By Cecilia Ijuo
The Senate on Tuesday mandated its Committee on Banking, Insurance and other Financial Institutions to hold roundtable with Central Bank of Nigeria(CBN) and other stakeholders over high interest rate.
It directed the committee to meet with experts in the finance industry to find immediate and sustainable solutions that would usher in a new interest rate regime that supported enterprise development in the country.
The decision followed a motion by the Chairman, Senate Committee on Banking, Insurance and other Financial Institutions, Sen. Rafiu Ibrahim, at plenary.
Ibrahim said that it was disturbing that in spite of all the negative economic indices in the country, banks had continued to declare huge earnings and profits.
“The current regime of high interest rate continues to place a major burden on business investments and household consumption spending in Nigeria, thereby negatively impacting on the survival of Nigerian businesses.
“This is perpetuating the indicator which shows that only about three per cent of Small and Medium Enterprises (SMEs) starting up, have access to credits from banks.
“This insignificant percentage ironically employs about 88 per cent of our workforce and therefore the backbone of the economy.
“It is disturbing that lending rates to the private sector has hovered between 28 per cent and 30 per cent across board,’’ he said.
In his contribution, the Deputy Leader of the Senate, Sen. Bala Na’Allah, said that there was an urgent need to discuss with all relevant stakeholders on the way forward.
According to him, it is worrisome that in spite of the current economic situation, which has largely affected Nigerians, the interest rate is high.
Na’Allah said “there is a dire need for a stakeholders’ roundtable to address increasing interest rates in Nigeria.
“I wonder why the interest rates are outrageously high, in spite of the fact that the country is yet to get out of the recession.
`The banks are run by a powerful cartel. They do what they like and jerk up interest rates.
“Over the years, we have seen the exchange rates go up, but it is not the same in other economies of the world.
“Nigeria has the most unpredictable economy in the world and we have to be worried about this,’’ he said.
In his remarks, the President of the Senate, Dr Bukola Saraki, gave credence to the claims by criticising what he described as the twin evil of interest and exchange rates.
He said that it was unreasonable for companies to continue to lay off staff, while declaring huge profits annually.
Saraki, however, assured that the Senate would step in and ensure that the right thing was done.
He said “there has always been the twin evil of exchange rate and interest rates.
“We cannot live in a country where companies are folding up, yet organizations are declaring mega profits. The committee should swing into action.”
He assured that the senate would not hesitate to see to the implementation of the committee’s resolutions.