Yakubu Dogara: CBN hindering economic growth with reckless regulations

The Speaker of the House of Representatives, Yakubu Dogara, on Tuesday said the Central Bank of Nigeria has been making access to credit facility difficult for small and medium scale businesses in the country.

Mr. Dogara said the CBN had unilaterally put in place several regulations that hinder economic growth rather than spur it, promising that the parliament would look at the policies with a view to reversing them.

He spoke during the inauguration of a public hearing organised by the House Committee Commerce as part of its deliberation over a bill that seeks to make credit facilities accessible to small business operators.

“Is the CBN authorised to introduce all manner of laws under the broad pretext of promoting ‘a sound financial system’ in Nigeria and giving effect to the ‘objects and objectives’ of the Banks and Other Financial Institutions Act?” Mr. Dogara queried.

“Is the CBN a legislative body or merely a regulatory body in the financial sector?

“The committee needs to determine whether the CBN overreached itself in proceeding by way of regulations instead of by legislation on this subject,” Mr. Dogara said.

The Speaker said despite their huge economic value, millions of small business owners had given up seeking loans from the formal channels because they had since lost confidence in the system.

“According to the World Bank, there are about 37 million micro, small, and medium-size enterprises (MSMEs) in Nigeria who contribute a lot to economic growth, development and job creation.

“However, many of these smaller businesses struggle to gain access to the capital they need to grow and “According to the World Bank, there are about 37 million micro, small, and medium-size enterprises (MSMEs) in Nigeria who contribute a lot to economic growth, development and job creation.

“However, many of these smaller businesses struggle to gain access to the capital they need to grow and prosper since they lack traditional collateral such as land and buildings.

“In many of the cases, businesses do not even bother to apply for loans as they are certain that they may not be able to satisfy the collateral requirements, such as land and real estate, often requested by banks,” he said.

Mr. Dogara said the Committee on Commerce would produce a bill that will clearly outline the role of CBN and solve most of the current challenges that small businesses are grappling with.

The Bill, if passed into law, will align Nigeria’s secured transactions regime with international best practices since the existence of a modern collateral registry for movables is one of the indices indicated for better doing business ranking.

“This contemplated regulatory framework legislation will also delineate rights, responsibilities and duties of parties to credit transactions in and out of bankruptcy,” he said.