Finance ministry moves to rescue businesses from CBN’s clutches

Barely 48 hours after the Central Bank of Nigeria (CBN) announced it is retaining a high interest rate regime for the country, the Finance Ministry said some palliative steps, to cushion the effect of the policy on the organized private sector, had been initiated.

Officials of the ministry told Ripples Nigeria that a new understanding was being worked out with manufacturers and players in the agricultural industries and allied products, to guarantee a conducive investment environment, which will take effect as from the first quarter of 2017.

Part of the measures include introducing a longer term tax holiday, granting import waivers, especially to agric-related farming machinery as well as improving the state of infrastructure.

The Minister was said to have had different meetings with the representatives of the various sectors and other stakeholders as soon as it became obvious that the MPC would not review the interest rate downwards.

A senior official said the Minster, Kemi Adeosun, had frowned at the insistence of the MPC not to listen to calls from several experts to reduce the interest from its 14 per cent to at least 10 per cent, if a single digit could not be possible.

Though the MPC at the end of its two-day meeting, which ended on Tuesday, said it had empowered the CBN to, from time to time, introduce some measurers to cushion the effect of the current economic hardship, indications that this may not be feasible came from Godwin Emefiele’s press briefing on Tuesday.

He advised the Federal Government to take a second look at its debts and servicing, failure of which there would be no shift in the fiscal policy of the bank.

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Emefiele cited lack of progress in improving the oil revenue, due to the crisis facing the sector, which was identified by the CBN boss as the main fact that made the MPC’s maintaining the status quo imperative.

A financial expert, James Usoro, said the release of the National Bureau of Statistics figure on Nigeria earlier in the week, showed that the jump in inflation rate had further boxed the apex bank into a corner.

“Reducing interest rate with high inflation would have distorted the little recovery that has been gained by the measures put in place so far,” he stated.

But others are of the view that there should be a better synergy between the CBN and the Ministry of Finance, if the government’s plan to exit from the recession will be realizable.

“There has not been a common goal in the whole economic programmes of government. From what we are seeing, the government is yet to get its bearing well in the present situation of things,” said another expert.
By Emma Eke….

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