AfDB faults CBN, says interest rate too high

The African Development Bank, AfDB, has faulted the Central Bank of Nigeria, CBN, saying its 14% interest is too high for an economy hoping to get out of recession.

This was stated by the bank’s President, Akinwumi Adesina, in an interview late on Monday in London.

It would be recalled the CBN had raised its Monetary Policy Rate, MPR, after a meeting of the Monetary Policy Committee, MPC, meeting in Abuja a few months back to popular outcry of financial experts.

Adesina said: “Attracting investment was the only way for the central bank to lower its interest rates. The interest rate is way too high.

“You cannot drag the economy out of recession with those interest rates.”
Adesina however said the AfDB was ready to help the country out of its recession but insisted that taxes must be raised and restrictions on foreign exchange lifted.

Read also: FG offers N25bn lifeline to mass transit companies

The former Nigerian Agriculture Minister, who said Nigeria is too big to fail, further posited that low taxes and restrictions on foreign currency leading to dollar scarcity have been choking the economy.

He said: “The African Development Bank will rally strongly around Nigeria to overcome its recession.

“They (Nigeria) have a liquidity problem. We (AfDB) want to make sure Nigeria gets resilient.

“In our view it would be better to have gradual (customs) tariffs as opposed to (Forex) restrictions.”

According to Adesina, the tax-toGDP ratio in Nigeria is around four to five percent and far lower than that of other countries in the region at 15 percent.
He however added that the country had agreed on some reforms such as increasing its value-added and corporation taxes to offset a loss of oil revenues.

By Timothy Enietan-Matthews…

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