Amidst calls and anticipation of a rate cut by the Monetary Policy Committee of the Central Bank of Nigeria (CBN), director of Other Financial Institutions Department, OFID, CBN, Mrs Tokunbo Martins has disclosed that the apex bank is working on a gradual lowering of interest rate.
The MPC meeting is scheduled for this week after it missed the first one in January because a quorum could not be formed. The National Assembly had recently consented to the appointment of member of the committee and deputy governors of the CBN.
Speaking at a stakeholders’ luncheon and introduction of the N1 billion Investment Note of Crownrise Finance Plc, Martins said there is a concerted effort by the CBN and the government to increase lending to the private sector.
She noted that aside plans by the CBN to cut benchmark interest rate, the government is working on reducing its local borrowings so as to channel funds to the real sector. The director, OFID, however cautioned that a lowering of rates would be a gradual process.
She said: “Now the inflation rates have come down for fourteen consecutive months and currently at 14.33percent, I am sure those interest rates would come down gradually. I cannot promise it would come down immediately like we all want.
“The federal government and the central bank of Nigeria are doing everything possible to bring down interest rates. For instance, if you look at the yield for the 20 year federal government bond, it has come down from almost 20percent to 13 per cent.
“Even the yields on treasury bills is coming down and the reason for this is because the federal government is making a deliberate effort to reduce borrowing internally and increase borrowing internationally for two reasons because they don’t want to crowd out borrowers here and because it is cheaper to borrow abroad. Crowding out borrowing here means the interest rates so much higher for borrowers locally. So, I think that is one step in the right direction.”
Speaking on the proposed bond sale by Crownrise, Martins said, “I am very excited about this because this is the first feat of this nature in this sub sector of this issuance of N1 billion investment notes by Crownrise finance plc. This is an exciting feat and would mark a turning point in this sector because it relates to funds mobilisation, financial intermediation and income generation.”
Furthermore she said: “The loan portfolio has just been growing. From 2016 to 2017, it grew by 55percent and that was at a time when borrowing declined by 5percent in this sub sector. If borrowing declined by 5percent and the loan portfolio grew by 55percent what would have happened if borrowings actually grew? So a N1 billion bond into the market is a starter of how much more the loan portfolio would grow and if you have many more of this, it can only be good news.”
On his part, the managing director, Crownrise Finance Plc, Mr. Babatunde Rufai-Lariba said: “We have decided to rise to the occasion by mobilising the resources that would enable us support the economic players committed to tap into the opportunities for growth of the Nigerian economy, employment generation and prosperity for individuals and families.
‘‘We are about to float a N1billion investment bond and we are issuing that through a respected issuing house which is Tiddo Securities. Through this we would reach out to millions of small and medium businesses pushing to explore the huge opportunities offered by the nation’s economy.