Business
MPC Assures On Interest Rate Review
Financial experts yesterday expressed optimism that the Monetary Policy Committee (MPC) would review the interest rate at its subsequent meetings when the 2018 budget would have been passed.
They told the Tide source in Lagos while reacting to the outcome of the first MPC meeting for the year that the Monetary Policy Rate (MPR) review would be expected after the passage of the budget.
Former President, Chartered Institute of Bankers of Nigeria (CIBN), Mazi Okechukwu Unegbu said that the MPC would tinker with the rate when the budget would have been approved.
Unegbu said that the members had no choice but to retain the rates the way they were at the moment because the budget was still pending as well as other economic factors.
He said that the capital market had been experiencing a mixed performance, while the interest rate for manufacturing companies had skyrocketed.
“When the budget is passed and implementation commences, things will start working. We will now know if they will do a downward review, retain or take it up.
“They are right to retain the rates the way they are at the moment, if they tamper with it, it will create more problems for them,’’ Unegbu said.
He said that apart from the budget, the Federal Government needed to embark on human capital development to achieve the desired growth, noting that money was not the major thing.
The Managing Director, APT Securities and Funds Ltd. Malam Garba Kurfi, expressed dissatisfaction with the MPC decision to keep Nigerians in suspense as to when the rates would be reviewed.
Kurfi said that the members would have done better by setting a limit to when Nigerians should expect a change in the benchmark interest rate.
He said that the committee would have set an inflation rate target when the interest rate review would be expected rather than allow people to guess.
According to him, banks keep their money in Treasury Bills (TBs) and Federal Government Bonds rather than lend to the real sector to accelerate economic growth.
“As of today, most banks lend to companies between 22 per cent and 30 per cent which is higher than the apex bank approved limit,’’ Kurfi said.
He said that the development if not addressed would affect economic growth and the three per cent Gross Domestic Product (GDP) projected by government for 2018.
Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., noted that the outcome was in line with expectations.
Omordion observed that the present socio-political environment did not give room for a rate cut due to uncertainties surrounding the coming general elections despite the positive economic data.
He said that rates remaining unchanged for nine sessions of MPC would favour foreign investors.
This may keep the inflow of capital to the economy and market, knowing that their funds are for different investment purpose and limit exposure to different markets.
Fund managers have the choice of where to put their funds for profit with less associated risk,’’ Omordion said.
He said that the outcome of MPC meeting would likely slow down the panic in the market ahead of first quarter companies earnings and first quarter economic data.
Mr Bayo Adeleke, immediate past Secretary, the Independent Shareholders Association of Nigeria, said that the committee was trying to be careful in terms of adjusting the key variables since they have not met for some time.
“This is good for our market (capital market). The stability will continue because the returns on TBs is low (10-11%) largely due to increase in price of crude oil,’’ Adeleke said.
The Tide reports that MPC members of the apex bank have voted at the end of the two-day meeting in Abuja to retain MPR at 14 per cent, alongside all other policy parameters.
Mr Godwin Emefiele, Central Bank of Nigeria (CBN0 Governor, said at the end of meeting that the committee was keeping monetary policy rates because of the fear that loosening the rates may lead to a rise in consumer prices.
“Payment of tuition fees for undergraduate/postgraduate studies shall be subject to a maximum limit of $25,000.00 per semester,” the Manual states.
The expansion of international card limits also reflects growing confidence among lenders that foreign exchange liquidity has improved enough to support retail dollar transactions.
Speaking recently at the BusinessDay 14th Annual CEO Forum in Lagos, CBN Olayemi Cardoso, governor of the CBN said buying and selling activities now increasingly determine outcomes in the foreign exchange market, unlike in the past when market participants relied heavily on routine Central Bank interventions.
According to Cardoso, Nigeria’s net foreign exchange reserves have risen from just over $3 billion at the start of the reform programme to more than $40 billion, while gross reserves have climbed to about $52 billion, providing stronger confidence for investors and enabling the Central Bank to reserve interventions for periods of market stress rather than day-to-day liquidity management.
The restoration and expansion of international naira card spending limits are increasingly being seen as one of the clearest signs that the benefits of the CBN’s foreign exchange reforms are beginning to reach households, students and businesses making legitimate cross-border payments.
The Secretary-General and Chief Executive Officer, WEC, Dr Angela Wilkinson, disclosed this in a statement, last Thursday.
“Nigeria’s participation comes at a pivotal time as the country seeks to expand energy access, strengthen energy security, accelerate gas development and mobilise the capital required for industrialisation and sustainable economic growth.
“WEC Nigeria will convene leaders from across the energy ecosystem, apply the WEC’s globally recognised Energy Trilemma framework to Nigeria’s unique context, and promote evidence-based dialogue, practical collaboration and informed policymaking.
“It will also ensure that Nigerian and broader African perspectives contribute meaningfully to global energy conversations,” she said.
Wilkinson expressed confidence that Nigeria would play a significant leadership role at the World Energy Congress scheduled for Riyadh in April 2027 and beyond.
The statement also quoted the Chairman of WEC Nigeria, Isa, as describing the country’s participation as an opportunity to deepen national and African leadership within the global energy community through practical solutions tailored to regional development priorities.
He said the platform would promote collaboration across sectors and attract sustainable investments into Nigeria’s energy sector.
The Chief Executive Officer of WEC Nigeria, Wunti, was quoted in the statement as saying that the council would connect leadership, evidence and investment to build a secure, affordable and sustainable energy system.
“This system will be capable of driving economic growth and shared prosperity.”
According to him, the platform will also connect Nigerian institutions and businesses with international knowledge, technology, partnerships and investment opportunities through the World Energy Council’s global network.
Recall that WEC, founded in 1923, is the world’s oldest independent and impartial community of energy leaders and practitioners, advancing informed, collaborative and practical action across the global energy system.