Experts commend CBN for reducing MPR, CRR

CBN-GOV-EMEF Some financial experts on Wednesday commended the Central Bank of Nigeria (CBN) for its decision to adjust downwards its monetary policy rates.

The experts, who spoke in separate interviews with the News Agency of Nigeria (NAN) in Ota, Ogun, said that banks would now be more comfortable to lend to the real sector.

Dr. Wale Adegbite, the President, Ogun Chapter of Manufacturers Association of Nigeria (MAN), commended the downward adjustment of the Monetary Policy Rate (MPR) and Cash Reserve Ratio (CRR).

Adegbite said the reduction in MPR was commendable because it would enable banks to lend at lower rates to the real sector.
The CBN announced the adjustment of the rates after a two-day meeting of its Monetary Policy Committee (MPC) in Abuja on Tuesday.

The Monetary Policy Rate (MPR) was adjusted from 13 per cent to 11 per cent, while the Cash Reserve Ratio (CRR) was adjusted from 25 per cent to 20 per cent.

The CBN said that the measures were to check inflation in the country.

MAN president said that the adjustment of the monetary policy rates would make more funds available to manufacturers to do business.

He, however, expressed regret that Nigerian banks preferred to invest in treasury bills rather than lend to manufacturers.

Adegbite said this preference by bankers was due to the high risk of doing business in the country.

“Commercial banks in Nigeria believe that the real sector finds it difficult to make profit due to infrastructure challenges like poor power supply and inadequate transportation system,’’ he said.

The MAN chief said that the Federal Government needed to address the nation’s infrastructural problems to enable banks to lend effectively to the real sector.

Dr. Titus Okunronmu, a former CBN Director, said lowering the interest rates was a welcome development, saying that there had been lots of complaints about the high interest rates in the financial sector.

He said the reduction in MPR and CRR would encourage banks to grant credit facilities to the real sector at lower rates.

“If banks can play their roles by targeting the real sector and people that need the loans, it will help the economy to grow and bring down inflation rate in the country,’’ he said.
Dr. Samuel Nzekwe, a former President, Association of National Accountants of Nigeria (ANAN), agreed with the other experts that the decisions of the CBN would increase productivity in the real sector.

Nzekwe said that since public funds had been withdrawn from the financial sector, banks were left with private sector funds.

He urged the CBN to bring down interest rates further, saying this would be good for the financial sector.

“The ability of the productive sector to borrow at lower interest rates from the financial institutions will lead to employment generation for youths and reduce poverty in the country,’’ Nzekwe said.

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