Governor Godwin Emefiele of the Central Bank of Nigeria (CBN), has cried out over the outrageous interest rates microfinance banks in the country are charging on loans
Emefiele said the microfinance banks in Nigeria are not lending loans at single interest rates, adding that many small and medium enterprises are unable to access the Federal Government’s loans aimed at stimulating local production and boosting non-oil export.
The CBN boss made this known during a press briefing in Lagos at the end of the annual Bankers’ Committee Retreat with the theme, ‘Export-led transformation of the economy – Engine for sustainable inclusive growth’.
Emefiele said, “Those microfinance banks that we have today are not lending loans at single interest rates today; some of them are even lending money on flat. You borrow N50,000 for 90 days, and they expect you to pay another N50,000 interest to them in another 90 days. That is outrageous and that is too exorbitant.
“We feel that if we have these funds available in the Central Bank of Nigeria, through our own national microfinance, we can make access to funds to these people easy, even if it is not single digit per annum; even at 15 per cent, it is substantially lower than those who are borrowing money at flat arrangement basis. And if you don’t pay the N50,000 interest, they seize your bicycle or your car or machine.”
Nairametrics had reported that the Monetary Policy Committee (MPC) of the CBN has left the Monetary Policy Rate (MPR) at 14% and all other variables unchanged. Liquidity ratio was left at 30%, Cash Reserve Ratio (CRR) at 22.5%, and the asymmetric corridor unchanged at +200/-500 basis points.
What do the variables mean?
MPR is the interest rate at which CBN lends to the commercial banks. The MPR is the benchmark against which other lending rates in the economy are pegged and is usually used as an instrument to moderate inflation in the economy.
CRR simply refers to the ratio of customer deposits (i.e. your money in the bank) banks are expected to hold as cash or keep with the CBN.
Liquidity ratio refers to the amount of highly liquid assets that banks should hold in order to meet their financial obligations to customers.
The asymmetric corridor is the range within which the MPR can be increased or decreased.