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Reps ask CBN to implement single-digit lending rate

By on February 21, 2013

The House of Representatives on Wednesday pushed for a single-digit benchmark lending rate in the country’s banking industry.

It directed its Committee on Banking and Currency to engage the Central Bank of Nigeria on the matter with a view to implementing a single-digit lending rate.

It said this would encourage the growth of small-scale and manufacturing industries.

With the benchmark lending rate at 12 per cent, the House said Nigeria ranked among the countries with very high interest rates of between 17 per cent and 25 per cent.

A member from Bayelsa State, Mr. Nadu Karibo, who sponsored a motion on the subject, told the House that high interest rates were discouraging investors from raising money to fund projects in the country.

“Investors may find it difficult to raise money, and when they manage to do so, it is very difficult or impossible to repay, and in most cases, these businesses collapse,” he added.

The lawmaker also said investors who raised money offshore still faced the challenge of paying additional interest to “local guaranteeing banks, resulting in the high cost of doing business in Nigeria.”

Part of the motion read, “Whether investors in Nigeria raise money from within or outside the country, the result is often a disadvantage to our economy, as unemployment, insecurity and capital flight often result from the very unfriendly economic environment caused by high interest rates.

“Switzerland has a benchmark lending rate of 0 per cent; Japan, 0 per cent; the US, 0.25 per cent; UK, 0.50 per cent; Singapore, 0.03 per cent; Netherlands, 0.75 per cent; UAE, 1.0 per cent; Trinidad and Tobago, 2.75 per cent; Tunisia, 3.75 per cent; Togo, 4.0 per cent; Niger, 4.0 per cent; and Namibia, 5.5 per cent.”

The motion was endorsed in a majority voice vote.