Reduce Lending Rate , Ambode Tells CBN
By Pelumi Olaleye
Lagos State Governor, Mr Akinwunmi Ambode said the only way to grow the economy is for the Central Bank of Nigeria to reduce the lending rate to about five per cent or lower.
He explained that at the state level, his administration created the Employment Trust Fund through which about N10 billion had been disbursed to the MSMEs at five per cent with over 6,000 benefiting. He said the CBN could replicate such at the federal level for the overall benefit of the people and the system.
The Governor, who was speaking at the opening session of the 9th Annual Bankers’ Committee Retreat of the Central Bank of Nigeria (CBN) on saturday held in Lagos, harped that it was time for the government to review such policies that inhibit growth, and as well come up with a well-functioning low cost financial system that will work for all Nigerians.
And for the country to meet its growth ambitions and achieve full economic potential, concerted efforts must be made to create at least four million jobs annually and as well jettison policies that stifle development.
While describing the theme of the retreat: “Improving Financial Access, Enabling Job Creation and Driving Inclusive Growth in Nigeria,” as apt, the Governor said same was at the heart of the nation’s economy and are important determinants of the country’s future prosperity, but that all hands must be on deck to create more jobs for the people and ensure 6.7 per cent annual growth rate.
“To meet our growth ambitions we need jobs. Figures from the National Bureau of Statistics show that in employment terms, from a labour force population of about 81 million people, we currently have 11.5 million people unemployed in Nigeria and 17 million people under-employed with the total employment is around 52.6 million while the working age population grows by 3.7 per cent every year.To make a meaningful dent on unemployment, under employment, and to reduce poverty, which is at over 60 per cent, we need to be creating at least four million jobs per year.
“Where do banks fit into all of this? Well, the reality is if we do not have a well-functioning banking sector, all of this is not possible. Both investment and day-to-day commerce requires the intermediation of banks. And while someone outside of the formal financial sector can in some cases make a living, the reality is that incomes of the bottom of the pyramid are increased when we have better financial inclusion but we are not there yet.”
The Governor, who particularly alluded to the strategy adopted in Kenya to deepen financial inclusion, said efforts must be made to ensure low cost access to banking services especially through mobile money. Adding that it was painful that mobile money had been so slow to take off in Nigeria despite huge population, saying it remained very low, increasing from just 0.7 million adults in 2014 to 0.9 million in 2016, despite the fact that there were about 58.2 million people who actually had mobile phones in 2016.
Governor Ambode also challenged the CBN, the Nigeria Deposit Insurance Commission (NDIC), commercial banks and other players in the financial system to decide the type of financial system that will really impact on employment and bring more people into the formal financial system.