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Thursday, 28 January 2016

MAN Says No To CBN's Eleven Percent Interest Rate




The Central Bank of Nigeria (CBN) on Tuesday, 26th January, 2016 kept its benchmark interest rate at 11 percent and left the naira exchange rate fixed despite a dive on the parallel market. Central Bank Governor Godwin Emefiele said the 12 members of the bank’s Monetary Policy Committee voted unanimously to keep the rate unchanged.

The naira exchange rate is fixed at a central rate that falls within N196 to N197, N212 to N213 to N215, N279 to N283 equivalent to a dollar, Euro and Pounds Sterling respectively. Other currencies aside the three mentioned, have been fixed at a given naira exchange rate by the CBN. 

The Manufacturers Association of Nigeria (MAN) reacted to the decision of the Central Bank of Nigeria (CBN) to keep the benchmark of interest rate at 11 percent, warning that the rate is considered to be high and cannot sustain the members of the Organised Private Sector (OPS).

The President of MAN, Dr. Franks Jacob, at an annual briefing in Lagos, noted that no local manufacturer can be able to survive with any loan above single digit interest rate in the face of the economic challenges in the country.

“For us the only interest rate that can be sustainable is three to five percent (3 - 5 %), as anything higher than that cannot work for manufacturers”, he said.

Jacob said the high rate of interest on loans from the banks is one of the reasons MAN has been kicking against Nigeria opening up its border to European Union Economic Partnership Agreement and others.

According to him, local manufacturers contend against several challenges from electricity, infrastructure and low technology, which are not burdens to the developed world.

He stated, “Cost of production out there is less, so if we open our border to them, it is like killing our local industries. But if we can get loan at a lower rate, then we will be able to compete favourably.”

The MAN President who commended the CBN action restricting the Bureau de Change (BDC) operators to sourcing their funds from the autonomous market revealed that the apex bank was actually heeding to the advice of the Organised Private Sector.
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