Accountant Decries Banks High Lending Rates

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A  former president of  Association of National Accountants of Nigeria (ANAN), Dr Samuel Nzekwe, has urged  the Central Bank of Nigeria (CBN) to address the problem of short-term lending by commercial banks.

Nzekwe made the call on Saturday, in Lagos.

He said that many banks were not solid enough to give out loans to prospective customers for long-term projects.

He, however, stressed that the banks’ short-term funds were very costly, stressing that they were also “counter-productive to the economy’’.

Ezekwe noted that in spite of the reform and recapitalisation in the banking sector, many commercial banks had yet to attain the status of mega banks.

The former ANAN chief stressed that the CBN and commercial banks were dependent variables in efforts to improve the country’s economy.

He particularly stressed the need for the CBN to mobilise commercial banks to increase their lending to the real sector.

Ezekwe said that banks had been giving out loans at exorbitant rates to the real sector, adding that the high interest rates could cripple the real sector.

He noted that real sector had been discouraged  from borrowing to finance investments because of the high interest rates on the bank loans.

Ezekwe reiterated that the real sector needed long-term gestation loans before they could start making profits.

He said that the lack of access to cheap funds by the real sector was limiting its ability to play vital roles in developing the nation’s economy.

“The only people who are taking advantage of the bank loans with high rates are the ‘fire brigade investors’ who are mainly involved in the import trade,’’ he said.

Ezekwe said that such investors were thriving because of the inability of the Nigerian economy to produce adequate goods and services.