As of the end of December 2022, the maximum loan rate in the banking industry was 29.13%, while the return on savings deposits was 4.13%.
Data on money market indicators received from the Central Bank of Nigeria were made public on Monday.
The report states that the prime loan rate was 13.85% and the interbank call rate was 12%.
Treasury bill rates were 4.35 percent, while deposit rates for one month were 8.15 percent, three months were 3.79 percent, six months were 8.68 percent, and twelve months were 8.22 percent.
The Monetary Policy Rate was 16.5 percent for the time period under consideration.
In its blueprint report for the growth, development, and sustainability of the micro, small, and medium-sized enterprise sector in Nigeria, the National Institute of Credit Administration stated that businesses needed to be supported with single-digit loans because high interest rates were hindering economic growth.
It stated that, “The higher the Monetary Policy Rate, the higher the interest rate charged on loans and lines of credits offered to MSMEs in the country. High interest rate is an albatross to any MSME.”
According to NICA, many MSMEs have to balance a number of economic concerns while operating their businesses.
It stated, “Because of the scale and wherewithal of the MSMEs, these factors have significant impact on their profitability. Thus, not to further aggravate the problems, it is pertinent for MSMEs to have ‘Not too difficult’ access to single digit loans. CBN in conjunction with the developmental banks should create more sector-specific funds which MSMEs can access at single digits and without so much difficulties or strenuous conditions.”
“Federal government can jump start growth and development in the MSME sector by implementing targeted tax incentive policies.
“While this may immediately lead to reduction in revenue generation of the government particularly in this dire period of dwindling government revenue, the medium to long term benefits on the economy cannot be over-emphasised. Federal Government can give tax incentives in specific areas.”
The Monetary Policy, according to the report, refers to the particular steps taken by the Central Bank to control the value, supply, and cost of money in the economy with the intention of attaining the macroeconomic goals of the government, while other times they are not.
It was noted that while monetary policy goals could differ from nation to nation, there were primarily two points of view.
“The first view calls for monetary policy to achieve price stability, while the second view seeks to achieve price stability and other macroeconomic objectives,” it stated
It said that the CBN, like other developing-country central banks, achieved the monetary policy goal by the amount of money supplied.
According to the report, “The policy interest rate determines the levels of the rest of the interest rates in the economy, since it is the price at which banks-obtain money from the CBN. These banks will then offer financial products to the MSMEs at an interest rate that is normally based on the policy rate.”