Nigerian policy makers urged banks to turn on the taps and increase lending to stimulate the economy, or have access to a near-risk free way of making money choked off.
The West African nation’s Monetary Policy Committee is using persuasion to get banks away from parking their cash in high-yielding government securities to divert these funds to the private sector. Lenders in the continent’s top oil producer were burnt after sliding crude prices three years ago triggered a surge in bad debts, making the allure of state debt that pays average yields of 14.4 percent more appealing.
“For us to achieve growth those whose responsibility it is to provide credit must be seen to perform that responsibility,’’ Governor Godwin Emefiele told reporters after a meeting of the MPC in the nation’s capital, Abuja. The MPC wants the central bank “to provide a mechanism” for limiting the ability of banks to put customer deposits into government securities, he said.
Emefiele’s comments came after the committee held
its key interest rate at 13.5 percent, the lowest level since May 2016, in a bid to contain inflation, while still retaining some room to support the economy.