Lawmakers want CBN to grant low interest rate for SMEs

In from Ali Smart . . .
The House of Representatives on Thursday impressed on the Central Bank of Nigeria (CBN) the need to reduce interest rates on lending to small and medium enterprises (SMEs).
The lawmakers specifically charged the Chairman, House Committee on Banking and Currency, Hon. Jones Onyereri to liaise with the apex bank to ensure reduction in lending interest rate to a single digit and report back to the House within four weeks.
The resolution of the lawmakers was sequel to the passage of a motion sponsored by Hon. Bode Ayorinde and titled: ‘Call for regulation of the lending rate charged by commercial banks.”
Ayorinde, in his argument noted that the 21 licensed banks in Nigeria serve as financial intermediaries between those who have surplus funds and those who require borrowings for various purposes.
According to him, the banks charge astronomical rates ranging from 23% and 28% on lending against 2% to 3% interest on savings.

Read also: Economy: Interest rates hit lowest level in 6yrs

The lawmaker also expressed displeasure over the 5% to 10% monthly interest rate charged by microfinance banks, which he said translates to 60% and 100% per annum on loans and overdrafts.
His words: “Commercial banks use the benchmark interest rate otherwise known as the Minimum rediscount rate, as the basis for fixing the lending rates to their customers, while the CBN is accountable to Nigerians for the 13% benchmark interest rate, the licensed banks achieve their super profits by whatever percentage they add to the 13%.”
Ayorinde noted that the benchmark interest rate in some countries of the world as at July 2015 according to the Trading Economic website is as follows : Italy 1.56%, Candidate 0.05%, Japan 0.00%, South Korea 1.50%, Switzerland 0.75%, UK 0.50%, USA 2.5%, Australia 2%, China 4.85%, Turkey 7.5%, Indonesia 7.5%, India 7.25% and South Africa 6% and wondered why Nigeria’s case should be different.
The motion was supported by members when the Speaker, Hon. Yakubu Dogara called for a voice vote, and subsequently passed it to the House Committee on Banking and Currency for further legislative input.

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