NECA urges CBN to cut interest rate

The Nigerian Employers Consultative Association (NECA) has called on the Central Bank of Nigeria (CBN) to cut interest rates, noting that the tight monetary policy of the apex bank is suboptimal and has failed.

The President of NECA, MR Larry E. Ettah, disclosed this at a news briefing in Lagos, at the conclusion of a quarterly meeting of its Governing Council.

Ettah said Manufacturers and other employers of labour have thus had to cope with a triple whammy of recession, high inflation and high interest rates caused by the wrong policy choices.

“We call on the CBN to now move towards lowering interest rates and specifically to reduce the Monetary Policy Rate (MPR) which has been kept at 14% since July 2016.”

Ettah noted that another dimension of the negative implications of current interest rate policy is the phenomenon of “crowding out” of private sector access to credit by credit to government.

He said, Data from the CBN demonstrates that credit expansion to government is outgrowing by large margins credit to the private sector. For example, between February and April 2017, while credit to government grew by 3.10%, 27.81% and 7.54% respectively while private sector credit grew marginally in February by 0.10%; declined by 1.89% in March; and also declined by 1.48% in April on a month-on- both basis.

On a year-on- year basis, credit to government expanded by 15.43%, 19.76%, 37.46% and 42.15% in January to April 2017, while private sector credit grew only 19.76%, 19.17%, 17.96% and 13.23% in the same period.