₦airaland Forum

jpphilips:
Your points sound valid but I have a funny feeling you enthrone the Bank's interest above the interest of the average Nigerian, your position is in tandem with the CBN, which tells me that it is one of those moves the CBN employ to save their interests with the banks.
Did you forget that "Low forex inflow" like you hammered triggered another monster called "low revenue" for the government which necessitated tax increase?
If you lower tax, how do you compensate for the revenue loss for the Government? you can not be asking the Government to meet up with its wage obligations and proposing tax cut, it's a total conflict of interest. Government wages alone is a value chain stimulus.

I support a lowered interest rate, the CBN's arguement on "forex pressure" is too weak to be taken seriously. How is the CBN meeting its forex obligations to manufacturers to be jittery of further pressure? he that is down fears no fall.
If Emiefele is scared people will take loans and import stuffs (forex pressure), has he considered that lower interest rate will not only spur importation, it stimulates SME's who are contractors to the manufacturers thereby keeping the manufacturers afloat, considering the amount of goods we lost to importation bottlenecks (actual cause of inflation), it behooves common sense to prioritize our manufacturers because they are the last source of goods we have now.
If the bottle contractor to NBL does not supply, how is NBL supposed to produce beer? even if CBN doles out $$ to NBL. However valid your points are, it still appeals to me very selfish and insensitive, We stand to gain more from lowered interest rate than otherwise.

The angle where the CBN said its current policy has attracted $1b so far, does it occur to you that these type of "foreign investors" do not invest in the real sector of the economy, they add absolutely nothing to our socio economic value chain, yet we prioritize their blood money over the well being of hard working Nigerians?

They are international blood suckers who feed on the carcass of dying economies, look at what they did to Greece, so long as the interest rate is high enough to accommodate their risks, they are more than willing to invest, in the short run, we may have the liquidity, but at maturity, you will regret taking their money, they hardly create jobs nor have physical taxable structures nor corporate social responsibility, they are what I call them, "BLOOD SUCKERS".

Be reasonable bro!!

blueto:
Buhari is indeed a socialist. How can you compel the banks to reduce interest rate and suffer lost? This will no longer motivate banks to give interest rates, is like doing business that isn't lucrative, with time you abandon such business. I thank God that Emefiele and the 10 committee members stood their grounds and declined such irrational directives from the “poorly qualified” finance minister.

vedaxcool:
[s][/s]

Govt cuts its own interest rate of borrowing to banks which in turn cuts its own interest rate. In the us the rates are so low close to 2% if I remember right.


I feel this Emefiele guy should be shown the way out.

OlujobaSamuel:
administrative charges is close to 100k bro, the interest rate is compounded, not simple interest model, so yes, i know what i mean, you will pay close to ar say500k. ask any loan officer ir credit risk mgt officer you know

vedaxcool:
[s][/s]

blueto: :
That is because in there is adequate money in circulation in the US when compared to Nigeria. The hurried TSA implementation has ensured that banks are being deprived of sufficient funds, hence the increase or sustenance of interest rates becomes inevitable, else they may run into liquidity. The blame should go to the govt for pernicious policies.

You simply have no idea of what we are discussing

Lakeland4321:
Ha ha so admin charges of 100k i.e. 10%! in addition to the 22%. You probably haven't worked in a bank before and are just speculating on 'hear say'. I have spent 10 years in Retail, Consumer and Corporate banking at several times and your postulation is bereft of any reality in the industry. Like I said desist from misinforming the public, you may end up making a public jest of yourself especially when other bankers read your statement which is very misleading

OlujobaSamuel:
hmmmmmm, fine i never worked in a bank, but so sure of what i said, kindly state the % of cot, wt that will be charge, or is that not part of admin charges? bro, it's my discipline but i never practiced, and you working in a bank for 10years does not translate to you having to deall with loan matters. now ans the question on cot and wht, and i said 22% upwards which(22%) is not even the norm.

vedaxcool:
[s][/s]

Govt cuts its own interest rate of borrowing to banks which in turn cuts its own interest rate. In the us the rates are so low close to 2% if I remember right.


I feel this Emefiele guy should be shown the way out.

EternalTruths:
In as much I want the interest rate reduced, but CBN has a point when it said our industrial production is low to meet up Demand which will cause inflation and Exchange rates to increase as too much naira will be chasing fewer goods/services/dollars.

So he proposed reduction in taxation and investment in industrialisation


So you can't apply US case to our case

Xapio:
thank you for schooling these APC's sycophants on NL here.. Emefiele explained why CBN should not lower interest rate and suggests what should be done first, that is giving tax incentives to low income earners and tax the high income earners more, that way, there will be balance and stability in the system... But they are not seeing that rather, they spew their tribally induced hogwash here

agrovick:
I smh at the comedians who posted the first 10 comments or thereabout on this thread.
A recession means little money is in circulation, a way to tackle this is to reduce interest rates so as to encourage borrowing and discourage saving so that money can be spent in order for the economy to pick up. Another way is for govt to increase her spending while also reducing tax collection in order to keep money in the economy.
Emefiele, Adeosun and Buhari - Which way abeg? Epp our country.

EternalTruths:
If you increase interest rate and you fail to increase industrial production, what will be the outcome especially in an economy like us that is import oriented

agrovick:
Increasing interest rates will cause a decrease in production as manufacturers will find it difficult to obtain capital to operate, meaning it's likely going to be cheaper to import than to produce locally. This will result in to redundancy of local producers and a strain on the country's reserve.

My opinion is subject to review by people who are more experienced.

EternalTruths:
It is also vice versa.

If you reduce interest rate and industries go and borrow to import semi finished materials, it will put more pressure on the forex which in turn will increase price of goods and services.


Nigeria is like a man trap between an angry bear and a hungry lion


The problem is our inability to produce locally as a result of our technological backwardness due to our outdated educational system

agrovick:
I agree with the bold but at the same time the finished product to be derived locally means there is a substitute available for consumption, the worth of the value added to the imported semi finished material stays within the country.

What do you suggest as the way forward?

Chukzyfcb:
when I read at comments like this one nairaland, I baffle at the level of reasoning. so so irrational and myopic. I can't believe you even gathered likes for this low level thought.
yes USA and England's interest rate is between 0.25% and 0.5% but do you know their inflation rate?
don't you know that inflation rate and interbank rate move hand in hand.
at USA the inflation rate currently stands at 1.1% while at england is at 0.3%. now compare it to Nigeria
where inflation rate is at 17.5% meanwhile MPR rate is at 14%, which country is lagging behind? which country is more generous in its rates if not Nigeria. you were so quick to dish out the inter bank rates without checking the inflation rate yet you feel you have made an important comment.
how will investors invest in the money market, when your interest rate is at miserly 14% meanwhile inflation is 17.5%, how will the banks keep up? or don't you know that they will be losing money by over 3%
emefiele is right, in the actual sense if he wants to chase inflation he should even increase the rates to meet up with the rising inflation but then what we have is stagflation which is were adeosun comes in, he can't be chasing inflation when nothing is done to stimulate growth in the country.
adeosun like obiano has done should give tax incentives and lower tax rates for certain commodities, that way inflation will be lowered thus reducing the MPR rate overtime.
don't mention USA or england here again, when Nigeria is even doing us a favour by having a Net interest rate of -3%. Rubbish

Lakeland4321:
ok let's take it one by one. First COT has been N5 per mille for a. Wey long time i.e 5k for every N1m it's been reducing in the past 4yrs and is presently N3 per mille so for N1m you will pay 3k plus vat of N150 only. Secondly WHT is only taken from customer investment income from the bank e.g. Fixed deposit, not from loans. Other fess are usually, management fees 1%, processing fees 1% and they are one off. You mentioned compound interest as against simple interest, the banking software ensures that the customer is only charged on what he 'draws down' on and debit interest is collected on a monthly basis. This means if the customer draws down the entire N1m, he pays the one off mgt fees, processing fees(10k each) and the N3150 COT. He wil then be debit 1/12 of 220k on a monthly basis which will be about 18k. This figure will remain recurring debit but could reduce if during the course of the facility the customer engages in the gradual repayment. This a picture of what could happen and not the 500k on N1m you mentioned. They only thing that can balloon your interest payment is if you default on your facility thereby attracting a default rate of about 40%.

jpphilips:
Your points sound valid but I have a funny feeling you enthrone the Bank's interest above the interest of the average Nigerian, your position is in tandem with the CBN, which tells me that it is one of those moves the CBN employ to save their interests with the banks.
Did you forget that "Low forex inflow" like you hammered triggered another monster called "low revenue" for the government which necessitated tax increase?
If you lower tax, how do you compensate for the revenue loss for the Government? you can not be asking the Government to meet up with its wage obligations and proposing tax cut, it's a total conflict of interest. Government wages alone is a value chain stimulus.

I support a lowered interest rate, the CBN's arguement on "forex pressure" is too weak to be taken seriously. How is the CBN meeting its forex obligations to manufacturers to be jittery of further pressure? he that is down fears no fall.
If Emiefele is scared people will take loans and import stuffs (forex pressure), has he considered that lower interest rate will not only spur importation, it stimulates SME's who are contractors to the manufacturers thereby keeping the manufacturers afloat, considering the amount of goods we lost to importation bottlenecks (actual cause of inflation), it behooves common sense to prioritize our manufacturers because they are the last source of goods we have now.
If the bottle contractor to NBL does not supply, how is NBL supposed to produce beer? even if CBN doles out $$ to NBL. However valid your points are, it still appeals to me very selfish and insensitive, We stand to gain more from lowered interest rate than otherwise.

The angle where the CBN said its current policy has attracted $1b so far, does it occur to you that these type of "foreign investors" do not invest in the real sector of the economy, they add absolutely nothing to our socio economic value chain, yet we prioritize their blood money over the well being of hard working Nigerians?

They are international blood suckers who feed on the carcass of dying economies, look at what they did to Greece, so long as the interest rate is high enough to accommodate their risks, they are more than willing to invest, in the short run, we may have the liquidity, but at maturity, you will regret taking their money, they hardly create jobs nor have physical taxable structures nor corporate social responsibility, they are what I call them, "BLOOD SUCKERS".

Be reasonable bro!!

Chukzyfcb:
reduce the rates and have more people access the naira right and what happens? inflation reduces? lool
have you forgotten inflation means too much money chasing few goods, inflation cannot reduced if other factors aren't considered
we need
- huge forex inflows in the country
- the transportation fare needs to be reviewed
- the electricity tarrif is high with no significant improvement
- tax incentives should be given to key manufacturing item
these four things are to be checked, reducing MPR rates while these factors aren't touched will do nothing but further increase inflation.
all hands need be on deck. emefiele cannot do it alone

jpphilips:
Your points sound valid but I have a funny feeling you enthrone the Bank's interest above the interest of the average Nigerian, your position is in tandem with the CBN, which tells me that it is one of those moves the CBN employ to save their interests with the banks.
Did you forget that "Low forex inflow" like you hammered triggered another monster called "low revenue" for the government which necessitated tax increase?
If you lower tax, how do you compensate for the revenue loss for the Government? you can not be asking the Government to meet up with its wage obligations and proposing tax cut, it's a total conflict of interest. Government wages alone is a value chain stimulus.

I support a lowered interest rate, the CBN's arguement on "forex pressure" is too weak to be taken seriously. How is the CBN meeting its forex obligations to manufacturers to be jittery of further pressure? he that is down fears no fall.
If Emiefele is scared people will take loans and import stuffs (forex pressure), has he considered that lower interest rate will not only spur importation, it stimulates SME's who are contractors to the manufacturers thereby keeping the manufacturers afloat, considering the amount of goods we lost to importation bottlenecks (actual cause of inflation), it behooves common sense to prioritize our manufacturers because they are the last source of goods we have now.
If the bottle contractor to NBL does not supply, how is NBL supposed to produce beer? even if CBN doles out $$ to NBL. However valid your points are, it still appeals to me very selfish and insensitive, We stand to gain more from lowered interest rate than otherwise.

The angle where the CBN said its current policy has attracted $1b so far, does it occur to you that these type of "foreign investors" do not invest in the real sector of the economy, they add absolutely nothing to our socio economic value chain, yet we prioritize their blood money over the well being of hard working Nigerians?

They are international blood suckers who feed on the carcass of dying economies, look at what they did to Greece, so long as the interest rate is high enough to accommodate their risks, they are more than willing to invest, in the short run, we may have the liquidity, but at maturity, you will regret taking their money, they hardly create jobs nor have physical taxable structures nor corporate social responsibility, they are what I call them, "BLOOD SUCKERS".

Be reasonable bro!!

nextprince:
Yet people like u will still be very noisy calling the same Buhari several names when the same CBN dish out a policy that seems unfavourable. But for refusal to comply with a directive from Finance Ministry, it is assumed that the CBN is an independent body. INCOHERENCE is another name for this.

OBAGADAFFI:
Lower taxes is better than lowering interest rates.

When you lower interest rates, you automatically have more money in circulation chasing fewer products. And most Bussiness will prefer importing thier products due to the high cost of manufacturing.

What the government needs to for on is the reduction in the cost of manufacturing in Nigeria,and lowering taxation can achieve that.

Chukzyfcb:
when I read at comments like this one nairaland, I baffle at the level of reasoning. so so irrational and myopic. I can't believe you even gathered likes for this low level thought.
yes USA and England's interest rate is between 0.25% and 0.5% but do you know their inflation rate?
don't you know that inflation rate and interbank rate move hand in hand.
at USA the inflation rate currently stands at 1.1% while at england is at 0.3%. now compare it to Nigeria
where inflation rate is at 17.5% meanwhile MPR rate is at 14%, which country is lagging behind? which country is more generous in its rates if not Nigeria. you were so quick to dish out the inter bank rates without checking the inflation rate yet you feel you have made an important comment.
how will investors invest in the money market, when your interest rate is at miserly 14% meanwhile inflation is 17.5%, how will the banks keep up? or don't you know that they will be losing money by over 3%
emefiele is right, in the actual sense if he wants to chase inflation he should even increase the rates to meet up with the rising inflation but then what we have is stagflation which is were adeosun comes in, he can't be chasing inflation when nothing is done to stimulate growth in the country.
adeosun like obiano has done should give tax incentives and lower tax rates for certain commodities, that way inflation will be lowered thus reducing the MPR rate overtime.
don't mention USA or england here again, when Nigeria is even doing us a favour by having a Net interest rate of -3%. Rubbish

jpphilips:
Lower interest rates will lower cost of manufacturing faster than Lower taxes. I am not sure there is any company in Nigeria whose Local tax peaks its recurrent expenditure, Nigerian companies that cook their books, bribe tax authorities?
Perhaps you should ask Ben Bruce why he has been unable to repay the 11 billion naira debt he has with Union bank, cost of funds is not a joke in Nigeria, trust me when i tell you that, even discounting invoice rate in Nigeria is amongst the highest in the world.