The Central Bank of Nigeria (CBN) has directed deposit money banks in Nigeria to pay savings deposit account holders an interest of 30 per cent of the current 14% Monetary Policy Rate (MPR), reverting to what it was in 2020 before the COVID-19 pandemic era.
This was contained in a circular by the apex bank dated August 15, 2022, titled “Review of Interest Rate on Savings Deposits” and signed by Haruna B. Mustafa, Director of Banking Supervision.
Savings deposit rates are the interest rates that accrue to customers for keeping their money with the banks.
The circular reads: “It will be recalled that as part of the efforts to ameliorate the impact of the COVID-19 pandemic, the Central Bank of Nigeria reduced the minimum interest rates payable on local currency savings deposits from 30% to 10% of the Monetary Policy Rate (MPR). This was aimed at stimulating growth in the larger economy following the economic-slowdown occasioned by the pandemic.
“Accordingly, effective August 1, 2022, the negotiable minimum interest rate on local currency savings deposits shall be 30% of MPR. This supersedes our letter dated BSD/DIR/GEN/LAB/13/052 on the subject. September 1, 2020.”
Daily Trust recently reported that the CBN had increased the MPR from 13% to 14% in an effort to combat inflation, which reached a 17-year high of 19.64% in July 2022.
Speaking on the increase in the interest, a trader in Utako Market, Daniel Osagie, said it would not make significant changes.
He said, “Though I get credit alerts on the interest, most times they are little compared to the other charges removed from my account whenever money comes in or goes out from it.”
Another bank customer, Agnes Ochi, urged the CBN to make policies that would make the naira stronger, stating that inflation and the weakness of the naira had been the major concerns of Nigerians and not the little they would make from saving money in banks.
“The government should intervene to bring down the cost of commodities in the country.”
Another bank user, Mary Yakubu, said the fintech outlets give more returns than banks. She said, “I get more reasonable money from the Piggyvest account I have, including the little-to-nothing they charge whenever I engage in transactions, than the one I have with a commercial bank.”
However, an economist, Dominic Shale, said the CBN’s decision might be another means to curb inflation. “The apex bank is now wielding its monetary control measures to encourage people to save more. I think the decision of the CBN is on track, looking at it from depositors’ perspective.”
But Shale further said Nigerians expected to see its impact on the high prices of food items and other services as citizen found it difficult to save money due to the high cost of living.
By Philip S. Clement & Faruk Shuaibu