Vice Chancellor of Federal University of Petroleum Resources Effurun (FUPRE), Delta State, Akii Ibhadode, has hinged the high lending interest rates by financial institutions on averse to risk taking.
Ibhadode made the remark in a keynote address titled, “Lifting Nigeria out of Poverty,” delivered at the third annual conference on Microfinance and Enterprise organised by Lift Above Poverty Institute (LAPO) in Benin City, with the theme, “Entrepreneurship, Financial and Economic Development.”
The vice chancellor noted that the development had greatly stunted the growth of businesses, especially in the real sector of the economy, as well as cannot ensure profitability of businesses.
“It is common knowledge that our financial institutions are averse to risk taking. It hardly lends to the real sector of the economy due to high risks involved. This has made lending interest rates to be too astronomically high, which cannot ensure profitability of businesses. This has greatly stunted the growth of businesses, especially in the real sector of the economy,” he said.
He proffered that the risks of doing business need to be reduced for the financial sector to be able to make the desired impact, and advised that the sector needed to be able to devise ingenious ways of lowering interest rates while at the same time giving good returns on its lending.
Ibhadode, who also attributed the low public confidence in publicly quoted companies to unattractive low dividends paid on shares, said economic activities need to expand for businesses to do better.
While also noting that the country’s per capital income was ranked 120 in the world, he opined that the development was an indication of a low quality of life, which would not attract foreigners to come to the country to work.
According to Ibhadode, though Nigeria ranked 27 with the highest GDP in the world in 2016, her ranking in per capita income was 120 in the world. If we take the exchange rate of N361/$, the per capita income in Nigeria is N2,117,987 per annum per person = N176,499/month per person. This is an indication of a low quality of life, which will, for example, not attract foreigners to come to Nigeria to work.
He further contended that Nigeria had no business being poor because of her enormous endowments in natural resources, including a large human population.
He however proffered that for the country to be out of poverty emphasis should be placed on what Nigerians as individuals and as groups can do for themselves rather than what the “dismally performing governments” can do for them.
“Nigeria’s poverty is self-inflicted due primarily to poor leadership. As a result of consistent failures of successive governments, emphasis should be placed on what Nigerians as individuals and as groups can do for themselves rather than what the dismally performing governments can do for them,” he added.
He listed forming partnerships, inclusive financing, social entrepreneurship, commercialization of R&D outputs, and entrepreneurship training and youth empowerment as some measures to be adopted by governments to be out of poverty.
