Private sector owes banks N18.7trn

The Organised Private Sector (OPS) owes banks N18.7 trillion as at September. Also, the banks’ credit facilities to the private sector grew by 0.5 per cent month-on-month. Government’s credit facilities from banks also rose to 0.9 per cent during the period to N2.8 trillion. Afriinvest, financial analysts, explained that the amount was still low contrary to the statutory obligations of the banks to the real sector and Small and Medium Scale Enterprises (SMEs) as directed by the Central Bank of Nigeria (CBN).

The OPS also decried the inability of the banks to give credit facilities to the real sector at a single digit coupled with the CBN’s foreign policy (forex) restriction and government’s policy summersaults, which has been responsible for the current phase out of SMEs businesses in the country. Already, there is a growing concern by the Monetary Policy Committee (MPC) that authorities had decided to play safe by investing in fixed government securities, forcing rate to come down to year lows. It was learnt that the economy has been under strain as banks restricted lending to businesses.

President, Nigerian Association of Chambers of Commerce, Industry Mines and Agriculture (NACCIMA), Chief Bassey Edem, said that due to the present economic woes in the country, the banks had neglected one of their statutory obligations by not lending money to the SMEs. Edem said banks lend at high interest rate of 28 per cent instead of a single digit interest rate as obtained by some government agencies such as the Bank of Industry and Bank of Agriculture respectively.

He added that business could not thrive in the real sector with the present economic woes unless something was done to salvage the nation’s economy from further depleting. The NACCIMA boss stressed that paucity of funds had made some factories to operate at 45 per cent capacity.

He noted: “The Nigerian economy is in crisis. A lot of factories are producing at 45 per cent capacity. This is not a good sign of a country that wants economic improvement.

So, there is urgent need to get the business environment to be conducive for operators. “Our counterparts in France are talking about interest rate of two per cent and 1.5 per cent and you see people who want to do business with their banks.

You will go to our own banks and borrow money at 28 per cent. How do you expect us to improve? So, there are a lot of rooms for improvement in Nigerian economy.”

Also, Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said that the most affected sector with this ongoing economic crisis were the SMEs owners.

He added that the present economic situation was making some SME owners to close shops since they could not compete under the present harsh business environment.

Yusuf noted: “Well, things are very difficult for SME owners, because the cost of operation keeps increasing due to infrastructure problems. “So infrastructure remains a big issue and because purchasing power is also dwindling, it is not easy for them to even push some of their products into the market place. And for those of them that are in production, competition from bigger companies is making it difficult for them. Competition from import is also making it difficult for them. So, it is a big challenge for many of them in the SMEs sector.”