By Emma Ujah, Abuja Bureau Chief
The Central Bank of Nigeria, CBN, yesterday, said it would soon announce measures to limit the excessive appetite of banks for government securities.
Meanwhile, the Monetary Policy Committee, MPC, of the apex bank concluded its bi-monthly meeting, yesterday, with a decision to retain the Monetary Policy Rate, MPR, at 13.5 percent. The committee also retained the Cash Reserve Ratio at 22.5 per cent and the Liquidity Ratio at 30 percent.
The governor of CBN, Mr. Godwin Emefiele, announced this at a press briefing on the decisions of the MPC meeting in Abuja, yesterday.
According to him, the step became necessary to curtail banks’ focus on investing in government debt instruments, while neglecting their role of lending to the private sector, in order to bring about the much-needed growth in the economy.
Emefiele said: “According to our regulation, there is a particular minimum percentage of a treasury bill or government securities that the banks must invest in in order to remain liquid.
“But unfortunately and increasingly so, that the banks, rather than focusing credit to the private sector, they tend to direct their focus mainly on buying government securities.
The MPC has frowned at that and has directed the management of CBN to put in place policies or regulations that will restrict the banks from unlimited access to government securities.
“It is important and expedient that the committee gave this directive to the bank’s management because this country badly needs growth.”
Mitigating credit risks
In addition, the CBN boss said his team would come up with strategies to mitigate the credit risks of private sector lending which lead to a very high non-performing loans in the past, with a view to making it more attractive for the banks to lend to the private sector.
He said although the NPLs had improved to between 9-10 per cent, down from between 15-17 percent in the recent past, it remained higher than the minimum regulatory 5 per cent threshold.
To boost consumer credit
As part of the strategies towards boosting the economy, the governor said consumer and mortgage credit markets would be brought into focus in the industry.
His words: “The MPC also felt that the consumer and mortgage credit market must be catalyzed in Nigeria. That one of the inhibiting factors to growth is the fact that we have not been able to jump-start consumer credit and mortgage credit and business in Nigeria and the management of the bank will think of how to put in place regulations that will assist banks to ensure that consumer credit is improved again in Nigeria.”
Laments impact of insecurity on economic activities
Meanwhile, the CBN governor lamented the impact of insecurity on economic activities, especially farming appealing that that farmers be allowed to return to their farms.
He said: “There will be need for us to be thinking about how do we improve employment and reduce unemployment in the country.
“I must confess that there is a relationship between an improved employment, improved economy and the level of security in a country. So we all have to work together.”