The House of Representatives Wednesday mandated its Committee on Banking and Currency to liaise with the Central Bank of Nigeria (CBN) to consider the possibility of reducing the Monetary Policy Rate (MPR) to single-digit.
The lawmakers argued that a single-digit MPR would encourage the growth of small scale businesses, expand the manufacturing industry and attract more foreign investors to Nigeria.
In adopting a motion sponsored on the issue by Hon. Nadu Karibo(PDP/Bayelsa), the House noted that the MPR of any country determines the rate at which banks access funds and the rate at which they also lend money to businesses and investors.
He observed that with the current MPR at 12 per cent, Nigeria ranked among the countries with very high interest rates in the world.
Available statistics showed that Switzerland and Japan have benchmark interest rates of zero per cent, United States has 0.25 per cent, United Kingdom, 0.50 per cent, Singapore has 0.03 per cent while Netherlands has 0.75 per cent. Others include Trinidad and Tobago, 2.75 per cent; Tunisia, 3.75 per cent; Togo, four per cent; Niger, four per cent and Namibia, 5.5 per cent.
Karibo said that currently lending rates hover between 17 per cent and 25 per cent in Nigeria, making it difficult for investors to raise capital or repay loans whenever they are able to secure one.
"Some investors raise money offshore. These investors still have to pay additional interest to local guaranteeing banks, resulting in the high cost of doing business in Nigeria. The result is often disadvantageous to our economy as unemployment, insecurity and capital flight often results from the very unfriendly economic environment caused by high interest rate," Karibo said.