Written by Ebenezer Akinseloyin 
Emefiele: Awon goons me!
Goons: Poka!
Emefiele: Financial bajinatu fun awon goons me!
Goons: Poka!
Emefiele: Goons, let us agree firmly and stick to not reducing the interest rate!!!
Goons: Poka! Poka! Poka!
(above description is my imagination)

Else, how do one describe this unnecessary financial stubbornness and acute rigidity being displayed by the CBN’s governor and his cohorts within the MPC with regards to reduction of interest rate in Nigeria, especially during biting RECESSION? 

One need not be a financial expert, neither be a guru in financial mesmerizing, nor have deep understanding in financial jargons for you to adversely feel the effect of bad financial policies, however, I do understand that policies of any sort MUST create favourable enabling environment for businesses and citizens to thrive fairly and competitively devoid of any nepotism, favouritism and undue advantage.

It is shocking that despite the recession we are going through, CBN is bluntly refusing to reduce interest rate, this is utterly mis-normal, irritating and unpatriotic. Even without our economy being in recession, Nigeria cannot continue with the current double digit interest rate as it is prensently. Worse still is the arrogant defense by Mr. Moses Tule (CBN’s Director of Monetary Policy Department) on Sunrise Daily (Channels TV) on the 21st of Sept, 2016. He (Mr. Tule) pointed out that the economies of both Japan and U.K are not growing despite these countries reducing interest rate. 

I am not able to comment on Japan’s economy for a singular reason that I have never being to Japan, however, as I residein the UK, I can and will authoritatively tell Mr. Tule the many positives the reduction of interest rate has brought to the UK’s economy, but before then, here is a true story. Before the 2008 recession, a very good and close friend of mine was paying £800 monthly on his mortgage, he complained and lamented every month, because he was worried that his home may be reposed if he was unable to continue payment, as there was increase in the number of houses reposed.

The recession hit and Bank of England reduced the interest rate from 5.25% in 2008 to about 0.5% in 2009 even with further cut this year to 0.25% after Brexit. My dear friend who was paying £800 began to pay mortgage of £280 monthly on his mortgage till date, this simply means he has more cash to spend on things like food, clothes and essential utilities. Mr. Emefiele and Tule can do the maths if such action affect millions of households. It means extra cash for people to spend because Bank of England boosted spending confidence through cutting interest rate. I’ll let you to imagine the positive impact on the economy.

I heard President Obama in one of his several speeches during the recession saying “we have to spend our way through this recession”. This is because recession bites harder if citizens can’t or won’t spend, perhaps because consumer confidence is low or there is no cash to spend.

Below are the positives of reducing interest rate
Kudos to businesses operating in Nigeria under the various harsh conditions, you may not know what they are possibly going through until and unless you run a business. The truth is no serious economy (recession or not) operates on double digit interest rate. It is very important to know that we must keep our businesses (huge and SMEs) afloat through responsible government interventions during desperate times, by providing easy access to single digit business loans to enhance their operations. Infact, as we speak, in the UK a business not only get reduced/single digit rate, easy access to loans but also get few weeks/months break before repayment starts. With reduction and single digit interest rate, businesses can stay afloat, keep employing and creating more jobs.

Even in a country where the law works, employers may use recession as easy excuse to get rid of employees, therefore the last thing govt want is increase in unemployment, therefore,govt reduced interest rate and create other benefits for employers so as to allow them (employers) to hold on to employees, pay salaries and employees can in turn go to market to spend money. The more people we can keep gainfully employed, the more money that is available to be spent, the more we spend, the better our chances of beating recession.

I have seen this happened times over in the UK’s economy from 2008 till date, whenever interest rate is reduced, consumers have more money at their disposal, therefore increasing the purchasing power of every individuals. It is confidence building. Mr. CBN’s governor should/must accept the school of thought of “spending our way through the recession”. Reduced and single digit interest rate helps to reduce the cost of production, therefore, resources available go further than usual.

Aside from taxes, selling of crude-oil (as in the case of Nigeria) another form of raising funds to develop a nation is for Central Govt to borrow to finance project. Every govt borrow, responsible govt borrows for useful and worthy infrastructure as it is the case in London with the HS2 rail. Therefore, should our govt borrow at this current interest rate for infrastructural development means there may be fewer development and these few infrastructure might as well be enjoyed with sweat and blood by Nigerians. However, when govt is able to borrow at single digit interest rate, there’ll be more infrastructural development and citizens can enjoy the benefit with joy.

Lastly, Mr. Tule of the CBN opined that history has shown that reducing interest rate does not heal a nation’s recession, what he failed to point out is that the two countries he mentioned are not just stabilizing their economies but also healing from recession, part to full recovery.

Nonetheless, I ask Mr. Emefiele and Tule, is it ya interest rate? Kindly do what a sane country will do during recession with respect to interest rate.

It is better to reduce interest rate and nothing happens, than not reducing it and allow the economy to ruin, consequentially, impoverishing innocent citizens.

Mr. Emefiele, this is the time to be pragmatic, realistic and positively be solution oriented. This is the time to trash your “windows 98” financial beliefs for an “ios 8”. Kindly reduce the interest rate to single digit for the sake of economy growth, for the sake of Nigeria and Nigerians and our children.

Ebenezer Akinseloyin