The Central Bank of Nigeria (CBN) has said it would hold the over N700 billion liquidity occasioned by the recent reduction in Cash Reserve a Requirement (CRR) if banks fail to channel same to the real sector.
Consequently, the bank said that its accommodative stance would be defeated if the Small and Medium Enterprise (SME) are not supported for the growth of the economy.
The Monetary Policy Committee (MPC) had at its last meeting reduced the Monetary Policy Rate,(MPR) anchor rate at which it lends to banks to 11 percent from 13 percent, cut the Cash Reserve Requirement (CRR) to 20 percent from 25 percent and Asymmetric corridor around the MPR of +2/-7 percent.
The development had triggered bank’ repricing of deposit rates, particularly, savings from 3.6 to 3.3 percent, with the lending rate still maintaining its high mark of between 25 to 27 percent.
The MPC had emphasised that the liquidity arising from the reduction in the CRR to 20 per cent would only be released to the banks that are willing to channel it to employment generating activities in the economy, such as agriculture, infrastructure development, solid minerals and industry.
But, Godwin Emefiele, governor of CBN who spoke in Lagos at 7th Annual Bankers Committee retreat, decried that deposit money banks have not played an active role in support of SMEs.
About 99.95 percent of companies in Germany are SMEs, which employ 68 percent labour force with 37 percent corporate turnover.
Nigeria has 37 million SMEs, “can we answer the same question: do Nigeria SMEs represent 99 percent of the companies in Nigeria today ? Do Nigeria SMEs employ 68 percent and contribute 37 corporate turnover? he querried.
Emefiele said in the course of the next few weeks, the CBN would be unfolding a plan to create employment for at least 1million young graduates in Nigeria in 2016.
That, he said, would entail support from the banks and entail support from development institutions to see how these concretionary loans can be channeled to companies that are MSMEs.
“How do we channel these loans to them. These are young people, let us not assume that they will take a loan and not pay. We need to develop a scheme that will work, where they take a loan and they pay.
“We all need to think together and agree because there is no need to release the money to you and all you do with the money is buy treasury bills. It can’t continue. We need to agitate our minds, we need to think about the best ways to diversify this economy away from oil”, Emefiele said.
He said the details of the SME programme would be separate from the N220 billion launched in 2013, of which he said only half had so far been disbursed.
Speaking at the retreat, Akinwunmi Ambode, governor of Lagos State, said his administration was committing N25 billion in the next three years to the employment trust fund.
Ambode said it is an intervention fund which will attract low interest rate of not more than three percent.
“We will soon complete the legislative process of inaugurating our employment trust fund board of trustees through which our youths and entrepreneurs, particularly in the social enterprise sector, would be supported with start up funds”, he said.
Kemi Adeosun, finance minister, said in her remarks that she believes Nigeria can overcome its current challenges but that everyone has to be resilient in achieving that.
She said Nigeria needs to borrow to finance its projects, which she said would be spent on capital expenditure, 90 percent of projects are on recurrent and that needs to be changed, she added.
HOPE MOSES-ASHIKE
