Operators in the real sector of the economy have again flayed the effect of high interest rate on manufacturing and investment, asking the Federal Government to consider a downward review of interest rates, to boost domestic investment and the real sector.
The Managing Director, Vitafoam Plc, Mr. Taiwo Adeniyi, said that a critical thing that every manufacturer wants the government to do is to crash the interest rate window.
He decried that the monetary authorities do not fully appreciate the impact of high interest rate on investors, noting that it is hard to boost domestic investment with the current interest rates, especially in the real sector.
“The nation is in dire need of both domestic and foreign direct investments to turn around the economy, and this will not happen if government perpetuates high interest rate regime,” he said.
The Director-General, Lagos Chambers of Commerce and Industries, Mr. Muda Yusuf, argued that many businesses that ended up with Asset Management Corporation of Nigeria in recent times were victims of high interest rate, as it is a contributory factor to the rising level of non-performing loans in the banking system.
“Many investors depend on bank loans for the acquisition of fixed assets, machineries and working capital. Times like this demand that we should worry more about growth, jobs, and output, than inflation. In any event, an increase in output would have a moderating effect on inflation.
“The truth is that, it is hard to boost domestic investment with interest rates, especially in the real sector. Many of the businesses that ended up with AMCON were victims of high-interest rate. We need the investors to turn things around in the economy.
“This will not happen if we continue to perpetuate a regime of high-interest rate. This situation is further complicated by the high yield on government debt instruments. Funds are being moved from fixed deposits and savings account into the purchase of treasury bills,” he added.
