Someone very close to me received a letter on Friday from a bank informing her of an increase in interest rate. It read in part “the Monetary Policy Rate (MPR) was increased from 9.25% to 12% and the Cash Reserve Requirement (CRR) of all banks increased from 4%pa to 8%pa, thereby necessitating an increase in deposit rates and cost of funds for the banks“. Mind you, you never get a letter from the bank informing you that your deposit rates have been increased by the same vein. In fact it’s still around 2-5% per annum. They now went on to say “accordingly, we are compelled to advice an increase in our lending rates to you on your loan with the bank by 3%. Your consumer loan would increase from 25% to 27% per annum effective October 14, 2011“. If you had annual fees of about 2%pa that takes you to 29%pa.
To add more insult to injury they they ended with “we would monitor developments in the money market and keep you abreast of any changes that would have an impact on the pricing of your facilities”. They never do, especially if it is a decrease. You have to write them.
This is not a good time to run a loan with a bank, neither is it a good time to keep your money in the bank. If uou have a loan and have received this kind of letter, get on the phone with your bank and tell them you wont pay 3%. Never be afraid to negotiate with your bank. Remember it’s a transaction. It’s not their fault and neither is it yours that things are this bad. That is the situation we find ourselves in as a nation. We have a CBN governor who continues to inflict pain on ordinary Nigerians in the name of curbing excessive government expenditure. Expenditure he blames for driving projected higher inflationary trend.
An increase in MPR to tackle inflation is not such a bad medicine. But it’s the wrong medicine in this case. The cost of goods and services continue to rise as cost if doing business in Nigeria is constantly increasing. The increase in the cost of doing business is mainly due to the lack of infrastructure in the country leading businesses to spend money providing that on their own.
The CBN, Ministry of Finance and all members of the economic team lack requisite ideas that can lead Nigeria at out its quagmire. As such they come up with policies that ten more to increase the suffering of Nigerians. Everyday they ask us to sacrifice, yet we provide everything ourselves. This is by far the worst economic put together in recent times. Under their watch the stock market has imploded, interest rates are at their highs, inflation will be high (as they predict), Naira has crashed, there are no jobs and the rich keeps getting richer. Shouldn’t we just “occupy” the whole country?
