Experts hail CBN rate cut, seek further reduction
A former President of the Chartered Institute of Bankers of Nigeria (CIBN), Mr Okechukwu Unegbu, has commended the Central Bank of Nigeria (CBN) for reducing the benchmark interest rate from 26.5 per cent to 23 per cent.
Unegbu, however, urged the apex bank to further cut the rate to make credit cheaper and more accessible to industrialists and small businesses, to boost economic growth.
Unegbu said this in an interview with newsmen on Monday in Lagos.
“Although the CBN has cut down the rates to 23 basis points, but it is still on the high side.
“The apex bank ought to reduce the rates further down, to enable Deposits Money Banks (DMBs) support industrialists and small businesses with more friendly credits facilities.
“This will enhance their businesses and spur the growth of the general economy,”Unegbu said.
He noted that in spite of the rate cut, businesses would still struggle to access credit facilities from DMBs as expected.
“Most DMBs have perfected the act of imposing hidden charges on their customers, which partly accounts for the exorbitant cost of accessing credit facilities.
“This is undermining businesses in the country and one of the factors stifling the productive sectors of the economy,”Unegbu said.
Also, Mr Boniface Okesie, President, Progressive Shareholders Association of Nigeria, acknowledged the apex bank’s effort in the rate cut.
“We expect the Monitory Policy Committee to reduce the rate further, considering that the macro economic indicators have been improved upon.
“The country’s foreign exchange reserves have risen to $54 billion, the economy has been growing at 4.43 per cent in second quarter, also inflation rate declined to 15.39 per cent in August,” Okesie said.
He emphasised that the CBN’s rate reduction to 23 per cent was not in the best interest of an emerging economy desiring development.
“Local manufacturers cannot borrow at this rate and still produce affordable commodities for the average Nigerian amid the current economic hardship.
““It is only Foreign Portfolio Investors (FPIs) who are benefiting, as they bring in cheap funds and repatriate them when necessary, without recourse to our interest,” Okesie said.
Newsmen report that the Monetary Policy Committee (MPC) of the CBN cut the benchmark interest rate by 350 basis points to 23 per cent from 26.5 per cent.
The committee said the easing was informed by improved inflation and foreign exchange conditions, creating room for the biggest rate adjustment in the current monetary policy cycle.
Newsmen also report that the CBN Governor, Mr Olayemi Cardoso, announced the decision at the end of the committee’s 307th meeting in Abuja.
“The committee also recalibrated the standing facilities corridor to +50/-300 basis points around the MPR, while retaining the Cash Reserve Requirement for deposit money banks at 45 per cent, merchant banks at 16 per cent and non-Treasury Single Account public sector deposits at 75 per cent,” Cardoso said.
The latest decision followed two consecutive holds at 26.5 per cent in May and July, after the committee cut the rate by 50 basis points in February.