‘Present financial system, intermediation against poverty reduction goals, inclusion’
Despite the reduction in Monetary Policy Rate (MPR) by 50 basis points from 14% to 13.5 %, the Lagos Chamber of Commerce and Industry (LCCI) has described the current configuration of the financial system and intermediation actions as ones not in tandem with poverty reduction goals, economic inclusion and the job creation objectives.
According to the Chamber, significant portion of credits to the economy is still going to government, the large enterprises and the oil sector which have very weak linkages within the economy.
Specifically, the LCCI described as unhealthy, a situation where the government takes a large chunk of the credits in the economy, noting that the MPC report indicates that in February, net domestic credit to government grew by 17.2% while credit to the private sector grew by 6.4%.
The Chamber explained that while financial intermediation is expected to aid the flow of financial resources from the surplus segments of the economy to the deficit sectors, the reverse is the reality in the Nigerian economy.
In a statement made available to The Guardian, the Director-General of the Chamber, Muda Yusuf said there was need for fiscal and monetary authorities to work collaboratively to moderate investment risk in the economy, in order to boost the flow of credit to the private sector, investment growth and create jobs.
“The LCCI commends the stability of the exchange rate over the last couple of months. However, it is imperative to caution that the foreign exchange policy does not inadvertently perpetuate the import dependence character of the economy”, the statement read in part.
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