Increased interest rate to elicit tougher times, Obaseki tells CBN

GGodwin Obaseki of Edo State has predicted tougher economic times for the country, faulting the decision by the Central Bank of Nigeria ( CBN) to increase interest rate to 22.75 per cent. The Monetary Policy Committee ( MPC), last week, raised the Monetary Policy Rate ( MPR), also known as benchmarked interest rate, by 400 basis points to 22.75 per cent from 18.75 per cent.

Obaseki, who spoke at the yearly Edo Zone Bankers’ Committee Dinner in Benin City, cited potential adverse effect on businesses and the economy, reiterating the need to focus on productive activities.

He said: “The next few months will be difficult because the policies rolled out by the CBN will unfortunately not support growth in our economy. The interest rate is already high, and jacking it up will not allow small businesses access to credit to make them grow. “We must focus on the fundamentals, which are increasing production, making sure our citizens produce what we consume and depend less on imports. Our economic and monetary policies should not be determined by exchange rate alone.

“The issue of increasing the cash reserves in a bid to tighten liquidity is going to be detrimental to our economy. We should focus on fiscal issues to enable us to grow our economy, not panic about the interest rate. Creating jobs should be a priority for us as a nation.”

Commending the role of commercial banks in societal development, Obaseki charged them to come up with products and services that assist majority of citizens in these trying times. He reassured that his government would partner with the financial sector to cushion effects of the prevailing hardship in the polity.

His words: “We have built institutions, empowered our people with skills, and ensured they are gainfully employed and seven years after, we are ranked as one of the top states in terms of GDP growth in Nigeria. I am here to thank you for collaborating with us to grow the economy of Edo State in the last seven years. You have supported me to make progress this far. I thank each bank and management for taking advantage of the opportunities created in the last seven years, especially with our reforms and growth.

“In the last seven years, we have improved our security, ensuring our people walk freely as the ability to restore security gives confidence to our people, who returned to invest in our state.”