The Director-General of Lagos Chamber of Commerce and Industry (LCCI), Dr Chinyere Almona, has attributed the high lending rate to the nation’s SMEs to the harsh business environment in the country.
Chinyere, who stated this over the weekend in an interactive session with some select media practitioners argued that the high lending rate also stemmed from the fact that many of the nation’s banks still consider lending to SMEs, and most private companies, as extremely risky.
The new LCCI’s boss however called on the federal government to continue to give more special intervention funds through the nation’s banks, to support targeted sectors of the economy.
Such funds, she added, should be made to have a repayment plan, unlike the current Social Investment Programme, which looks like grants without a repayment plan.
“With Cash Reserve Ratio at 27.5 per cent and the Liquidity Ratio at 30 per cent, the CBN has tried to push the banks to play the financial intermediary role in the economy.
“However, due to the harsh business environment, many banks see lending to SMEs and most private companies as extremely risky and which gives room to a high lending rate going to almost 25 per cent.
“With this high rate of lending, most companies are not able to take loans from banks,” she stated.
Chinyere also advised businesses on the need to leverage the 5 per cent GDP growth recorded in the second quarter of the year, to enhance their fortunes.
This, she added, could be achieved when such businesses begin to identify growth sectors and see how they can play in such resilient sectors to enable them to beat the disruptive impacts of the pandemic.
The LCCI’s chief executive described the recent GDP growth figures as an indication that the economy is opening and recovering faster than expected, with some sectors attracting special funding and interventions from the government.
“Companies can build capacity to take advantage of these opportunities to expand their business or venture into new businesses,” she added.
While commending the federal government and the national assembly for eventually coming up with the new Petroleum Industry Act (PIA), Chinyere believes the Act would go a long way in opening windows of opportunities in the oil and gas industry.
She argued that while the new law would put an end to the decades of uncertainties concerning the future of the oil and gas industry in Nigeria, it would also provide a robust legal framework that would support the reforms required to position the industry.