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“Increase lending to grow the economy”- MPC members

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In a bid to  improve and stabilize the Nigerian economy, some members of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has called for increased targeted lending to Micro, Small and Medium Enterprises (MSMEs).

MPC made the call during meeting held in January, and blamed banks for the sluggish economic growth in the country.

According to them, the banks refusal to lend to MSMEs is affecting the growth of the nation’s Gross Domestic Product (GDP), stressing that the increased lending to soft loans to small businesses and farmers is critical to achieving the budget 2019 GDP growth target of 3.0 percent.

MPC member, Dr. Robert Asogwa said that the inverse movement between bank total assets and bank total credit at the same time may could be as a result of banks’ excessive interest in securitization and other non-traditional banking activities rather than real sector lending.

He noted that the negative implications of this credit reluctance by banks in a period of economic recovery have been discussed severally and remain significantly limiting for the economy

 Robert also said that inflation rate of 9.98 per cent  could be achieved  through  the application of development finance through making soft loan provision by government through agencies like Bank of Industry (BOI), Bank of Agriculture (BOA), Nigerian Development Bank (DBN) and other micro-finance agencies to households and firms in the economy to stimulate economic activity.

He therefore urged CBN to ensure credit allocation through its intervention schemes to provide microfinance credits so as to reduce the cost of production in the agricultural and the SMEs sectors of the economy

Also speaking, CBN Deputy Governor, Operations, Mr. Ade Shonubi, stressed that the current situation of the economy calls for the need to intensify implementation of measures, including targeted credit delivery and the current infrastructure expansion by government to facilitate improved productivity and increased aggregate demand.

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