Experts decry impact of high interest rate on production, domestic investment
The stakeholders, who spoke in an interview with The Guardian, decried that the monetary authorities do not fully appreciate the impact of high interest rate on investors, noting that it is hard to boost domestic investment with the current interest rates especially in the real sector.
They argued that the nation is in dire need of both domestic and foreign direct investments to turn around the economy, adding that this will not happen if government perpetuates high interest rate regime.
According to them, many businesses that ended up with AMCON in recent times were victims of high interest rate.
Specifically, the Director General of Lagos Chambers of Commerce and Industry (LCCI) Muda Yusuf, told The Guardian that high interest rate is a contributory factor to the rising level of non-performing loans (NPL) in the banking system.
“Many investors depend on bank loans for the acquisition of fixed assets, machineries and working capital. Times like these demand that we should worry more about growth, jobs, and output, than inflation. Times like this demand that we should worry more about growth, jobs, and output, than inflation. In any event, an increase in output would have a moderating effect on inflation.
“The truth is that it is hard to boost domestic investment with interest rates, especially in the real sector. Many of the business that ended up with AMCON were victims of high interest rate. We need the investors to turn things around in the economy.
“This will not happen if we continue to perpetuate a regime of high interest rate. This situation is further complicated by the high yield on government debt instruments. Funds are being moved from fixed deposits and savings account into the purchase of treasury bills. It does not urgur well with for the economy,” he added.
The Managing Director, Vitafoam Plc, Taiwo Adeniyi, said: “One critical thing that every manufacturer wants government to do is to crash the interest rate window.
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