The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said the high inflation rate and rising operating costs in the banking sector are some of the major reasons for the high interest rate in the country.
He said this in a lecture titled: ‘The dilemma of monetary policy and exchange rate management in a recession: Potential options for Nigeria’ at the second homecoming series of the Economics Department of the University of Nigeria, Nsukka.
Emefiele, according to a statement, said with inflation rate still hovering above 16 per cent, the apex bank would be failing in one of its key mandates if it reduced interest rates at this time.
The Monetary Policy Rate of the CBN is currently 14 per cent, higher than Kenya’s 10 per cent, South Africa’s seven per cent, Rwanda’s 6.25 per cent, Ghana’s 6.75 per cent, and Cameron’s 2.95 per cent.
Senate President, Bukola Saraki, had asked the apex bank to reduce the interest rate as it was affecting the growth and survival of businesses.
But Emefiele disagreed with those pushing for a rate cut as a path to growth, noting that the high inflation rate was inimical to economic growth.
He stated, “Interest rates reflect not just the cost of capital, but also the cost of doing business, and so, we need to also look at interest rates from the perspective of the lender.
“Given that most banks have to individually provide security, power and other infrastructure, it is not surprising that some of these costs are passed on to customers in the form of high interest rates.”
He explained that the CBN would continue to rely on moral suasion to encourage Deposit Money Banks in the country to be more considerate in interest charges on customers.
The CBN boss stressed the need for fiscal policy to target improved productivity of labour and increase disposal incomes for workers.
He said that fiscal policy should consider ways of stimulating household consumption and business investments.
According to him, the CBN, working with relevant government agencies, will continue to stimulate the agricultural sector through its Anchor Borrowers’ Programme and other agricultural interventions.
Specifically, he said the bank had committed about N29bn to the ABP with the active participation of 24 states of the federation.
Emefiele challenged tertiary institutions in the country to focus on research that would boost economic development, just as he gave an assurance that the apex bank would work with relevant stakeholders in the educational sector to stimulate research for the overall good of Nigeria.
He frowned on the consumption preference of many Nigerians, cautioning that the nation could not continue to rely on other countries for products that could be produced locally.
Source: Punch
No comments:
Post a Comment