The House of Representatives has called for the establishment of Financial Services Commission (FSC) comprising both monetary and fiscal authorities just as it called for the review of high interest rate.
Chairman of the House Committee on Banking and Currency, Sir Jones Onyereri, who made the appeal at the end of their oversight visit to the Lagos office of the Central Bank of Nigeria (CBN), said the idea behind the FSC formation is to reduce high interest rate on government securities and reduce domestic borrowing.
He stated: “That is why we advise CBN to work with the Ministry of Finance to find a way of reducing the level of domestic borrowing. I think that would also help in respect to the reduction in the interest rate. I think they should be able to work out all these and that to improve our economy.”
The committees also expressed worries over the impact of the hike in the Monetary Policy Rate (MPR) on the Small and Medium Enterprises (SMEs). “We were a little bit worried because of the increase in the MPR. We believe as a committee that that was not the best of decisions. But having heard from the CBN, we still want to tinker on what led them to come out with that decision because, for us, we were looking at the bigger picture of still trying to grow the SMEs and the only way to grow the SMEs is to make credit accessible to them. But making credit accessible to them will not work out with very high interest rate. But we believe along the line, we will be able to create a perfect balance,” he said.
On the exchange rate, he said: “We have seen that it was a smart way to get out of the issue of devaluation because the truth of the matter is that even our President does not believe in devaluation, and there has been a back and forth argument whether we should devalue, and I think the apex regulator was smart enough to let the market determine the rate. And I think that is what they are still working on, and for any policy that comes out, it would be too early to say whether it is working or not, but I believe so far so good; the only difference is between Nigerians who would always try to make the worse out of every situation. We are looking at issues as it concerns forex to see whether CBN can bridge the gap between official and the parallel market rate. If that is well achieved, then the flexible exchange rate would change.”