The Manufacturers Association of Nigeria have called for interest rates on loans to reduce to between 3 and 5% per annum. According to an article in The Nation, the MAN President Dr. Frank Udemba Jacobs, who spoke during the week on the sideline of the association’s Council in Lagos, said:
“One of the challenges we have is funding.We are concerned with the high interest rate that banks charge manufacturers. Government is serious about diversification but they cannot diversify at this current rate. We hope the government will reduce the rate to three to five percent.”
Maximum Lending rate in Nigeria is currently between 24% to 28% and is likely to increase further following the latest announcement that inflation rate was now 12.8%. Asking for 3-5% interest rate therefore seems highly unrealistic and perhaps suggest he may have been misquoted. However, with the recent antecedents of the President one may not be surprised if this request is indeed authentic. Currently, the CBN through the Bank of Industry gives out loans at single digit to small businesses and select manufacturing businesses.
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The high interest rates,( between 24 to 28 per cent) is ridiculously too high and should be reviewed downward by the commercial banks. The Central Bank of Nigeria has a noble role to play by giving directive to these banks to seriously consider lowering the interest rate to between 7 to a maximum of 10 per cent! Mere looking at the set up of our banking system, evince a system that is not properly guided by the Central Bank of Nigeria! It appears each bank initiates it own lending system in order to maximize profits. Profits realized by these banks through excessive charges unfortunately, are not adequately passed to their respective shareholders and the public at large! The Central Bank of Nigeria should arrange re education for these bankers so that their activities should be geared toward promoting the welfare of the populace not just generating attractive profits. A general restructuring of our banking institutions is right now. The general economy should be rationally restructured to bring about legitimate profits to bear on the success of these banks.