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Are urges banks to offer long-term loans

By on July 1, 2014

The Chairman, Kakanfo Inn and Conference Centre, Dr. Lekan Are, has called on financial institutions to offer long-term lending as well as reduce interest rate.

He said that such measures would promote development and business growth in Nigeria.

The industrialist and Director, Punch Nigeria Limited, spoke at the maiden edition of Capital Bancorp Plc’s Customers Forum held in Ibadan on Friday.

Are, who was the chairman of the occasion, said that banks’ rigidity with short-term loans being offered was responsible for the death of many business initiatives, adding that many investors were thrown out of business shortly after taking such loans.

He said, “Most of the banks in Nigeria only take money from customers; they do not offer any help when needed. They ask for unreasonable and impossible conditions before accepting to offer a little loan. They hide other charges and add-ons that increase their profit and kill investors. These are some of the reasons why small businesses are not growing in Nigeria – the investor will continue paying the banks high interest rate on the loan until his business packs up.”

Are recalled his experience as an investor. “When I was building the hotel (Kakanfo Inn) 26 years ago, most banks I approached were only ready to give me a loan that would be repaid in 24 months. It took me a long time to persuade one bank to give me seven years as repayment period. I even paid back in five years, two months. I am not happy that our financial institutions don’t give long-term loan. I have been a customer in a bank in the US from 1978. When the hotel was getting ready, I travelled to Germany to buy the fittings. I bought more than the money I had but the bank paid the excess of $87,000 I incurred with soft repayment plan. In Nigeria, you don’t get such facility. The conditions our banks give do not allow customers to even service the loan so they go bankrupt.”

He also berated banks for their foreign exchange service which he said was far above what the Central Bank of Nigeria approved.

The Chairman, Capital Bancorp, Mr. Olutola Mobolurin, said the forum was initiated in order to meet prospective customers in Ibadan and establish a bond with them ahead of its coming to the city.

“We want to meet them, familiarise with them and establish a bond with them before we open our Ibadan office this year. We have been doing business with institutions and individuals in Ibadan for 25 years but we have to come closer to them now,” he said.

Omobolurin added that gradually, the banking system would respond to the Nigerian environment and that the inability to give long-term loans and favourable interest was due to the unstable economic situations in Nigeria.

He said, “If the economy is stable, the banks will do long-term transactions and finance long-term assets. If power privatisation works, the banking sector will respond to the people’s needs.”

 

 

[Punch]