The Lagos Chamber of Commerce and Industry (LCCI) has urged the Federal Government to peg the maximum interest rate of commercial banks loan to a single digit of nine per cent.
Its President, Mr Babatunde Ruwase, speaking at the Lagos State University (LASU), Ojo, 2019 International Conference on Accounting, Finance and Insurance, also called for a long term repayment schedule.
Ruwase spoke at the three days conference organised by the university’s Faculty of Management Sciences, Departments of Accounting, Banking and Finance and Insurance.
Theme of the conference is: “Financial Institutions and Sustainable Development; Perspective of Accounting, Finance and Insurance.”
Ruwase, represented by Mr Muda Yusuf, LCCI Director-General, said reduction of the interest rate would ensure an affordable credit for investors and would in turn facilitate a drive in the economy.
He said there was a major disconnect between the banking institutions and the real economy as the focus of the banks was on profit making.
According to him, for as long as the banks continue to focus on profit-making, development of other sectors of the economy in the country may not be possible.
He said this was so because key projects such as Agriculture, Manufacturing, Real Estate, Transportation, Solid Minerals, among others that could drive development required low cost and long tenure funds.
“There is no way you can develop an economy, if you do not invest on infrastructure such as agriculture, manufacturing, real estate, education, healthcare and transportation.
“These are the sectors that drive development in a country, and the type of funding they need does not require short term fund that would be costing about 25 or 30 per cent interest rate.
“It is not ideal for banks to declare billions of naira yearly as profit, in a country where other sectors of the economy are collapsing.
“The banking system should be better aligned with real life challenges and be more supportive of the economy, as consumer credit is what drives the economy of developed countries.
“Some people have developed high blood pressure because they took bank loans and have been unable to repay due to the interest rate,” he said.
Ruwase said there was an infrastructure deficit of about N3.4 billion in the country, adding that only the private sectors, through access to affordable credit, could intervene to addressing it.
He said there was a need to develop the right model of policies in terms of fiscal and monetary to ensure the flow of resources from the financial systems to developmental projects and the real economy.
“We can have a framework of credit guarantee to minimise the risk of borrowing, because one of the reasons why banks do not lend money to the real sector and SMEs, is because of the high risk,’’ he said.
Ruwase, however, called for a better rewarding system for farmers at the agricultural sector, if the country was determined to reducing poverty as the current reward template for farmers was not commensurable to their inputs or efforts.
He said the regulatory and intervention role of the Central Bank of Nigeria (CBN) and a credit guarantee scheme could ensure that the financial institutions supports the development processes better than what it was presently.
In his remarks, Prof. Taiwo Asaolu of the Obafemi Awolowo University (OAU), Ile-Ife, called for an integration of the old or disruptive form of technology and the new technology to advance an improved course for finance and other sectors.
Asaolu, represented by Prof. Kolawole Subair of Global Research Fellow, Centre for Entrepreneurship and Sustainable Development, Indiana University, USA, said Nigeria was still backwards in several areas in terms of technology advancement.
“This is because some of the feats we have been able to achieve are still developing. I believe that the disruptive technology is not to destroy, but to improve and how we do this matter,” he said.
According to him, there should be an education in terms of training and research, augmentation of the digital automation and building of new business models within the disruptive technology.
Also, Prof. Olanrewaju Fagbohun, Vice-Chancellor of LASU, said theme of the conference was apt, because the seemingly overwhelming challenges of the private sector and financial institutions were taken toll on the economy.
Fagbohun said: “The threat of economic stability posed by the mass exodus of the manufacturing firms to neighbouring countries like Ghana, South Africa, among others on the account of poor or unfriendly economic, financial and social infrastructure.”
According to him, the multiplier implications of these humdrums could only be imagined.
Fagbohun said the conference would provide an opportunity to cross fertilise ideas on core issues like: Fiscal Policy and Tax Reforms, Corporate Governance, Business Risk Management, the perfection and Implication of National Financial Intelligence Reform Policy, Forensic Accounting and Auditing.
The Vice-chancellor expressed optimism that the communique from the intellectual discourse would open a road map to ensuring not only the survival and growth of both the private and public sector.
He said it would also facilitate total re-engineering cum complete overhauling of the entire financial sector.
In his remarks, Prof. Babatunde Rahman Yusuf, Dean, Faculty of Management Sciences, said the conference was aimed at assessing the impact of financial institutions sustainability regulations on Nigeria economic development.
Yusuf said it would also show the gaps in the government financial framework with regard to the various policies put in place and discuss among other issues on how pragmatic financial regulations could be formulated and implemented.