The Group Managing Director, First Bank of Nigeria, Mr. Bisi Onasanya, on Monday said the proposed increase in Cash Reserve Ratio on public sector funds from 75 to 100 per cent would reduce the amount money banks could lend to businesses and the public.
As a result, he said the country needed to decide if it wanted a psychologically stable exchange rate or drive the growth of the real sector.
Onasanya spoke the Nigerian Summit 2014, organised byThe Economist in Lagos.
“The more of these funds that are restrained and tied down at the CBN, the less money there is to lend out and this affects the rate on lending. We need to decide if we want a physiologically stable exchange rate or we want to drive the real sector,” he said.
He also stressed the need for the country to decide on the policy path it wanted to pursue.
According to him, Nigeria has become “a nation that is fighting exchange rate without balancing the impact on growth.”
Onasanya said inadequate and, in some cases, non-existent infrastructure in the country had turned businesses into local governments as they had to provide all they needed by themselves.