23 April 2015, Abuja – The Lagos Chamber of Commerce and Industry has called on the Central Bank of Nigeria to reduce charges on bank deposits, especially the 0.5 per cent fee payable to the Nigeria Deposit Insurance Corporation and another 0.5 per cent to the Asset Management Corporation of Nigeria.
The President, LCCI, Alhaji Remi Bello, noted that the CBN’s Monetary Policy Committee, at the end of its meeting last month, decided to sustain the tight monetary policy regime, as it retained the Monetary Policy Rate at 13 per cent, Cash Reserve Ratio on private sector deposits at 20 per cent, CRR on public sector deposits at 75 per cent and liquidity ratio at 30 per cent.
Bello said, “The implication is that interest rate will continue to remain high and continue to put pressure on operating costs in the economy. For now, the lending rate of commercial banks, including fees and charges, range between 22 and 34 per cent, depending on the customer profile, tenor and collateral quality.
“High interest rate is a concern we have expressed at every turn in our advocacy activities engagements. High interest rate regime is good for the attraction of portfolio investments, but it penalises the real economy and impedes the capacity to create jobs.”
According to him, deposit money banks deserve to earn interest from the 20 per cent CRR on private sector deposits because the deposits are mobilised at a cost.
“The same is true of the 75 per cent CRR on public sector deposits. We believe it is only fair for some interest to be paid on account of the withdrawal of these funds from the banking system,” Bello added.
He said with the apparent floating of the naira exchange rate, it had become necessary for the CBN to commence the gradual easing of monetary conditions to stimulate growth in the real economy through cheaper credit.
Bello noted that following the closure of the Retail Dutch Auction System foreign exchange window in February, the CBN gave an assurance that the interbank foreign exchange market would be adequately funded through its intervention.
“Regrettably, in the last couple of weeks, it has been difficult for investors to access foreign exchange to meet their various international payment obligations,” he added.
While appreciating the concerns about dwindling foreign reserves, the LCCI said it was equally important to worry about the country’s reputation in the international trade arena and the global financial system.
“Failure to meet international payment obligations has very profound consequences for the economy as a whole. We, therefore, urge the Central Bank of Nigeria to urgently put in place a framework to ensure sustainable intervention in the interbank foreign exchange market,” the chamber said.
The LCCI also expressed concern over the mounting public debt as the nation’s debt had grown from $35bn in 2010 to $67.7bn as of December 2014, an increase of 94 per cent in four years.
It stated, “Debt service payment has correspondingly increased. In the 2015 budget proposal, the provision of N976bn was earmarked for debt service as against N418bn four years ago. This is an increase of 134 per cent.
“We, therefore, call on the incoming administration to look critically into the continuous accumulation of debts in order to reduce the burden of debt service. The main worry is that the bulk of the debts, especially domestic debts, are incurred for the purpose of running the business of government. This is reflected in the relativity of recurrent and capital spending budgets over the years.”