By DEMOLA AKINYEMI
ILORIN—The Federal Government has complained about the high interest rate of 20 percent being charged by banks on indigenous investors, saying that it is killing, even as it assured stakeholders that there would be combined efforts to bring it down.
The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, said this during her pre-commissioning visit to KAM Industries’ ultra-modern cold roll steel sheet mill complex, meant to produce car body sheets, in Ilorin, weekend.
She explained that zero import duty granted by the Federal Government to industrialists was to support industrialisation, job creation and agricultural revolution in the country.
On the high lending rate, she said the current interest rate of 20 percent by banks cannot encourage sustainable investment, particularly among indigenous industrialists.
She also said that the development had continued to kill the desire and commitment of indigenous industrialists in financing their capital projects capable of developing the nation’s economy.
The minister was apparently reacting to the claim of the Chairman of the company, Alhaji Kamaldeen Yusuph, that the interest rate on the six-year loan granted to the company by First Bank, to finance the project was 20 percent.
She said: “They got some resources from First Bank and we want to thank and congratulate First Bank for making available a facility for six years.
“They also got some resources from Bank of Industry and we are very proud that the Bank of Industry under Ms. Okputu has been able to support them.
“But there is a catch, which is that the interest rate on the resources that they have from First Bank, like many other banks, which is generally known to most of those who are in industry or small and medium scale enterprises, SMEs, is very high.
“Government wants the interest rate to come down because we believe that we cannot have sustainable investment at such a high rate.
‘Inflation is down’
“One of the things we have to do as government is to bring the rate of inflation down because banks surcharge an interest rate that is higher than the inflation rate to stay solvent.
“So we have been working harder together; between the Ministry of Finance and the Central Bank. And what has happened? Our inflation has gone from 12 percent in January to 8.7 percent now.
“So, we are driving it down, meaning that interest rate can also go down. So that is why I was asking the question, why is their loan at 20 percent? Because this Alhaji and Alhaja KAM here, they’ve got assets.
“They have been in business for 15 years; they have movable assets; they have immovable assets; they have a lot for collateral. So, someone like this should be enjoying much lower interest rate, not much above the 8.7 percent.
“It could be in the lower double digit. It could be 12 percent, it could be 13. But 20 is killing.
“So, we must work harder. We must have the cooperation of the banks, the Central Bank and the Ministry of Finance; the President is concerned about this and that is why we are talking to the banks.”
Vice Chairman of KAM, Alhaja Yusuph, said the vision of the industry was in consonance with Federal Government’s drive to speedily industrialise Nigeria and put the economy on sound footing.
Yusuf, who said that the cold steel rolling mill complex was the third in the country and the biggest and the best of the three, added that it was a multi-billion naira project comprising HR slitting line, push-pull, pickling line, cold steel rolling mill and many more.
She said: “The Cold Rolling Mill is an assembly of technology from 11 countries of the world, which includes Belgium, India, USA, Brazil, Germany, China, among others.”
Also speaking, Governor Abdulfatah Ahmed, who was represented by the Secretary to the State Government, SSG, Alhaji Isiaka Gold, called on the Federal Government to wave import duty for the farm input as it would go a long way in helping the state’s Shonga Farm scheme.