A Review of the Nigerian Energy Industry

High interest rate‘ll pressurize operating costs in Nigeria’s economy –LCCI

Nigeria enterprises.
Nigeria enterprises.

11 May 2015, Lagos – The Lagos Chamber of Commerce and Industry, LCCI, has said that the implication of the Monetary Policy Committee (MPC) decision to sustain the tight monetary policy regime is that interest rate would continue to remain high and continue to put pressure on operating costs in the economy.

In a parley with pressmen in Lagos, the President of LCCI, Alhaji Remi Bello, said MPC at the end of its last meeting decided to sustain the tight monetary policy regime and retained Monetary Policy Rate (MPR) at 13per cent; CRR on Private Sector deposits at 20 per cent; CRR on Public Sector deposits at 75 per cent; and liquidity ratio at 30 per cent.

“The implication is that interest rate would continue to remain high and continue to put pressure on operating costs in the economy. For now, 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” he said.

According to him, with the apparent floating of the naira exchange rate, it has become necessary for the CBN to commence the gradual easing of monetary conditions to stimulate growth in the real economy through cheaper credit.

Fiscal operations of government need to be better managed to reduce money supply pressures on macro-economic conditions to create room for a growth oriented monetary policy.

“High interest rate regime is good for the attraction of portfolio investments, but it penalizes the real economy and impedes the capacity to create jobs. We call on the CBN to reduce charges on bank deposits, especially the 0.5 per cent fee to NDIC, and another 0.5 per cent for AMCON.
*Naomi Uzor – Vanguard

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