Why Interest Rate Is High — CBN - Business - Nairaland
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| Why Interest Rate Is High — CBN by phemmie06(m): 6:21am On Mar 13, 2017 |
By Emeka Anaeto, Babajide Komolafe and Prince Okafor The Governor of the Central Bank of Nigeria, CBN, Mr. Godwin Emefiele, at the Vanguard Personality Awards, last weekend took time to explain why interest rate is still high. He stated: “I sympathize with people when I hear the call on the CBN to reduce interest rates. I share their goal of a reduced single digit interest rate regime in Nigeria. But many people do not seem to understand that in times of high inflation, reducing interest rates make inflationary pressures much worse, with a second round effect of making economic growth even less possible. “It is also important to note that interest rates reflect both cost of capital as well as cost of doing business. If we can approximate cost of capital as the average saving interest rate, which is about 6 percent, what then accounts for lending rates at 25 or more percent? It is cost of doing business. For example, a typical Nigerian Bank must employ the services of policemen and other security people deployed constantly to protect its branches. The bank must also provide a significant amount for reliable electricity and broadband internet services to keep its systems running. These expenditures only further increase costs of doing business for lenders, a cost they must pass on to borrowers. Muda Yussuf “This is why the CBN’s fight to bring inflation down is strongly connected to our quest to ensure that lending rates also come down in due course.” But the DG of LCCI, Yusuf, articulated the agonies businesses and the entire economy are passing through in this circumstance of high interest rate. He stated: “We have monetary policy effects on business confidence. The monetary policy regime has not been supportive of efforts to rescue the economy. First, on account of interest rates, it is ranging between 25-30 per cent. How can domestic investors invest profitably when you are having an interest rate of 25-30 per cent? “There are no incentives for domestic investors to even play significant role, and these are the kind of things that shape economy and the investments people do. Because as they say, “an economy gets the kind of investments it deserves.” It is the incentives, the policy that determines the kind of business people will do, and that is why there are so many disincentives for investors to go into real sector (Manufacturing, Agriculture, Solid minerals) investments because of the issue of cost of fund. “How can you make any reasonable returns on investment at 30 per cent in agriculture, industry, property? Maybe it is buying and selling which is even very difficult now. So, monetary policy regimes have been big issue. “Then, there is the challenge of the way government borrows. Government’s borrowing has become a major problem for investors; government is borrowing at 18 per cent, 20 per cent; zero risks, how can the private sector compete? And that is why all funds in the economy now are going into treasury bills, they are going into federal government wallet, so that has made it very difficult for the private sector to play its role in the economy in terms of this rescue mission. “As it is now, there is no way you can compete with government in the financial market, even the banks, they would rather buy treasury bills and bonds than to give money to manufacturers. That is the kind of investments disincentives or structure that the policy has created.” http://www.vanguardngr.com/2017/03/interest-rate-high-cbn/ 2 Likes 1 Share |
| Re: Why Interest Rate Is High — CBN by eezeribe(m): 6:30am On Mar 13, 2017 |
I dedicate this FTC to the CBN Governor and Minister of finance. Even a 100level student of Economics or Finance knows something more than the both of them. Their Cluelessness is Monumental.I wonder how they schemed their way to the top. #SACK EMEFIELE AND ADEOSUN 14 Likes |
| Re: Why Interest Rate Is High — CBN by searchng4love: 6:40am On Mar 13, 2017 |
I don't want to hear why? I want to hear how the interest rate was brought down! 1 Like |
| Re: Why Interest Rate Is High — CBN by REDshouse(m): 7:01am On Mar 13, 2017 |
I think emefiele ideology belongs to the school of scrap he was making reference to bank expenditure as d reason why they can't reduce interest rate.. but he forgot that the high interest rate has limited borrowings to the few... has he forgotten that single digit interest rate will boost our economy beyond boundaries by encouraging more borrowers.. and increasing employment rate.. why care for banks that have multiple streams of generating income, from illegal deductions of funds, statement of account...alert charges...ATM charges...etc pls spare us all those thrash... 14 Likes 2 Shares |
| Re: Why Interest Rate Is High — CBN by REDshouse(m): 7:03am On Mar 13, 2017 |
I think he is Happy as AMCON is taking over all our industries cos in reality the interest rate is not feasible.. very soon AMCON will take over CBN.... 5 Likes |
| Re: Why Interest Rate Is High — CBN by eezeribe(m): 7:12am On Mar 13, 2017 |
Emefiele only knows how to impose levies on Deposits and withdrawals 3 Likes |
| Re: Why Interest Rate Is High — CBN by jonnpedro: 7:28am On Mar 13, 2017 |
Spoilt market |
| Re: Why Interest Rate Is High — CBN by Inception(m): 7:30am On Mar 13, 2017 |
 |
| Re: Why Interest Rate Is High — CBN by tunwumi: 7:30am On Mar 13, 2017 |
this is not true. they have borrowed money to people that will use it for luxurious life style only to use common wealth to intervene and write it off. and the circle continues. 1 Like |
| Re: Why Interest Rate Is High — CBN by lordsharks(m): 7:30am On Mar 13, 2017 |
They should try to reduce it by all means |
| Re: Why Interest Rate Is High — CBN by Emmanuel602(m): 7:31am On Mar 13, 2017 |
ARSENE WENGER MUST GO #WENGEROUT |
| Re: Why Interest Rate Is High — CBN by anonimi: 7:32am On Mar 13, 2017 |
It is because there are too many LEAKAGES in our economy. Too many cabal people in Aso Rock getting N3:$ exchange rate for buying properties in Dubai just like Buratai who remains PROTECTED by the Grand Sheikh of corruption. No more, no less. General Buratai Bought Second Dubai Property Days After Appointment As Chief Of Army Staff 3 Likes 3 Shares |
| Re: Why Interest Rate Is High — CBN by Daniel058(m): 7:33am On Mar 13, 2017 |
Those that earn in dollars are praying that it reach 1000/$1 one man's Ohhh God, is another Man's Thaannkk God.. My surface pump's coil got burnt, electricians prayers has been answered 3 Likes |
| Re: Why Interest Rate Is High — CBN by Benjom(m): 7:34am On Mar 13, 2017 |
Our past glory shall be restored... $1 = N10 1 Like
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| Re: Why Interest Rate Is High — CBN by Gwan2(m): 7:37am On Mar 13, 2017 |
Banks like BOI and BOA that are meant to stimulate the economy by its constant disbursement of single digit loan with a proper follow up plans in place to willing and qualified entrepreneurs will rather make the process of obtaining their loans insurmountable for eligible entrepreneurs while buying bonds, treasury bills and trading with the funds to obtain higher returns. NONSENCE  |
| Re: Why Interest Rate Is High — CBN by saturnjay(m): 7:37am On Mar 13, 2017 |
It still amaze me why PMB decides to leave Emefiele and Kemi in their current position, they just got nothing to offer, we have a CBN governor making a case and justifying the high interest rate by Nigerian banks, this is pathetic. 1 Like |
| Re: Why Interest Rate Is High — CBN by penzino(m): 7:39am On Mar 13, 2017 |
eezeribe:Exceptional Cluelessness |
| Re: Why Interest Rate Is High — CBN by Ayoswit(f): 7:39am On Mar 13, 2017 |
hmmm |
| Re: Why Interest Rate Is High — CBN by Clone2020(m): 7:41am On Mar 13, 2017 |
If you are in the US or have relatives in the US trying to send money to naija, I will exchange the funds at 400/$, simply deposit into my US bank account and receive instant funding into your Nigerian account. Don't bother with western Union and co, they exchange at 375/$ with fees and the exchange rate drops to around 345/$. Contact in signature. |
| Re: Why Interest Rate Is High — CBN by realGURU(m): 7:42am On Mar 13, 2017 |
Y |
| Re: Why Interest Rate Is High — CBN by MyGeneration(m): 7:43am On Mar 13, 2017 |
He should try and reduce it. Its really affecting Nigerians negatively |
| Re: Why Interest Rate Is High — CBN by emi14: 7:44am On Mar 13, 2017 |
REDshouse: Why can't CBN employ someone like you? |
| Re: Why Interest Rate Is High — CBN by TheFreeOne: 7:45am On Mar 13, 2017 |
Is Emefiele working for Nigerians or he's protecting the interests of banks  The dude is sounding like a misfit. 2 Likes |
| Re: Why Interest Rate Is High — CBN by emi14: 7:48am On Mar 13, 2017 |
REDshouse: Why can't CBN employ someone like you? But when you're employed obviously you will forget this brain in ur closet. |
| Re: Why Interest Rate Is High — CBN by Tripleb: 7:52am On Mar 13, 2017 |
eezeribe: Talk is cheap...if it takes being clueless to be there Then ur clueless!!! |
| Re: Why Interest Rate Is High — CBN by DirtyGold: 7:53am On Mar 13, 2017 |
Current CBN governor as man of the year? Joke of the year! What's tha business? |
| Re: Why Interest Rate Is High — CBN by WeRblessed(f): 7:54am On Mar 13, 2017 |
Do you mean to say CBN lend money to people? You said "they borrowed money to people". You can only borrow 'from' and lend 'to'. You do not borrow something to someone. You borrow from someone and lend to someone. Just wanted to correct you on that. You know my brother, no one is perfect, and English could be confusing sometimes. tunwumi: |
| Re: Why Interest Rate Is High — CBN by femarse: 7:57am On Mar 13, 2017 |
REDshouse: |
| Re: Why Interest Rate Is High — CBN by dallyemmy: 7:57am On Mar 13, 2017 |
To curtail the parallel market excesses, CBN needs to force them to open accounts where customers could pay in. POS could be used also. This would enable CBN to track their transactions regularly and the BVN of the customers. 1 Like |
| Re: Why Interest Rate Is High — CBN by habex005(m): 8:03am On Mar 13, 2017 |
not acceptable |
| Re: Why Interest Rate Is High — CBN by coolsegun2002: 8:08am On Mar 13, 2017 |
REDshouse:Where do u expect him to make reference from? Is it not these same commercial bank's that will borrow you the money. All he's saying is it is quite unfair for the CBN to force bank's to drastically reduce lending rates when the condition of the country isn't favourable. I once listened to the PRO of MTN back in 2005, and he said something I so much agree with.... "let government of Nigeria make business running a bit favourable by providing 24hrs electricity and see if call and data tariffs won't drop drastically. There's a mast beside my house, they don't run on PHCN at all..it 24hrs mikano.just imagine that running cost for all their mast nationwide, every one wants to maximise profit.. shareholders wants returns. Look at from the angle of ordinary cooked rice sellers. 50naira rice is now one spoon, very soon there won't be N50 meat again. Why? you have indirectly paid for kerosene or gas, water, cost of other, transport cost, ingredients and possibly cost of other labour hired in cooking the entire food. And this is what people are still clamouring for...the government is shouting corruption....let them first tackle some little things the masses shuldn't be worried about before they will now expect people not to take bribe or steal money, or impose rules on pple and business owners bank's inclusive Citizens of many schools abroad especially in Europe go to school for free even to PHD level, water is almost free, light is affordable, fuel which is only used for cars is sometimes not even needed cos there are free fast bullet railway transport system available to transport u across the country so there's very little reason to steal, and every reason to force bank's to lend us money to do business. 4 Likes |
| Re: Why Interest Rate Is High — CBN by ISTANDWITHBUHAR: 8:18am On Mar 13, 2017 |
anonimi: No one take this your useless spamming post serious anymore hahaha.. 1 Like |
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