LCCI charges CBN to review MPR
Worried by the high lending rate to the private sector, the Lagos Chamber of Commerce and Industry (LCCI), has charged the Central Bank of Nigeria (CBN) to review the Monetary Policy Rate (MPR).
Dr Vincent Nwani, Director, Research and Advocacy, LCCI, told the News Agency of Nigeria (NAN) in Lagos that reduced MPR would stimulate the economy through improved access to credit facilities.
NAN reports that the Monetary Policy Committee had on July 26,2016 increased the MPR by 200 basis points from 12 per cent to 14 per cent to combat inflation and stimulate growth.
MPR is the benchmark rate at which commercial banks can borrow from the central bank to boost the level of liquidity in the economy.
“The private sector has long been chased away from the banking halls. Monetary Committee raised MPR from 12 per cent to 14 per cent in the wake of recession.
“Today, private sector can only borrow between 25 per cent and 35 per cent from commercial banks and if you are borrowing from microfinance banks, it can be as high as 50 per cent.
“Who borrows such money? To do what? Except if you are doing an illegal business; even the ease of getting this credit is cumbersome.
“The challenge of high interest rate in the country has made government’s effort at stimulating the real sector of the economy ineffectual, “Nwani said.
He noted that the challenge had exacerbated the dearth of SMEs, low capacity utilization, staff rightsizing, increased cost of production, reduced purchasing power and increased nonperforming loans.
The director argued that the country’s improved ranking in the access to credit indicator, recently released in the 2017 World Bank’s Ease of Doing Business report, was theoretical.
“I watch the market and economy every day. The improvement in ease of getting credit is not in reality with what is on ground in the country.
“If we are talking about ease of banks to borrow money to government, it has improved.
“If it is about private sector, it has been worsened by higher interest rate and harsh business environment,’’ he said.
Nwani who lauded the various intervention funds of the CBN, however, noted that efforts should be geared toward ensuring that targeted recipients access the funds.
He stressed that the lending process utilised by financial institutions should be simplified and be investment friendly to accelerate economic growth.
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