Laudable but insufficient – LCCI
Highly commendable – ASBON
By Yinka Kolawole
Stakeholders in the organised private sector (OPS) have expressed divergent views on the use monetary intervention to mitigate the impact of the global Coronavirus (Covid-19) pandemic on businesses in Nigeria.
They spoke exclusively with Vanguard against the backdrop of the announcement by Central Bank of Nigeria (CBN) to reduce interest rate on its intervention loans from nine percent to five percent as well as floating a new N50 billion fund for NIRSAL Microfinance Bank for on-lending to small and medium enterprises (SMEs).
The Director General of Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, cautiously lauded the initiative but worried that it is not sufficient to tackle the problem. However, President, Association of Small Business Owners of Nigeria, ASBON, Dr. Femi Egbesola, described the move as one of the best initiatives in recent time.
Yusuf stated: “The N50 billion stimulus response by CBN is commendable and a step in the right direction. It would have some measure of positive enterprise level impact on businesses that can access the facility. It will impact their liquidity and operating cost. It also has a symbolic significance which we must applaud.
“However, like in most economic challenges, monetary intervention can only fix a fraction of the problem. There are fundamental macroeconomic issues that investors still have to contend with in the current circumstances.
“These are issues around the implications of the coronavirus pandemic for crude oil price, exchange rate depreciation, depletion of foreign reserves, inflationary pressures, stock market slump and general investors’ sentiments.
“These are critical drivers of investment decisions. Unless the external sector normalizes, there is very little domestic policy responses can do to fix these disruptions, especially in the light of the vulnerabilities of the Nigerian economy.”
On his part, Egbesola said: “This indeed is one of the best initiatives we have lived to witness in our time. The proactive and prompt action of CBN is highly commendable. So many small businesses and startups are already feeling the heat of the economic downturn caused by Covid-19. Prices of raw materials which are mostly imported have jumped to the roof and robbed off the profits business owners make from many products.”
“Having a timely intervention like this manner will go a long way to forestall the negative effects of Covid -19 on small and ailing businesses. We hope that this will not just be a policy statement but implemented all the way through and for it to get to the reach of the intended targets and not political allies.”