Saintinoo:


I gave you a good analysis of how an economy work, but as usual, you are beating round the bush with data probably from worldbank.

I will continue stating more facts just as I have done in the last post. Go back and check the contribution to GDP in the last two years, only trading came second to manufacturing sector in GDP contribution.

You have refused to answer any of my questions, but rather you continue beating around the bush. Tell me the co operatives that can give loan to the MSMEs you are talking about, what do you think grows a nation economy? How many businesses in MSMEs produces most of the FMCG in Nigeria, you think it the local bread producers that grow the economy?

For your information, most businesses in SMEs depend on big manufacturers for raw materials for their products.

I know people who no nothing about the economy when I see one, always bringing forth data they saw online without a critical analysis if these data can be compared to developing economies like ours.

There is really no need arguing about the economy with you, because I so much believe that you know nothing about economics aside going online to download data as a point of argument.

For your information, I carried out my thesis all by my self, with the help of a professor, and can defend that anywhere in the world.

One last thing, I will tell you this as a trained economist, you do not compare different economies in order to getvyour economy working, so keep comparing Nigeria to UK shows that you know nothing about what you are saying.

Go to your state, probably ask the businesses over there to shun banks and collect loans from co operatives. Akara selling economist.

“In Nigeria, SMEs contribute 48 percent of national GDP, account for 96 percent of businesses and 84 percent of employment."

In 2022, MSMEs contributed 48 percent to Nigeria's gross domestic product (GDP), accounted for 96 percent of businesses

Goodlady:
What's the benefit?

DeLaRue:
It is a double edge sword.

As CBN rate rises, commercial banks will increase savings/fixed deposit rates, thereby attracting more savers who will be locked into 12 months or more term.

This will indirectly reduce the money available for spending and thus reduce patronage of many goods. As traders and manufacturers wait to exploit consumers with predatory prices, less and less people will buy their goods. As their warehouses pile up with unsold goods, they'll have to reduce prices, thus helping to reduce inflation.

Increasing interest rate will also mean the government can issue bonds at rates that will be attractive to foreign investors. More dollars should flow into the country.

The bad news is:

As Cbn increases interest rate, banks too will increase their lending rate with the likely result that:

1. Many businesses that depend on bank loans will lay off staff or even close down

2. There will be fewer new investments- businesses can't survive on 33% - 35% loan rate

3. More pain for the economy generally.

Unfortunately, with the amount of money printed by Mr Buhari's government, the CBN will have to keep increasing interest rate in order to mop up excess liquidity and control inflation.

Managing a large economy in times of crises is a sophisticated game of chess. For every positive steps, there are multiple potential negative consequences. There are usually no easy solutions.

Unfortunately for politicians, the public want solutions NOW! or they dabaru everything and even call for coup

The public is not interested in, nor do they understand economic theories.

Truths9ja:
during GEJ, it wasn’t increased to this level now 😳😳😳

Tareq1105:


All I know is that on the final analysis, Nigeria economy would recover and the lost glory of Nigeria shall be restored during the time of Tinubu APC presidency.

EconomistXplain:


I love your moniker

blacksam01:



Wen u need money for business, u go to thr bank and the bank charges u what is called interest rate....

When the banks need money, they go to the CBN nd thr CBN charges them what is called MPR still an interest rate...

Now the interest charged by the banks on u, if low, encourages u to borrow more, but if the interest rate is high, it discourages u to borrow.....this same mechanism of raising the interest rate to discourage borrowing and reducing it encourage borrowing is used by the CBN on banks..

Now if the CBN raises its MPR, it discourages banks from borrowing from them, and if the banks borrow less from them, banks will give less to business borrowers.....and if the banks went ahead to still borrow from the CBN at high cost, it will also raise borrowing cost (interest rate) on the businessman...

Since businesses won't borrow at high cost, it means new money supply to the system will b reduced nd with less and less money in the system, inflation will be reduced...

Inflation: it is the continuous rise in the price level of goods and services as a result of too much money in circulation

blacksam01:


Yes, u are wrong...the inflation is a cost push inflation...

Kukutenla:

My concern is the contraction.
We need expansion of our manufacturing sector especially now
Besides, the inflation seems to be as a result of supply shortage not demand pull. I hope I'm wrong though

RhinoChest:


It’s not txt book jargon to raise interest rate when inflation rate is high.

You want to attract savers!! Less money in circulation, making the value of naira gradually appreciating.

KomGhale:
Raise am!
Raise am!!
Raise am!!!

Acidosis:


I sincerely hope that you're not a graduate. That's the only way I can rationalize and justify this post.

"You have been dealing with data on GDP since your diploma days" but you don't know the contributions of each sector to your GDP? You don't know the difference between SMEs and MSMEs? You don't know the contribution of MSMEs to the employment rate? But you'll rather scream Dangote, bla bla? How many people in our generation work with Dangote? Even his (Dangote) employees rely on cooperative loans for survival. How often does Dangote consult your bank for a loan??

To discard your thoughts here, I had to check Dangote Cement's debt-to-equity ratio (I hope you know what this means?). Anyway, a debt-to-equity ratio of 23 per cent means that Dangote relies more on equity financing (77%) than loans (23%) for his business. Do you now see the relevance of data "abi you still won't chop statistics"?

No worries sha, whenever I have to discuss "copy and paste" final year project works like you did in your diploma days, I'll tag you.

My line of thought differs from whatever you have posted here. I apologize for the initial mention. It's such a waste of time and intellectual property.

But I'll try to help you for the last time.

Nigeria has 21 commercial banks
The UK has 375 commercial banks

Nigeria has 916 microfinance banks
The UK has 60 CDFI (aka microfinance banks)

Nigeria has 300,000 cooperative societies
The UK has 7,000 cooperative societies.


Now if you were a 4-year-old toddler, would you apply the same policy measures taken in the UK in Nigeria just because these policies worked in the UK? Answer like a 4-year-old. That's enough.

grandstar:


I pray it hits 30%.This will slow inflation down and make the Naira appreciate.

Omooba77:


https://dailytrust.com/just-in-mpc-raises-interest-rate-to-22-5/

Seun:
Reduction in inflation.

DeLaRue:
It is a double edge sword.

As CBN rate rises, commercial banks will increase savings/fixed deposit rates, thereby attracting more savers who will be locked into 12 months or more term.

This will indirectly reduce the money available for spending and thus reduce patronage of many goods. As traders and manufacturers wait to exploit consumers with predatory prices, less and less people will buy their goods. As their warehouses pile up with unsold goods, they'll have to reduce prices, thus helping to reduce inflation.

Increasing interest rate will also mean the government can issue bonds at rates that will be attractive to foreign investors. More dollars should flow into the country.

The bad news is:

As Cbn increases interest rate, banks too will increase their lending rate with the likely result that:

1. Many businesses that depend on bank loans will lay off staff or even close down

2. There will be fewer new investments- businesses can't survive on 33% - 35% loan rate

3. More pain for the economy generally.

Unfortunately, with the amount of money printed by Mr Buhari's government, the CBN will have to keep increasing interest rate in order to mop up excess liquidity and control inflation.

Managing a large economy in times of crises is a sophisticated game of chess. For every positive steps, there are multiple potential negative consequences. There are usually no easy solutions.

Unfortunately for politicians, the public want solutions NOW! or they dabaru everything and even call for coup

The public is not interested in, nor do they understand economic theories.

nwetadinobi042:
Does it mean an increase in the normal savings account interest rate per annum in our banks?

Acidosis:
There are over 300,000 cooperative societies in Nigeria (around the largest in the world). The UK has only 7,000.

These institutions have more than 30 million members in Nigeria.

SMEs contribute 48% to Nigeria's GDP.

Over 70% of business owners in Nigeria would rather depend on loans from cooperative societies than bank loan. These are the people controlling credits in Nigeria.

The above are fundamental datasets that are peculiar to the Nigerian economy. We need people to hack our peculiarities. Enough of using economic jargons from the West. Our lives and economic decisions shouldn't be solely based around the banking sector.

RepoMan007:
I doubt so. If it means increased interests, where will banks suddenly get the extra money to pay that interest from?
The banking sector in Nigeria is unique in the sense that it lends to mostly civil servants whose salary can be easily used to recover the loans. They dont believe in SMEs(and thats for good reasons off course), so how will deposits be used to suddenly generate extra profit from which they will pay higher interest?
The civil servants themselves are finding it hard to feed not to talk of repaying loans or taking new ones.

This whole chess-like move they are making is nothing more than a postponement of the d-day if import substitution is not aggressively pursued.

RepoMan007:
I doubt so. If it means increased interests, where will banks suddenly get the extra money to pay that interest from?
The banking sector in Nigeria is unique in the sense that it lends to mostly civil servants whose salary can be easily used to recover the loans. They dont believe in SMEs(and thats for good reasons off course), so how will deposits be used to suddenly generate extra profit from which they will pay higher interest?
The civil servants themselves are finding it hard to feed not to talk of repaying loans or taking new ones.

This whole chess-like move they are making is nothing more than a postponement of the d-day if import substitution is not aggressively pursued.

nwetadinobi042:
So the usual interest payable will still be intact?

Seun:
Reduction in inflation.