Minister of Finance, Kemi Adeosun, is calling for lower interest rates less than two months after the Central Bank of Nigeria (CBN) raised it from 12 per cent to 14 per cent.
According to Adeosun, lower interest rates implies the government can access more loans domestically without expanding its debt servicing costs.
The speaker spoke on Monday during a special interview on CNBCAfrica.
She said the central bank needed to re-evaluate the hike in loan fees which it announced at its last meeting in July, in order to support the Naira and attract foreign inflows into the security market. Adeosun also said that Nigeria’s foreign exchange problems will not be easy to resolve because of the import-driven nature of the economy.
She however, expressed strong belief that the government can ‘spend its way out of trouble’ through fiscal stimulus by specifically investing in infrastructure and ease of doing business.
She said: “What hurts us more is interest rates, we would like to see them reconsidered.
We need lower interest rates. If we drive the economy and there is growth, that is the payback. I would rather seek growth, we can manage inflation – let’s stimulate the economy.
“Our economy is largely import driven so we are always going to have a foreign exchange problem. At the moment we still have two rates for the Naira, it needs to be resolved – we need to narrow the spread.
“We need to move from a consumption led economy to an investment led –one. if Nigeria just does what it says it will do, which is investing in infrastructure and ease of doing business it will be fine.”
Meanwhile, the central bank is due to announce a new interest rate decision on Tuesday