrench workers.

“Hopefully, with the stability of the foreign exchange, we can now begin to address the issue of interest rate.

“There is no business that can make money if you are borrowing at 28 percent, it cannot work,” said Saraki.

The Senate President added that the Senate would engage financial institutions to reach an affordable interest rate; stating that, “If they refuse, the Senate may come up with legislation to peg the interest rate.”

Saraki continued that the banks were charging high interest rate because they had tied their assets in government securities and were getting 18 to 19 per cent:

“They will tell you they are doing business, but in any business, there must be social responsibility.

“I promise Nigerians that we will find a solution to the high interest rate,” Saraki pledged.

Dr Saraki also stated that the red chamber may well limit the amount banks can put in government securities and direct the rest to sections like the real sector.

The Senate President also conveyed concern over the standing of local governments in the country, expressing that virtually all local councils lacked the required finances to perform their statutory obligations.

Saraki emphasized that to reduce the burden of responsibilities on local councils; the Senate might transfer the responsibility of funding primary education to the states:

“I am of the view that we should look at how state governments take over primary education.

“This is an arm of government that cannot meet its constitutional obligations and you now put a very important one under it.

“Ninety Five percent of local governments depend on state governments’ support to pay workers’ salaries,” Saraki said.

Saraki remarked that the Senate Constitution Review Committee may grant autonomy to the local governments in the country.

Meanwhile the Senate president believed that granting autonomy to local governments may not solve their problems. He therefore emphasized that the main problem was that of inadequate funding which must be addressed, to allow local governments function effectively, (NAN).

It would be recalled that various business sectors (MAN, chambers of commerce, MSMEs) have at various times raised their concerns about high interest rates charged by banks on loans, even at a time the country is trying to improve the ease of doing business. Therefore, this new move as promised by the Senate president would be a good step in the right direction if implemented, as there is no business that can make money, borrowing at 28 per cent. Just as the banks are there to make profit, the various business sectors, MSMEs, entrepreneurs, small businesses, artisans among others, are also in business to make profit and we must determine an affordable interest percentage for borrowing, so businesses can thrive. The time to think and act is now; these are life and business essentials, so let’s keep thinking clearly.  Thank you for reading and do have a beautiful day!

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High Interest Rates: Senate to Confer with CBN

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