Yemisi Izuora
Former Managing Director of Asset Management Corporation of Nigeria, AMCON, Mustapha Chike-Obi has said that intervention funds as a means of boosting access to finance isn’t as efficient as reducing interest rates.
“All these intervention funds, they don’t work. And let me tell you why they don’t work. If you give a man in agriculture an interest rate at 5%, you think you are helping him but everything around him is at 26%. So, he gets a little bit of relief on his financing, but he doesn’t get reliefs on his supplies, diesel, food, employees, so at the end of the day, those things he gets at 26% invades his 5%,” he said while delivering a lecture titled: “Repositioning The Nigerian Economy for Sustainable Growth”.
The lecture, organised by Finance Correspondence Association of Nigeria, FICAN in Lagos on Monday was to set economic agenda for the newly inaugurate government in Nigeria.
Chike-Obi said intervention funds also don’t work because “the default rates are as high as default rates of non-intervention funds. So, they don’t work. They are not very efficient”.
According to him, what the economic managers need to do instead, is to provide capital at a reasonable interest rates that work for everyone.
He said: “There must be access to capital at a reasonable price. With 26% interest rate, you cannot do a business successfully. So, we must find a way to provide interest rate to everybody at a reasonable rate. We must have an interest rate that will support our economy. And it cannot be much higher to the borrower at 12 to 15%. Every Nigerian should be able to borrow money at between 12 to 15%, so, we must have capital available.”
Nigeria needs ministries of infrastructure, revenue generation
Speaking further, he said it was about time Nigeria created ministries of infrastructure and revenue generation, with smart Nigerians heading those ministries to get the economy moving on the right path.
“We need policies and the way to get policies is to get everyone in the room. We have a man in Nigeria, his name is Bayo Ogunlesi. Bayo Ogunlesi runs Global Infrastructure Partners. He owns Gatwick and he owns a pipeline in Italy, and he is there building infrastructure all over the world. Why can’t we get Bayo Ogunlesi to come and be minister of infrastructure?
“We should have a ministry of infrastructure. We should also have a ministry of revenue generation. And if they (ministries) are too many, we can combine ministries of sports, women affairs etc, into health, education and welfare into one ministry. But revenue generation and (infrastructure) are our biggest problems and we must deal with them immediately,” he said.