The Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA) has blamed the Central Bank of Nigeria (CBN) for the hike in interest rate in the country and the attendant consequence of paucity of fund to the real sector.
NACCIMA noted that the 12 per cent Monetary Policy Rate (MPR) fixed by the apex bank was responsible for the rising cost of fund in the country and urged the Federal Government to intervene to make conditions better for operators of the private sector.
The President, NACCIMA, Mohammed Abubakar, who made the statement said a reduction in the MPR will invariably lead to the reduction of the interest rate in the country.
Abubakar, in a media briefing on the state of the nation, stressed that with a 12 per cent MPR, interest rate will continue to rise, thereby increasing the cost of borrowing, discouraging investments and hindering economic development.
“On monetary policy, while we have condemned the Central Bank of Nigeria (CBN) and its MPR at 12 per cent since 2012, which keeps the interest rate high and unaffordable to borrowers, especially Small and Medium Enterprises (SMEs). We therefore, counsel that business operators should not be allowed to continue to struggle with that kind of high lending rate which is based on a wrong monetary policy stance,” he said.
He advised that the “MPR should be reduced to less than five per cent so that banks can lend to the private sector at less than 10 per cent interest rate in order to make the Organised Private Sector (OPS) thrive and boost productive capacities to create more jobs to reduce unemployment and poverty level in the country.
“We also know that there are intervention funds from the CBN, Bank of Industry (BOI) and the Bank of Agriculture (BOA) that give soft loans to businesses, especially SMES. This is not enough and government must do more by adequately funding these institutions for effectiveness,” he stressed.
He said despite the epileptic power supply in the country, NACCIMA had expressed concerns over the fixed charge of between N750 and N1500 based on MYTO2 retail tariffs to residential houses saying that this charge has been considered too high for the average Nigerian who earn very low income and therefore urged for no fixed charge to consumers.
“Similarly, the fixed charge of between N90, 000 and N200, 000 based on MYT02 retail tariffs for commercial and industrial purposes is also considered too high for Micro Small and Medium Enterprises (MSMEs) in the country. Therefore, we urge that there should be no fixed charge to businesses and industries,” he added.
He said according to available statistics on macro-economic indicators and variables from the CBN and the National Bureau of Statistics (NBS), the official exchange rate stabilised within a narrow band of N156 and N157 to 1 US dollar while the Bureau de Change increased to between N165 and N170 per US dollar.
He noted that inflation rate went up marginally from 7.7 per cent in January 2014 to 8.3 per cent in July 2014 while Gross Domestic Product (GDP) growth rate dropped from 7.72 per cent as at end December 2013 to 6.21 per cent in the first quarter of 2014.
He stated that the association is still worried about the policy of 24 hours cargo clearance promised by the federal government which is yet to materialise saying that, the situation has been compounded with the concerns of the Pre-Arrival Assessment Report (PAAR), issuance and wrong computation, huge demurrage to shipping companies, gridlock on the access roads to the ports amongst others.
“Indeed, this development does not portend the country as becoming a preferred trade hub for cargo destination, hence, we urge government and her agencies to continue to make efforts to find lasting solution to this problem through the option of Public Private Partnership (PPP),” he said.
He said in spite of the enormous spending by governments on transportation infrastructure nationwide, the desired positive impact is yet to be felt by the business community and citizens stressing that, this is because a good number of about 50 per cent of the federal and state roads are still in deplorable conditions, compounding the already high cost of doing business in the country.
To address the issue, he suggested that the federal government should intensify efforts on its collaboration with the private sector through the PPP arrangement to ensure the provision of adequate and reliable transportation infrastructure in the country.
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