CBN WORKING OUT MODALITIES TO REDUCE INTEREST RATE FOR MSMES
source: http://www.eyesoflagos.com/2017/06/cbn-working-out-modalities-to-reduce.html

The Central Bank of Nigeria has said it is working on adjusting conditions for lending to micro, small and medium enterprises (MSMEs) in the country.
This followed calls by operators in the real sector, agencies and Nigerian lawmakers for a reduction in interest rates, particularly for MSMEs
Lending rates in the country currently hover around 28 and 30 per cent, making the cost of finance high for companies, especially small businesses.
Rising from the Bankers Committee meeting last week, the CBN and chief executives of banks said they plan to de-risk SMEs so as to make it easier to lend to them.
Acting director, corporate communications of the CBN, Isaac Okoroafor, told journalists after the meeting in Lagos that there was a consensus to look into ways to bring down interest rate “as a complimentary measure to bring about prosperity, especially through the SME and agriculture.
“This would involve finding ways of de-risking SMEs, because people argue that SMEs are too risky to lend to and so the bankers committee is working in collaboration with the CBN to ensure that that segment of business is de-risked by way of risk sharing and trying to tweak some of the conditions even as the CBN works to ensure that the macroeconomic impediments to low interest rate are addressed over time”, he added.
The Senate recently met with the CBN on the need to ensure that lending rates is brought down so as to save the country’s economy.
At a round-table between the Senate and interest groups in the country’s financial and business sectors in Abuja, the Senate President, Bukola Saraki, frowned at the decision to keep lending rate unchanged, saying it was stifling businesses.

“The economy will not grow despite the current efforts by the federal government to revive it, if the interest rates charged by banks remained high,” the Senate President said, noting that despite government’s new initiatives to boost growth in the economy, Nigerians were still concerned about the impossible interest rate regime businesses were facing to survive.
The CBN, the regulatory authority, has continued to insist that it cannot reduce interest rate in the country which is currently at between 25 and 30 per cent, to avoid worsening the inflationary pressure on the economy.
Saraki however noted that “it is inconceivable that businesses anywhere can survive on a 25 to 30 per cent interest rate regime.


“How can investors anywhere survive on these rates? How can they create jobs and make returns on their investment? But, this is the situation our businesses currently live with”, he queried.
During the last Monetary Policy Committee (MPC) meeting, the CBN left the benchmark lending rate, also known as Monetary Policy Rate (MPR), unchanged for the seventh successive time at 14 per cent.
The President of the Nigeria Employers Consultative Association (NECA), Mr Larry Ettah, had at the weekend also joined in the call for a lower interest rate, noting that one crucial step towards revitalising the economy was by bringing down interest rate.
Stating that interventions will not be enough to address the financing challenges of the real sector, he said, “When textile industry or other sectors have problems, CBN intervenes. When you open many windows, you have to ask yourself, ‘why not open a door?”

In this country, frustration on businesses and livelihood just be spreading like EBOLA

Pls... The working out should be fast.. ... Sometimes, the intrests use to bemore than the loan sef...

People dy suffer fir this country..

Good work CBN

AceGang:
In this country, frustration on businesses and livelihood just be spreading like EBOLA

AceGang:
In this country, frustration on businesses and livelihood just be spreading like EBOLA[nquote]m[quote author=AceGang post=57677591]In this country, frustration on businesses and livelihood just be spreading like EBOLA

o be small thing

Cool

In other news

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Fix the power sector and see American wonder.

Cbn cbn cbn how many times I call u

Still waiting patiently for $1=#1

If your girlfriend break your heart. Don't bear the heartbreak alone. Call her in the middle of the night tell her, you went to the hospital to check for your HIV status and the result came out positive, ask her why she infected you with the virus and dumped you. Cut the call at the moment, relax one corner, open your window for a fresh air and let your ancestors do the remaining fight for you Good morning

Lending rate should be not greater than 1.75% percent.

An interest rate between 28 to 30 % means out of =N=1 profit, the bank keeps 28 to 30 Kobo
If you have overheads like salary and running cost say 30-40 percent, that is 30-40 kobo on every Naira.

At the end of the day you make less that 10kobo after tax and provisions are made.

This is like monkey dey work baboon dey chop story.

Nigeria banks are the one stalling our economic growth and expansion, a rate of no more than 1.75% for M&SME loans should be strongly canvassed.

Mortgage loan of no more than 3%

Just fix power for us oooo

I wish we have zero interest. it will definitely boost our economy

CBN keep pumping $ into the forex market.. Make dollar do reduce abeg

This doesn't make any sense.

When the base rate is 14%, coupled with the CRR requirement of 22%. How do you expect banks to post a healthy profit after their huge operation cost.

Drop inflation, then the base lending rate, then we can talk.

Even in most developed countries like US and U.K., the interest rate around 0.05%.

And yet Nigeria Banks are charging 30%, black man mentality.

Fix power sector and loan rate should be single digit. Then we will truely giant of Africa.

Great

chloride6:
This doesn't make any sense.

When the base rate is 14%, coupled with the CRR requirement of 22%. How do you expect banks to post a healthy profit after their huge operation cost.

Drop inflation, then the base lending rate, then we can talk.

You spoke my mind.
With MPR at 14% plus the CRR, (ignoring other factors like the risk and the operating costs) the banks don't have much in their control.

It is the CBN's call not the banks. Many people just dey blame banks for the high interest rate for nothing.

its d wife's job to cook so if she refuses, d husband too will refuse to go buy foodstuff for his children?
if banks needed policies to stimulate loans, they'd be lobbying for them. but they use savings to make money from govt and forex, instead of investing in the local economy.
banks will only reduce interest rates if there are direct consequences from their customers.

Olamilekan08:

You spoke my mind.
With MPR at 14% plus the CRR, (ignoring other factors like the risk and the operating costs) the banks don't have much in their control.

It is the CBN's call not the banks. Many people just dey blame banks for the high interest rate for nothing.

modified
you forget the recent history of failed banks.
that was due to overexposure beyond the value of their deposits.
crr is a fixed percentage. increase your cash flow by increasing your customer base and loan book, but they refuse.
the effect of cheap govt funds and customer complacency.

@ ur signature-
na d way. 2023 sef too short.
@ ur post-
just as d hos of those nations leave their countries in a recession to get treatment in Nigeria.
abi?

yinchar:
Even in most developed countries like US and U.K., the interest rate around 0.05%.

And yet Nigeria Banks are charging 30%, black man mentality.

most Nigerians fail to realise that this one issue is the biggest problem of our economy.
if we did, fahola would've been warned to reject his appointment as power minister, on pain of grievous bodily harm.
besides, where's d petroleum minister right now? and why has everyone kept mute on d second most important problem of d economy- d refineries?

eph12:
Just fix power for us oooo

menwongo:
If your girlfriend break your heart. Don't bear the heartbreak alone. Call her in the middle of the night tell her, you went to the hospital to check for your HIV status and the result came out positive, ask her why she infected you with the virus and dumped you. Cut the call at the moment, relax one corner, open your window for a fresh air and let your ancestors do the remaining fight for you Good morning

hahahahahahahahahaha. guy u wicked.

isnovic:
Lending rate should be not greater than 1.75% percent.

An interest rate between 28 to 30 % means out of =N=1 profit, the bank keeps 28 to 30 Kobo
If you have overheads like salary and running cost say 30-40 percent, that is 30-40 kobo on every Naira.

At the end of the day you make less that 10kobo after tax and provisions are made.

This is like monkey dey work baboon dey chop story.

Nigeria banks are the one stalling our economic growth and expansion, a rate of no more than 1.75% for M&SME loans should be strongly canvassed.

Mortgage loan of no more than 3%

Its partly the Government's fault really, when your Govt borrows at 21% per annum through Treasury bills, at what rate do you think banks will now lend to private sector that is full of risk, created still by the past and present inept government.

aloeman15:
its d wife's job to cook so if she refuses, d husband too will refuse to go buy foodstuff for his children?
if banks needed policies to stimulate loans, they'd be lobbying for them. but they use savings to make money from govt and forex, instead of investing in the local economy.
banks will only reduce interest rates if there are direct consequences from their customers.

modified
you forget the recent history of failed banks.
that was due to overexposure beyond the value of their deposits.
crr is a fixed percentage. increase your cash flow by increasing your customer base and loan book, but they refuse.
the effect of cheap govt funds and customer complacency.

I agree with all your submissions but I am still of the opinion that high interest rate is not totally their fault.

They are there for business, they are designed and structured to operate in what ever business environment they find themself including regulatory. The commercial banks are not concern with Social performance measurements, only the MFBs do and so you see them keep quite on the matter since there is no direct customer's consequences to affect their business. What do you expect? That's capitalism.

It's up to the government to wake up and do the needful. Though it is not as easy as said, inflation is always there to dodge.