FG mulls instrument to bring down interest rate to single-digit

The Federal Government has disclosed its intention to come out with a financial instrument that will guarantee single-digit interest rate for investors.

Segun Awolowo, executive director, Nigerian Export Promotion Council (NEPC), said this in Abeokuta at the end of the 54th annual conference of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), adding that the single-digit financial instrument was in its final stages and would be made available for investors soon.

Earlier, Mohammed Abubakar, president, NACCIMA, decried the harsh economic condition of the country as being caused by high interest rate, high cost of power and production as well as delay in budgetary process of the Federal Government, which, he said, was greatly affecting the economic atmosphere, especially on the part of the investors.

He said, “While we commended the Central Bank of Nigeria (CBN) and its Monetary Policy Committee (MPC) for doing a good job to maintain monetary stability in the economy, we are also expressing concern on the continued retention of its high Monetary Policy Rate (MPR) at 12% since 2013, which keeps the interest rate high and unaffordable to borrowers, especially MSMEs.

“We counsel that business operators should not be allowed to struggle with that kind of high lending rate in existence if they are to thrive and boost productive capacities and create more jobs in the country. The plan by the new CBN governor to reduce interest rate is commendable if it is made to become a reality.

“While we have observed delay in budgetary process, we have also repeatedly drawn the attention of all tiers of governments and their legislative bodies on the need to ensure that they strictly adhere to extant practice of timely crafting, presentation, debate, passage and signing of annual budget latest by mid-December and subsequently announce to the citizens on 1st January, every year.

“Adhering to this practice will definitely forestall dislocation of proper planning by government’s MDAs and business operators whose public and business plans and projects are directly dependent on the policies and provisions in the annual budgets”, he said.

But the executive director of NEPC, who was a guest speaker and representative of the Federal Government, disclosed that government was planning a robust financial instrument through Federal Ministry of Finance and CBN that would break economic barriers for investors, especially operators of Micro, Small and Medium-scale Enterprises (MSMEs).

He said that the Federal Government, having observed the high interest rates on credit facilities from financial institutions, including commercial banks to the operators of MSMEs and investors in the country, came up with financial instrument that would bring down interest rate to a single-digit.

“The honourable minister of finance and coordinating minister of the economy is working on an instrument that we can get and bring down this interest rate, particularly for MSMEs, for businesses, I think it is in final stages now and when it is ready it will be made available,” Awolowo declared.