Dr. Bukola Saraki, the Senate President of the Federal Republic of Nigeria on Sunday (June 4, 20170 promised that the Senate will look into the high interest rate charged by Deposit Money Banks (DMBs) in Nigeria. He said, “It is likely that we will debate it this week,” Saraki said during an interactive session with journalists in Ilorin. Saraki is from Ilorin where his family is revered for their political prowess.
According to Dr. Saraki, who earlier in life managed the defunct Societe-Generl Bank, the high interest rate is not good for the economy as the nation eases out of recession and targets growth. “This week we will debate it (interest rate), have a round table discussion with the Central Bank of Nigeria (CBN) and other commercial banks and talk frankly to ourselves.”
Saraki said it was not fair for the banking sector to be making astronomical profit while companies lose money and retrench workers. Again he added, “Hopefully, with the stability of the foreign exchange, we can now begin to address the issue of interest rate. “There is no business that can make money if you are borrowing at 28 per cent, it cannot work.”
He said the Senate would engage financial institutions to arrive at an affordable interest rate, adding, “If they refuse, the Senate may come up with legislation to peg the interest rate.” According to him, the banks are charging high interest rate because they have tied their assets in government securities and are getting 18 to 19 per cent. “They will tell you they are doing business, but in any business, there must be social responsibility.
“I promise Nigerians that we will find a solution to the high interest rate,” Saraki assured. The Senate president also said the upper chamber may limit the amount banks can put in government securities and channel the rest to areas like the real sector. He also expressed concern over the status of local governments in the country, saying virtually all local councils lacked the required finances to carry out their statutory obligations.
He said that to reduce the burden of responsibilities on local councils, the Senate may transfer the responsibility of funding primary education to states. “I am of the view that we should look at how state governments take over primary education. “This is an arm of government that cannot meet its constitutional obligations and you now put a very important one under it.
“95 per cent of local governments depend on state governments’ support to pay workers’ salaries,” Saraki said. He noted that the Constitution Review Committee of the Senate may grant autonomy to the local government in the country. The Senate president, however, believed that granting autonomy to local governments may not solve their problems.