House advocates single digit interest rate

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… Seeks to criminalize contempt of NASS

By IHEANACHO NWOSU, Abuja

The House of Representatives, yesterday, ordered its Committee on Banking and Currency to work with the Central Bank of Nigeria (CBN) to consider the possibility of implementing a single digit benchmark interest rate for Nigeria and report to it in two weeks. The resolution followed a motion raised by Rep Nadu Karibo, representing Ogbia Federal Constituency of Bayelsa State.

The motion was titled: ‘Need to Introduce a Single Digit Interest Rate in Our Monetary Policy Rate (MPR), to encourage the growth of small scale businesses, manufacturing industry and investors’.

Karibo stressed that the monetary policy rate of any country determines the rate at which banks access funds, and the rate at which they lend money to investors and businesses. He observed that Nigeria ranked among countries with very high interest rates in the world, stating that the resultant effect on the economy was that the lending rate rose to between 17 per cent and 25 per cent or more.

The politician regretted that the high interest rate would make it difficult for investors to raise money, stating that even when they managed to borrow, it would be difficult or impossible for them to repay.

He also regretted that the ugly situation had resulted in the collapse of many businesses in Nigeria while some investors in the country were compelled to borrow money offshore.

This, he further noted, resulted in high cost of running business in Nigeria. The Bayelsa-born politician further expressed worries that whether investors raised money locally or from outside the country, the result was always a disadvantage to the economy because unemployment, capital flight, insecurity and other social vices, had to emanate from the unfriendly economic environment caused by the high interest rate.

Karibo, who carried out a survey on interest rates of various countries stated that Switzerland and Japan have interest rate of 0 per cent each, while the USA and UK have 0.25 per cent and 0.50 per cent respectively. Others are: Singapore, 0.03 per cent, Netherlands, 0.75 per cent, U. A. E., 1 per cent, Trinidad and Tobago, 2.75 per cent and Tunisia, 3.75 per cent.

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  1. Lowering interest rates to about one percent will stimulate economic growth and fight inflation. Nigeria will experience economic boom as it was in the 1970s and 1980s again. This is the first time the Nigeria national assembly will propose a meaning fiscal policy that will help all Nigerians at home and abroad.

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