Activities in the Nigerian money market may pick up from next when banks begin to respond to CBN's appeal that they should increase their lending to private sector operators.
The CBN Governor, Mallam Sanusi Lamido Sanusi, gave the directive in Abuja on Wednesday after the Monetary Policy Committee meeting.
He said that it became necessary to direct banks to put in place appropriate measures to boost credit flow to the private sector.
Sanusi said that there was the need for banks to enhance their credit activities in order to induce growth within a relatively short time.
“The committee expresses regrets over the growth in lending to state and local governments at the expense of the core private sector,’’ he said.
Mr Olumide Adegoke, the General Manager, Standard Alliance Insurance Company, said that the directive was a welcome development.
He said that the development would trigger economic activities in the country.
Adegoke said that the ability to effectively implement the policy would create job opportunities for youths.
The MPC meeting also decided to retain the Monetary Policy Rate at 12 per cent. The rate is the nominal anchor of banks’ lending rates.
Dr. Samuel Nzekwe, a former President of Association of National Accountants of Nigeria (ANAN), said that the 12 per cent was still high and would discourage manufacturers from taking banks’ loans.
“No investor will be willing to borrow money at high rate from banks, unless the returns on the investment are very high,” he said.
The issue of the autonomy of the CBN continued to generate controversy with the apex bank Deputy Governor, Dr. Sarah Alade, appealing to the National Assembly not to tamper with the autonomy.
She said that the CBN autonomy was in the interest of the country and any attempt to tamper with it or “water down it down” would put the economy in jeopardy.
Some banks continued to hold their annual general meeting during the week. They included First City Monument Bank.
The bank announced a loss after tax of N9.9 billion for its financial year ended Dec. 31, 2011 against a profit after tax of N7.9 billion recorded in 2010.
Mr Ladi Balogun, the Managing Director of the bank, said that the loss was as a result of additional net provisions and write offs totaling N32 billion.