Sanusi fixes single-digit lending take-off for Dec


Friday, 17 September 2010


Central Bank of Nigeria (CBN) Governor, Malam Sanusi Lamido Sanusi, declared yesterday that lending rate within the financial system must drop to single-digit by the end of the year.


Sanusi, who spoke to foreign media in London, Britain, said that weak bank lending to the domestic economy had continued to erode the growth of the economy, which is a major worry within the Nigerian financial system, adding that efforts would be geared towards achieving that objective, without allowing the impact to jeopardise the country’s economic growth.


The development has remained a source of worry for small and medium scale enterprises, in the country that have always complained of difficulty sourcing long-term credit, despite the N100 billion ($4 billion) banking sector bailout by the apex bank last year, which has not changed the banks’ tightened policy on lending criteria.


According to the CBN, lending to the domestic economy, through the private sector, stagnated at 0.3 per cent in the first half of the year.


“Bank lending is a major worry because we would like to get more money into the real economy,” Sanusi said at a conference in London.


“Bank lending has not been growing as fast as we would like it to grow. So, as far as upside risk to inflation, it is not very high,” he added, while speaking ahead of a monetary policy committee (MPC) meeting next week.


He noted, however, that higher government spending, the coming of elections early next year, and the establishment of Assets Management Company (AMCON), are expected to soak up bad bank loans, which is expected to help put more money into the system, meaning that inflation risk was not zero.


“The risk is there with an election year and with money likely to come in with the asset management corporation. The discussions at Monetary Policy Committee next week will be on the relative balance of inflation and expenditure,” he said.


The country’s interest rates on saving have been at 6.0 per cent for more than a year with efforts geared towards reviving lending, despite double-digit inflation.


But the MPC said at its last meeting in July, that negative money supply growth and weak credit were still challenges.


Source: Proshare



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