The Central Bank of Nigeria, CBN, has been advised to review its monetary control high interest rate policies in the country to save Nigeria’s economy from further crises.
The advice was given by a Professor of Banking and Finance, Professor Sebastian Uremadu on Wednesday while delivering the 60th Inaugural Lecture of Michael Okpara University of Agriculture, Umudike, Abia State.
Uremadu lamented that high interest rate fixed by the CBN makes it hard for companies and individual investors to access funds or repay the one taken in the past, thereby affecting foreign and local investors’s confidence in Nigeria’s business environment.
He also expressed worry that the CBN policy mandating Nigeria’s comercial banks to keep 50% customers’s cash with the the apex bank had widely affected the cash available to bank customers and the investing public.
“How can the banks be told to keep 50% of the customers deposit with the CBN.
“Where will the banks get the money to lend to the investors or fund investments and how can they have enough money to pay their customers?
“Interest rates fixed by the CBN is about the highest in the world and this scares away domestic and foreign investors from taking loans.
“Research has shown that these policies of the CBN, coupled with fuel subsidy removal, have greatly contributed to high cost of things and economic crises in the country”;, said Uremadu.
He said that FDI is a major catalyst for capital formation that could significantly bolster Nigeria’s economic development and challenged policy makers to foster a favourable investment climate to attract foreign and domestic investors.
He urged the Federal government to reduce Nigeria’s over dependence on foreign capital by increasing spending on key areas like health, education and infrastructure to drive economic growth.
He blamed macroeconomic variables like fiscal deficit, uncontrolled growth in money supply, high interest rates and exchange rate volatility for the rise in inflation.
He further said that much of the figures being released by the National Bureau of Statistics, NBS, may not be in tandem with the country’s actual economic data.
