Following lamentations by entrepreneurs and small scale business owners on low lending activities by banks, the Central Bank of Nigeria has said that it canÃ¢â‚¬â„¢t force any Deposit Money Bank to lend to customers.
The Director, Corporate Communications, CBN, Mr. Ugo Okoroafor, told our correspondent in an interview on Monday that there were a lot issues affecting lending in the country.
He said, Ã¢â‚¬Å“The CBN cannot force any bank to lend to a particular customer; we can only encourage them like we have been telling them to lend to the real sector. If you have identity as a customer, definitely you will get loans from banks. You cannot tell the banks to lend to someone without identity. Besides, there are other issues affecting lending that the CBN cannot control.
Ã¢â‚¬Å“We should also look at the challenges the banks are facing that are not making them lend like they used to. The CBN, on its part, is using its monetary tools to ensure that the banks lend to the critical sectors, but there are fiscal and security issues to this too. It is when all these things come to play that you see things working perfectly.Ã¢â‚¬Â
A report by FSDH Securities, which was obtained by our correspondent on Monday, stated that the current 12 per cent benchmark rate was affecting the small businesses conversely.
It said, Ã¢â‚¬Å“In our opinion, it is now time for the Monetary Policy Committee to consider monetary easing in order to boost growth and complement its effort of ensuring that credits flow to some select sectors of the economy, such as power and aviation. The activities of the small scale industries are negatively impacted by the current high interest rate in the country.Ã¢â‚¬Â
The Lagos Chamber of Commerce and Industry recently faulted the position of the MPC of the CBN over the retention of the benchmark lending rate at 12 per cent.
The LCCI, in a statement signed by its Director-General, Mr. Muda Yusuf, said the MPC decision to retain a regime of tightening was ill-advised and insensitive.
Yusuf said, Ã¢â‚¬Å“The reality of the current economic and business conditions is a cause for concern Ã¢â‚¬â€œ escalating unemployment crisis, profit margins are declining, consumer demand is weak, prohibitive interest rates, decelerating economic growth and high mortality rate of small businesses.
Ã¢â‚¬Å“These conditions call for policy choices that will stimulate the economy, even at the risk of inflation. Boosting economic activities will increase output and invariably moderate inflation. We appreciate the concern of the CBN about inflation, exchange rate stability and the preservation of foreign reserves. However, given the present socio economic conditions, stimulating the economy should be paramount at this time.Ã¢â‚¬Â