Nigeria Employers’ Consultative Association (NECA) has applauded the Central Bank of Nigeria (CBN) over its directive to the commercial banks to maintain a minimum Loan Deposit Ratio (LDR) of 60 per cent.
In a chat with journalist, Mr. Timothy Olawale, Director-General of NECA, said considering that access to funding is a major challenge for the manufacturing sector in the country, the CBN directive is a welcome development as the real sector has over the years suffered due to stringent conditions to access needed capital.
Olawale noted that the attempt by the CBN is worthy of commendation considering that over N1.5 trillion additional money will be available as credits to the real sector of the economy from this policy.
He noted that the interest rate charged by financial institutions is another source of worry for businesses. “With the volatility of the Nigerian economy and the unpredictable regulatory environment, the risk of a double digit interest rate could be too high for businesses, especially the Small and Medium Enterprises that are supposed to also be beneficiaries of the directive,” he said.
Olawale, therefore, urged the CBN to do more than give directives but also ensure the effective implementation and monitoring of the directive. “More deliberate efforts should be made to ensure a hospitable business environment that will make lending attractive and borrowing by the real sector even more attractive,” he said.