By Musa Adamu
Senate Thursday mandated its Committee on Banking , Insurance and other Financial Institutions, in conjunction with those on Finance and Compliance, to investigate the rationale behind the huge difference between deposit and lending interest rates as obtained among commercial banks and other financial institutions.
This was sequel to a motion sponsored to that effect by the Chairman, Senate Committee on Finance, Adeola Solomon Olamilekan (APC Lagos West).
Senator Adeola in the motion titled “Urgent need to reduce the gap between lending interest rate and deposit interest rate among commercial banks and other financial institutions” said there is a huge divergence between the deposit and lending rates in Nigeria.
According to data from the Central Bank of Nigeria (CBN), he quoted , “savings deposit rate as at December 2019 was 3.89 percent while the prime and maximum lending rate were 14.99 percent and 30.72 percent in the same period”.
Adeola maintained that “Nigeria’s current lending rate is one of the highest in the world”, explaining that while the prime lending rate, according to the CBN monetary policy rate, MPR is 14.99 percent, loans are available in commercial banks and others at an interest rate of between 22 and 27 percent.
He also lamented that the country’s inflation rate has risen to 11.98 percent as at December 2019, saying “this is the highest inflation rate between January and December 2019.”
“Latest data from the National Bureau of Statistics also shows that the inflation rate further rose from 11.98 percent in December 2019 to 12.13 percent in January 2020. This development negatively affects the deposit of bank customers in addition to the low interest rate on deposits.
“For instance, in Kenya, the deposit rate, savings rate and lending rate as at September 2019 were 6.89 percent, 4.58 percent and 12.47 percent respectively. South Africa’s overnight deposit rate and lending rate as at February 20, 2020 were 6.34 percent and 9.75 percent respectively,” he added.
Contributing, Senator Barau Jibrin (APC Kano North), described the practice as “deliberate attempt to shortchange the citizens”, saying that 24 to 30 rates are not only the highest in Africa, but a rip-off.
“There’s no way economy can grow under such situation. How can investors come into the country huge lending rate when no investors can do without bank loans,” he declared, adding that the CBN as the country’s apex bank should be summoned and call to order over bank’s policies that are anti-people.
Also, Senator Sabo Mohammed (APC Jigawa South West) said: “If the country must be industrialized, investors must have access to bank loans with affordable interest rates. Unfortunately, it is now being made difficult for the people and this is the reason why our industries are not working.”
In his own, Senator Bala Ibn Na’Allah (APC Kebbi South), lamented that Nigeria has one of the most unstable monetary policy in Africa and described National Assembly as the only hope for Nigerians to correct the excesses of government agencies in the country.
According to him, “80 percent of decisions by people in government are based on personal interest and it is this Parliament that has the power to reverse such policies.