Lagos based economist, Segun Sopitan, has projected that inability to access loan schemes would force companies to fold up with the recent increase in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN), from 13% to 14%.
Segun Sopitan, is the Head of Corporate Strategy at C&I Leasing Plc, he is a seasoned banker with over 12 years experience. He is a certified treasury professional (CTP). Mr. Sopitan, was the Managing Director and Chief Executive officer of SWAV Ventures Limited.
The current inflationary trend in the country, has become something of a major source of worry, to both the government and Nigerians, hence the reason for the decision. Unfortunately, this move may not be the answer to stemming the tide of inflation within the country, but it would have adverse effect on businesses and businessmen’s ability to access loan, in order to keep their businesses alive.
Sopitan, while speaking with iBrandTV, said, this move is bound to lead to commercial banks and lending houses increasing the rate at which they borrow money. When borrowing rate increases, businesses and businessmen would also be deterred from borrowing. Recall that, before the MPR was increased from 13% to 14%, average lending rate hovered between 25%-30%, which was even difficult for some businesses to pay back. The result of this 14% MPR increase therefore is that banks and lending houses would also increase their lending percentage to borrowers.
“With this upward move cost of goods and service will shoot up and it will ultimately affect the what the common man is able access as the prices of commodities will go higher, making it difficult for the common on the street to access some produce”
In His view, he said, what will then be the hope of an ordinary business man at keeping his business afloat? Because individuals and businessmen alike are primarily going to be denied access to loans in order to keep their businesses alive. Though the CBN is trying to constrain the supply of money in circulation, money holders would arguably benefit more as they would derive return on investment.
He also submitted that inflation in the country is also being fueled by the ongoing war between Russia and Ukraine. Sopitan, also suggested that the CBN should stop trying solve the problem of inflation with conventional methods rather we should try to think more out of the books in coming up with solutions that tailor made Nigerian problems