The Governor of Central Bank of Nigeria, CBN, Mallam Sanusi Lamido Sanusi, has warned the Federal and State Governments to stop accumulating debts for future generation by reducing its current levels of borrowing.
He said the current level of borrowing, if unchecked, would result to unmitigated hardship for future generations.
He urged governments at various levels not to allow the present and unborn generations inherit the heavy burden of foreign debts, cautioning that Nigeria, currently under the suppressing weight of the heavy burden of foreign debts, is in great danger.
Speaking at the just concluded conference of Honorary International Investments Council (HIIC), in London, he warned of a great danger ahead if the nation continued to live above its realistic means.
His words: “We are borrowing more money today at a higher interest rate while leaving the heavy debt burden for our children and grandchildren. For example, if you receive your salary and everyday the money is not enough, you have two options to adjust yourself; Either check your expenditure or check your wages.
He urged the ruling class and the older generations to set good example and educate the coming generations for a better and secured future. According to him, such example should be set by not accumulating debt for future generations to inherit.
Meanwhile Sanusi Lamido Sanusi has defended his fiscal tightening stance, saying that the apex bank was extremely committed to defending the economy.
He said the tightening measures were adopted to defend the naira, create price stability and build reserves, as he argued that the hazards of lowering the rates at this time, were much weightier than the gains thereof.
He made the remarks while speaking on “Financial Inclusion in Nigeria” at the 18th Nigerian Economic Summit (NES#18) which ended in Abuja, where he also said the apex bank, in 2012 alone, recovered over N6 billion in charges from the banks, on behalf of banking consumers.
He said the monies were recovered by the apex bank’s consumer protection department, set up so banking customers can lodge complaints on problems they encountered in the industry.
Sanusi also disclosed that the banking system was working towards setting up a unified or single biometric data base, which would enable every single bank in Nigeria to have records of every banking customer.
According to him, this would help combat fraud and money laundering. He said consumer protection was simplified because unique identification had been a major problem to accessing finance.
In defence of high interest rates, Sanusi told summiteers there was no empirical evidence so far in the Nigerian context, that lowering interests would boost the kind of lending that was hoped for, especially for real sector growth.
The CBN has continued to maintain a tight monetary stance. In November, it kept the benchmark lending rate for the seventh consecutive time on hold at 12 percent, with a corridor of +/- 200 basis points around the midpoint; retaining the Cash Reserve Ratio (CRR) at 12.0 per cent and the Liquidity Ratio at 30 per cent.
This stance has expectedly resulted in higher borrowing costs to businesses and there have been calls to the apex bank to bring down rates, so that the economy can be stimulated.