Nigeria’s 14-percent lending rate, maintained since last July, is beginning to have debilitating effects on productivity, head of a local manufacturers’ association said on Monday.

Frank Jacobs told reporters that “a quick downward review of the lending rate by the Central Bank of Nigeria would accelerate economic growth and productivity in the country.”

“If manufacturers have access to low-interest rate as done in other climes, we will be able to employ more people and create wealth for the nation through tax,” Jacobs said.

In its bid to stimulate economic growth amid surging inflation, the Nigerian apex bank has continued to retain, since July 26, 2016, the 14-percent lending rate to commercial banks.

This had suppressed productivity and competitiveness among local manufacturers, also affecting economic growth, the manufacturers’ association chief noted.

The Monetary Policy Committee of the apex bank opened a two-day meeting on Monday to assess, analyze and review monetary policies in the country.

At the opening of the meeting, the Manufacturers Association of Nigeria (MAN) called on the committee to consider the downward review of the lending rate, noting with the appreciation of the local currency naira and the current drop in the inflation rate, a friendlier policy could stimulate economic growth and boost production.

MAN urged the fiscal policymakers to consider 5-percent concessionary interest rate for manufacturers to drive, saying this might increase the manufacturing sector’s contribution to the nation’s GDP.

“With concessionary interest rate, manufacturers would be able to expand their businesses, create wealth, boost productivity and catalyze economic transformation,” he added.

The manufacturing sector is responsible for about 10 percent of the country’s total annual GDP, according to the National Bureau of Statistics.

The Nigerian apex bank said the calls for rate reduction came mainly from an erroneous belief that reducing interest rates will spur credit growth in the private and public sector, which will help provide liquidity to stimulate consumption and investment spending.

It added that it would continue to deploy its development finance interventions to complement the overall effort of fiscal policy toward reinvigorating the economy. Enditem

Source: Xinhua/