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How Can Nigeria Bank Justify 30% Interest Rate On Loan?

While all the goverment of serious country all over the world are slashing their interest rate to 1% sometimes 0%. The cabal that runs the Nigeria banks and central bank still maintain this clueless economy sense. Yaradua thinks by reducing the salary of the political office holder will improve Nigeria economy situation as if this people really depend on their salary to survive . How can any nation that have the interest of her citizen at heart justify 30% interest rate?

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National ID or SSN is seriously needed in nigeria for these ideas to work, but it wont work at all even if the banks decide on 0% interest rates. What is the borrower going to do with the loan, buy a big generator for production first?

No electricity, no development.

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A 30% interest rate isn't so bad o,,  ,  ,  ,  .   if you intended to start your own cocaine manufacturing and distributing business with the money. Guess it won't be so hard to pay back the 130% the following year.

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What is the savings rate in Nigeria, shouldn't it be high too?

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or a credit reporting agency

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Nigeria need to find out from the U.S. The Nigerian banks are lending at high rate now for low terms, wait and see, it will get to a time the value of their collateral will fall and borrowers will default, then, they will have problem. This is one of the reasons why wall street ran into problem.

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Once again, my point is that some customers, some situations, some circumstances deserve applicable market interest rate; 30% or even higher, while some deserve and even attract lower rate.

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Here's the latest news on credit reporting agency in naija:

http://www.nigeriamasterweb.com/paperfrmes.html

Home Money Banking & Finance UBA, other banks pioneer credit bureau establishment

UBA, other banks pioneer credit bureau establishment

Friday, 13 February 2009 00:08 NGOZI UCHE

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The need for a financial infrastructure that provides information on credit profiles of corporate entities and individual customers has been met by the emergence of Credit Reference Company (CRC) Limited in the country, a world-class credit bureau.

At the road show cum awareness campaign, held in Lagos at the corporate headquarters of UBA plc, the company management provided insight on the roles of a credit bureau to the economy.

Tony Elumelu

The group managing director, UBA plc, Tony Elumelu, observed that the bank saw the need for such an infrastructure in the financial services industry as far back as 2002, and initiated collaboration with the promoters of CRC and in the process, other financial institutions bought into the idea and made their stake.

He expressed confidence in the management of CRC to be able to deliver the quality of service the organisation was set up to provide.

The company is in association with some international institutions that facilitate the establishment of world-class credit bureaus, like Dun and Bradstreet, Accenture and International Finance Corporation (IFC).

According to Elumelu, “a company like this is one of the infrastructure needed in the economy to provide relevant data to the financial industry”.

The managing director of CRC, Tunde Popoola stated that the establishment of the credit bureau in the country would revolutionalise access to credit for both the borrowers and lenders.

He said it would change the psychology of individuals on credit by eliminating fraud and reducing incidences of loan defaulters.

“If you know that your history is available, that the loan you took from bank A, you did not pay back and that the record are there for other financial institutions to see, then it will make people to get committed to meeting their obligators to their creditors”, he explained.

The pioneer chairman of CRC, Angela Nwabuoku, who is also an executive director in UBA flagged off the road show.

At present, CRC has about 14 banks that have signed on to their service which is to take off by May.

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Me thinks interest rate should be subject to each individual credit worthiness, just as it is in developed countries

Because Nigeria is not developed doesnt mean it should blatantly molest and rip off its own citizens

Applying flat rates to loans and other credit facilities is grossly incorrect

30% is pretty much high risk lending rate, and lower risk customers shouldnt face the same problem

But in Nigeria, seperating high risk customers and low risk customers is another area which needs to be sorted out

How they will do that, i dont know, judging by identity fraud, inept postal address system and other important criterias, it is going to be a tough task!!

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You need more than ECS101 to understand  micro/macro economic theories.Reduction of interest rate stimulate business borrowings and investments.

Salaries of government functionaries is only fraction of the expenses and allowances they collect  and that is a heavy weight to the overhead cost of running the government of the day.

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Interest rate is lower in other countries because of foreign investment. The more money people pour into your country, the lower the cost of borrowing money

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What's there to discuss? You need economics 101 to understand demand and supply? You want to see some US banks charging 39% on certain customers?

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