FG Wants Interest Rates Below 10%
Asks CBN to act
From Cletus Akwaya and Kunle Aderinokun
The Federal Government has directed the Central Bank of Nigeria (CBN) to ensure that banks lower interest rates to a single digit of below 10 per cent.
Dropping this hint yesterday in Abuja at the opening of InvestNigeria International Fair 2004, Political Adviser to the President, Professor Jerry Gana, said the Federal Government wants the CBN to bring down interest rates to either 8 per cent or 9 per cent but "certainly not 10 per cent or above 10 per cent."
Currently the prescribed lending rate is four per cent plus the Minimum Rediscount Rate (MRR) which presently stands at 15 per cent. MRR is the rate at which the CBN lends to banks.
Many banks have, however, refused to abide, jerking up lending rates to between 22 to 27 per cent on the excuse that the Federal Governement has refused to reduce the cost of doing business in the country by providing the basic infrastructure.
Gana, however, explained that the directive was aimed at creating wealth in the country.
"We want to ensure that interest rates in the economy are brought down. It is not possible to take loans which commercial banks give and invest in industry," he said.
He expressed the determination of the government to give support to the SMEs. He said "the Bank of Industry (BOI) has been revitalized and refocused to give loans to productive sector. We want to encourage producers."
He said the Federal Government was determined to create employment, noting that it is for this reason the government wants to create conducive environment for small and medium enterprises (SMEs) to thrive.
Gana, who represented President Olusegun Obasanjo noted that "SME sector is a very vital sector that would help us achieve the key objectives of our development needs."
According to him, "we want to encourage SMEs in the country to take advantage of opportunities in the market place.
"The major objective of the government is to create home demand and allow producers to be viable. We have taken a decision that will help you to compete with goods produced elsewhere."
Gana, who is also the Chairman, Advisory Board of The International Multisec-toral Economic Development Organisation (IMEDO), pointed out that "the second objective is to reduce poverty because we are endowed with resources and skills to create wealth in this country."
In her welcome address, Director-General, Small and Medium Enterprises Develop-ment Agency (SMEDA), Mrs. Modupe Adelaja, said" whilst SMEs development may be recognized as veritable tool for broader economic and social development, there are myriads of problems the sector is experiencing."
According to her, "in many circumstances, policies affecting economic development are weighted in favours of large-scale enterprises, leaving the small and medium one in vulnerable position."
"For example," she noted, "many SMEs have limited or no access to finance, credit, technology, market information and development, management capability and technical support to name a few of the challenges facing SME operators."
Given this scenario, she said "in order to find a balance and jump-start the sector, SMEDAN intends to undertake: establishment of business support centres to provide business plans/ blue prints or business prototype, need assessment, product and market information, capacity building, skill acquisition, new technology, sources of funds, research and development; product/ enterprise cluster formation based on product which a particular geo-political setting has comparative advantage in; establishment of industrial parks to provide conducive environment for local industrial production, market and regulatory services, amongst others; trade exposition to bring together Micro, Small and Medium Enterprises (MSME) stakeholders, investors, market, new technology etc, such as this International Trade Fair.
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