Senate blames CBN for economic woes
The Chairman of the Senate Committee on Banking, Insurance and other financial institutions, Rafiu Ibrahim (APC, Kwara) yesterday blamed the Central Bank of Nigeria (CBN) for the challenges facing the country’s economy.
Speaking during a stakeholder’s round-table meeting on the need to address increasing interest rates in Nigeria, Ibrahim said the mopping up of N5.7trillion in interest expenses negatively affected the country’s economic growth.
“It is on records that the CBN mopped up about N5.7tr in interest expenses for liquidity management, thereby sacrificing economic growth development and employment in the name of targeting inflation.
“Equally so, the reported explosive increase in net credit government in April 2017 annualized to 72 per cent compared to the private sector below 14.88 per cent target for 2017, portend grave challenges for future macroeconomic stability if allowed to entrench, crowding out private sector borrowing from the economy,” he said.
He said current regime of high interest rate continue to place a major burden on business investment and household consumption spending in Nigeria, thereby negatively impacting on the survival of businesses.
Ibrahim said despite negative economic indices, Nigerian banks continue to declare huge earnings and profit, which as at 31st March, 2017 increased significantly by 151per cent as Profit before Tax stood at N186tr as against N75tr in 2016.
He said the huge profits were derived from investment in risk free government securities such as bonds and treasury bills.
Senate President Bukola Saraki said the present interest rate was negatively affecting businesses in the country.
“It is inconceivable that businesses anywhere can survive on a 25-30% interest rate regime. How can an investor anywhere survive on these rates? How can they create jobs and make returns? But this is the situation our businesses currently live with.” Our correspondent report that the roundtable meeting was held in a closed session.