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WATCH: Kemi Adeosun Confident that the Recession is Coming to an End Soon | Urges CBN to Lower Interest Rates

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Kemi AdeosunNigeria’s Minister of Finance, Kemi Adeosun says the recession in the country coming to an end as the fiscal authorities are working round the clock to reset the economy to put it back on a path of growth.

In an exclusive interview with CNBC Africa‘s Esther Awoniyi, she speaks on the various measures being taken to end the recession and reflate the economy.

Adeosun said that the federal government is focusing on releasing money into the economy so as to stimulate growth.

“I would rather seek growth, we can manage inflation – let’s stimulate the economy,” she said.

She also said that the Central Bank of Nigeria (CBN) will have to lower interest rates so that the government can borrow domestically to boost the economy, without increasing its debt-servicing costs.

“We need lower interest rates because when we are borrowing and interest rates go up, it increases our cost of debt service and it reduces the amount of money that is available to spend on capital projects.

The attempt was to manage inflation and the trade off for the economy right now is what is a bigger problem: Is it growth or inflation? For me it is growth. I would rather seek growth. We can manage inflation. I think for us, at the moment in the Nigerian economy, growth is the most important thing,”she told CNBC Africa.

Adesoun also said that the Executive is working with the Legislature to shorten the procurement process, so as to get funds for contracts released quickly.

Watch:

31 Comments

  1. Mannie

    September 19, 2016 at 8:38 pm

    Given how messy the economy is at the moment, there’s no other option than to reduce interest rates. It’ll act as a disincentive to save and enocurage people to take money out of their saving pots as it will become increasingly worth less; perhaps leading to further spending in the local economy.

    As for the cash injection, I would have preferred it to have a direct impact on people, rather than it being some sort of bank bailout. For instance, if such cash was used to pay workers being owed money, that can contribute towards a direct multiplier effect that may be more effective than a bank bailout. Banks often tend to sit on bailout funds thus limiting its impact on the economy.

    I just hope that we don’t sell off our assets. I’ve heard Dangote, Elumelu and Kachikwu mention this proposal. These people are up to something fishy methinks.

  2. Seun

    September 19, 2016 at 9:21 pm

    We have a.ways been in recession,hopefully the oil money drying up,will make us change our high taste for foreign goods.

  3. Babytohcute

    September 19, 2016 at 9:24 pm

    Wow! That’s all “they” could come up with. This is the same thing someone wrote that the UK government kinda did wrong.
    CBN should lower interest rates so that government can borrow domestically. Una never tire to dey borrow? Nigeria is always running on a budget deficit. It’s not only monetary policy that is needed here oh even physical policy is required. Government should try and reduce their cost. At least try to run on a budget surplus(that’s if we ever can) so that the surplus can be pumped into the economy. There’s only so much the CBN can do.

    At the end, this government has a lot of reading, thinking and analyzing to do.

    • Mannie

      September 19, 2016 at 10:29 pm

      Given that Nigeria has very low tax rates (about 7% for the average income bracket), the only way the government can have an (expansionary) fiscal policy would be to spend money. That money will definitely not come from taxes, and our oil revenue is at the lowest in recent memory. So, the government can only borrow to spend on providing infrastructure to boost the economy.

      Borrowing is not always a bad thing. As long as the government can divest such loans towards growth and development, it should be able to keep up with payments. Because our economy’s so messed up, we can’t afford to reduce our budget deficit (our credit ratings cannot help us to reduce our deficit and increase our debt, hence the reason why Buhari has been begging national governments for loans instead of IMF & World bank).

    • Lacey

      September 20, 2016 at 12:21 am

      @Thank you Mannie, people that know nothing about finance we come here to just comment! Right now it is cheaper for the government go with debt than equity , especially for long term infrastructure ,the cost of debt is cheaper,here Kemi is using the WACC principle where debt is cheaper than equity and thank you Mannie for breaking it down for people who come here to mislead people with very flawed analysis!with lower interest rates businesses in the private sector will be be able to borrow from banks at lower rates and will help boost the economy!Instead of running to Worldbank at every whim like her predescessor !welldone Kemi Adeosun!you have made me really proud ,Nigerians must adjust as in the years of plenty the country did not save,when oil was $120, now this woman has been working with oil our mainstay at $40 average price and driving the real sector as well ,through the diversification that her predescessor could not articulate properly!

    • Fleek

      September 20, 2016 at 12:40 am

      Lacey, you have a problem you know? You are gradually running mental on this blog. People like you who are too keen to prove who they are, are in real life very unworthy. Do your own analysis let people judge if you are actually intelligent or not. For now, all l see is a desperate wannabe fighting imaginary ghosts on BN everyday. Girl, get a life. By the way, your comments also come across as childish. Show some maturity!

    • Chidi

      September 20, 2016 at 1:26 am

      @lacey here you come again with ur ignorance defending an unqualified daddy’s connection Kemi. What do you mean government can’t use equity. Do you know what equity means, equalty= retained earnings + common stock. How would a government get either. Private sector uses equity because their balance sheet is Asset = liabilities +equity while governments and non profits is Assets =liability. Please stop trying to sound credible by talking about WACC cus that’s related to equity in private sector. Your really disgracing yourself defending this woman.

    • Lacey

      September 20, 2016 at 2:41 am

      @Fleek,I guess you just described your state of mind! So I will let you pass,as I do not have nothing to prove to nobody! My goal is to reach out to people that will go do their personal research to expand their knowledge and so if you are pained,good luck to you! I am not here for you,if my comments are making you run mental,then I apologize profusely ,but that will not stop me from making my points clear!

    • Tosin

      September 20, 2016 at 4:15 am

      @Fleek I suspect Lacey…may…be…the…Honourable….Minister…herself
      waaaaaaaaaaaaaaah dead!

    • Fleek

      September 20, 2016 at 8:50 am

      Don’t mind the urchin. Always talking crap. I am yet to see anyone demonstrate ignorance so happily. She is so brilliant, yet no single blue chip org agreed to file residence permit for her to remain in England. All of a sudden, she is now the Minister of Finance. UEL Alumi. Nigeria Kangboshi.

    • Mannie

      September 19, 2016 at 10:32 pm

      Given that Nigeria has very low tax rates (about 7% for the average income bracket), the only way the government can have an (expansionary) fiscal policy would be to spend money. That money will definitely not come from taxes, and our oil revenue is at the lowest in recent memory. So, the government can only borrow to spend on providing infrastructure to boost the economy.

      Borrowing is not always a bad thing. As long as the government can divest such loans towards growth and development, it should be able to keep up with payments. Because our economy’s so messed up, we can’t afford to reduce our budget deficit (our credit ratings cannot help us to reduce our deficit and increase our debt, hence the reason why Buhari has been begging national governments for loans instead of IMF & World bank).

    • Lacey

      September 20, 2016 at 7:23 pm

      @Fleek you that have residency in the UK,even citizenship sef ,what have you accomplished with it nothing!You are obviously pained she left you’ll broke ass behind in London to continue with your pay check to pay check lifestyle or at most you work for TFL as a train conductor or driver or work as carer for the elderly @Chidi ,I am so laughing at you right now ,as your level of daftness has no pair!so my dear read theory and apply it when they say M&M theory you apply it to any model you are working on and when you are calculating NPV ,you just use for companies abi!please go and educate yourself , the proponent of M&M theory worked across finance, economics ,treasury and for your information theories are used to build models, as you have come here to disgrace Chicago Booth time and time and again! I have just be rotfl at your high level stupidness ,as this is the last reply you will get from me going forward , as it is very clear that your reasoning faculty is not coordinating properly and so ,I just wasted 5 minutes from my 24 hours tight schedule on a schooled olodo!!!

  4. Babytohcute

    September 19, 2016 at 9:28 pm

    Fiscal policy*

  5. tunmi

    September 19, 2016 at 9:37 pm

    Yes CBN!!!!! Please lower rates not just for govt borrowing but also for small businesses and future home owners

  6. Chidi

    September 19, 2016 at 9:41 pm

    ????? this is an administration that increased the interbank interest rate to 14% three months ago and now they are talking about lowering, lol confuses fools. I pity Nigeria, when your vote is blinded by bigotry, hate and tribalism you tend to elect the worst possible option.

    • Mannie

      September 19, 2016 at 10:22 pm

      Surely that must be amongst the highest in the world!! Countries like the UK and US keep such rates at less than 1%. With such exorbitant rates for transactions that occur daily, it’s no wonder banks are chasing borrowers for NPLs these days.

    • Chidi

      September 20, 2016 at 1:41 am

      Yea but 14% is actually low because inflation is at 17.6% so lowering the interest rate won’t work. It’s definitely unrealistic because to caculate interests rate charged is inflation +required rate of return that means 17.6% + X . But If the government takes a conservative path we should see inflation + libor. Libor fluctuates at 1% and lower anything less than 17.6 +1 will have to be subsidized.

    • EE

      September 20, 2016 at 2:36 am

      But? But? CBN…………independence????

      Emefiele gets far much slack.

    • Mannie

      September 20, 2016 at 8:41 am

      You’re right about the value of the interbank rates. I was looking at the absolute value of the interbank rates, rather than compare it with the relative inflation rate. Nonetheless, we will have to reduce interest rates to encourage consumer spending, private investment and job creation. I can’t envision another solution; our economy is too messed up to apply any other means in my opinion.
      BTW, the 3-month interbank rate for this quarter released on Friday stands at 17.8%. With such values too close to inflation, I won’t be surprised if banks begin to use their capital base unsparingly for transactions instead of engage in O/N OTC transactions within the financial markets; and we both know what the consequences of that could be.

    • Philip

      September 20, 2016 at 10:15 am

      CBN is independent off the FG… lets do our home work well.

  7. Agu

    September 19, 2016 at 9:46 pm

    The problem with Nigeria economy is simple we are not net exporters of products rather net importers. we import almost everything we use and with the weak Naira for example how can i spend dollars and buy product in countries like china, UK or japan, send it to Nigeria and expect to make huge profit with how weak Naira is today which is due lack of manufacturing of products in Nigeria. we need to make a Nigerian brand a good brand all over the world and start making our product and grow the economy within.

    • EE

      September 20, 2016 at 2:39 am

      The numbers don’t agree with you, we’re actually net EXPORTERS.

    • Philip

      September 20, 2016 at 10:18 am

      And what exactly are we exporting? We import rice, beans, palm oil, toothpick, tooth paste, cement, sugar even potato chips are imported. How are we net exporters when our basic amenities are imported.

    • EE

      September 21, 2016 at 12:25 am

      Exports are based on value. Think of it this way, a banker (one job) can afford to hire a cleaner, driver, gateman, tutor, doctor (5 jobs). Is the banker a “net importer”???

  8. Mannie

    September 19, 2016 at 10:37 pm

    Given that Nigeria has very low tax rates (about 7% for the average income bracket), the only way the government can have an (expansionary) fiscal policy would be to spend money. That money will definitely not come from taxes, and our oil revenue is at the lowest in recent memory. So, the government can only borrow to spend on providing infrastructure to boost the economy.

    Borrowing is not always a bad thing. As long as the government can divest such loans towards growth and development, it should be able to keep up with payments. Because our economy’s so messed up, we can’t afford to reduce our budget deficit (our credit ratings cannot help us to reduce our deficit and increase our debt, hence the reason why Buhari has been begging national governments for loans instead of IMF & World bank).

  9. Gorgeous

    September 20, 2016 at 12:52 am

    Nice interview. Though she is a little guarded about the strategy they hope to employ. Which is somewhat understandable. She definitely knows what she is doing and understands the need for urgency.

  10. nnenne

    September 20, 2016 at 3:35 am

    History shows that what works for other countries don’t work for Nigeria.
    Hope borrowing helps.
    How much did the bail out work for the payment of salaries in state ?
    Our people are not selfless!

  11. LemmeRant

    September 20, 2016 at 9:38 am

    Shoot!!

    I knew i should have studied finance in school. See how i just they read comments like zombie. (It is well)

    Me sef i have comment. (Like a boss).
    Peace out.

    • Ranyinudo

      September 20, 2016 at 11:35 pm

      Lols…yeah right? I don’t understand jack but I have a soft spot for madam Kemi…she’s really trying.
      I applaud Mannie and Chidi…u all should be in a round table talk with madam Kemi analysing and comparing notes on how best to improve our economy.
      Lacey??.. though u always find a way to rope in NOI in your analysis, I commend and highly respect ur viewpoints.
      Una welldone☺

  12. Kimoni

    September 20, 2016 at 9:39 am

    Yes true, we are sure getting out of recession soon.

    Since our first lady can now afford expensive jeweleries, that is definitely an indicator

  13. Prince

    September 20, 2016 at 9:46 am

    God, You’ll have to forgive me on this but this lady annoys me these days.

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