LCCI tasks CBN on interest rate

The Lagos Chamber of Commerce and Industry (LCCI) has advised the Central Bank of Nigeria (CBN) to formulate a framework on the Monetary Policy Rates (MPR), that would be beneficial to players in the economic sector.

LCCI’s Director-General, Mr Muda Yusuf, said on Thursday in Lagos that such a framework should be able to transmit the benefits of MPR reduction to key players in the economy.

According to him, the effect of relaxing the tight monetary conditions is yet to translate to reduced lending rates.

The CBN had on Nov. 24, 2015 reduced the MPR form 13 per cent to 11 per cent as well as the Cash Reserve Ratio (CRR) from 25 per cent to 20 per cent.

The MPR is the benchmark interest rate at which the CBN lends to Deposit Money Banks (DMB) to cover their immediate cash shortfalls.

The CBN’s Governor, Mr Godwin Emefiele, had said that the reduction was aimed at stimulating the growth of the real sector of the economy through improved liquidity and reduced lending rates.

Yusuf said, “We expect that by now the benefits of economic stimulation through reduced MPR will have lessen the pain of high interest rate suffered by entrepreneurs operating in the country.

“However, lending rates from commercial banks to entrepreneurs have remained unchanged.

“The banks are still lending at high interest rate to SMEs at between 23 per cent and 25 per cent depending on the profile of the organisation.

“The customers are not getting a fair deal from the banks, as far as some of these policy actions are concerned, while the trend is also slowing the growth of the economy.’’

He further said that if the situation had been reversed, banks would have, immediately, reflected the changes in the adjustment of their lending rates.

The director-general urged the CBN to uphold policy implementation by financial institutions and remove impediments hindering investments and economic growth.