Cartels Running CBN, Banks –Senate

Senate has alleged that an unnamed cartel has taken control of Nigerian commercial banks to the detriment of the economy and small businesses operating in the country.

The chamber said that the cartel, in connivance with Central Bank of Nigeria (CBN) have refused to review the interest rates downwards, to reflect the economic mood of the country.

The upper chamber also accused commercial banks in the country and the Central Bank of Nigeria of strangulating Small and Medium Enterprises (SMEs) .

Deputy Senate Leader, Bala Ibn Na’Allah, who spoke on the issue, wondered why interest rates are high despite the fact that the country is in recession.

“The banks are run by a powerful cartel. They do what they like and jerk up interest rates. Over the years, we have seen the exchange rates go up, but it is not the same in other economies of the world. Nigeria has the most unpredictable economy in the world, and we have to be worried about this,” Na’Allah said.

Senate President, Bukola Saraki, who also gave credence to the claims, criticised what he described as the twin evil of interest and exchange rates.

He said it was unreasonable for companies to continue to lay off staff, while declaring huge profits annually and added that Senate will step in and ensure the right thing is done.

Saraki said: “We cannot live in a country where companies are folding up, yet, organisations are declaring mega profits. The committee should swing into action. Whatever comes of the committee’s work, we must see to it that it is implemented to the fullest by the Senate.”

In a motion sponsored by Senator Rafiu Ibrahim, Senate said the current Monetary Policy Rates (MPR) of 14 per cent has remained high compared to other developing nations such as Brazil, which has 10.25 per cent; Kenya, 10 per cent; South Africa, seven per cent; Rwanda, 6.25 per cent; Bangladesh, 6.75 per cent; Botwana, 5.50 per cent and many West Africa countries with single digit rates.

Senator Ibrahim said despite all the negative indices, banks continue to declare huge earnings and profitability which as at March 31, 2017, increased significantly by 151.02 per cent, as profit before tax stood at N186.155 trillion as against N74.160 trillion in December 2016.

He said: “Available and reliable records indicate that between January to December 2016, the CBN, as regulator of the banking industry, had mopped up about N5.784 trillion in interest expenses for liquidity management, thereby, targeting inflation at the expense of economic growth, development and employment.

“The current high interest rate continues to place a major burden on business investments and household consumption spending in Nigeria, thereby, negatively impacting on the survival of Nigerian businesses.

Meanwhile, the committee on Banking, Insurance and other Financial Institutions has been mandated to organise a session with the CBN, commercial banks, Nigerian Deposit Insurance Corporation (NDIC), other relevant stakeholders and industry experts with a view to finding immediate, sustainable and lasting solutions that would help usher in a new interest rate regime that supports enterprise development in Nigeria.