By Ignatius Okorocha
Senate has conclude plans to investigate commercial and financial institutions on the rationale behind the huge difference between deposit and lending interest rates.
To achieve this the upper chamber has mandated its Committee on Finance in conjunction with that of the Banking, Insurance and other Financial Institutions to carry out the investigation.
This was sequel to a motion, “Urgent need to reduce the gap between lending interest rate and deposit interest rate among commercial banks and other financial institutions” sponsored by Senator Solomon Adeola (APC Lagos West), who said during plenary yesterday that “there is a huge divergence between the deposit and lending rates in Nigeria.”
According to data from the Central Bank of Nigeria, CBN he quoted in the motion, savings deposit rate as at December 2019 was 3.89 percent while the prime and maximum lending rate were 14.99 percent and 30.72 percent in the same period.
Adeola maintained that “Nigeria’s current lending rate is one of the highest in the world”, explaining that while the prime lending rate, according to the CBN monetary policy rate, MPR is 14.99 percent, loans are available in commercial banks and others at an interest rate of between 22 and 27 percent.
He also lamented that the country’s inflation rate has risen to 11.98 percent as at December 2019, saying “this is the highest inflation rate between January and December 2019.”
“Latest data from the National Bureau of Statistics also shows that the inflation rate further rose from 11.98 percent in December 2019 to 12.13 percent in January 2020. This development negatively affects the deposit of bank customers in addition to the low interest rate on deposits,” he added.
The lawmaker further expressed worry that Nigeria’s inflation rate spread in some other African countries are not as wide as that of Nigeria.
“For instance, in Kenya, the deposit rate, savings rate and lending rate as at September 2019 were 6.89 percent, 4.58 percent and 12.47 percent respectively. South Africa’s overnight deposit rate and lending rate as at February 20, 2020 were 6.34 percent and 9.75 percent respectively,” Adeola pointed out.
Contributing, Senator Barau Jibrin (APC Kano North), described the practice as “deliberate attempt to shortchange the citizens”, saying that 24 to 30 rates are not only the highest in Africa, but a rip-off.
“There’s no way economy can grow under such situation. How can investors come into the country huge lending rate when no investors can do without bank loans,” he declared, adding that the CBN as the country’s apex bank should be summoned and call to order over bank’s policies that are anti-people.
Also, Senator Sabo Mohammed (APC Jigawa South West) said: “If the country must be industrialized, investors must have access to bank loans with affordable interest rates. Unfortunately, it is now being made difficult for the people and this is the reason why our industries are not working.”
In his own, Senator Bala Ibn Na’Allah (APC Kebbi South), lamented that Nigeria has one of the most unstable monetary policy in Africa and described National Assembly as the only hope for Nigerians to correct the excesses of government agencies in the country.
According to him, “80 percent of decisions by people in government are based on personal interest and it is this Parliament that has the power to reverse such policies.
“Last week, the CBN came up with a policy that you cannot transfer to a third party from your domiciliary account. Ordinarily, this shouldn’t have happened without coming to the National Assembly,” he added.
In his remarks, President of the Senate, Dr. Ahmad Lawan recalled that it was the same legislature that gave certain organizations power of regulations, adding that they can only be summoned when are not discharging their roles affectively and not at the point of policy making.
The Senate President, after adopting the resolution, gave the committees two weeks to report to the plenary.
