Nigerian banks focus on commissions, neglecting real economic growth – Dr. Muda Yusuf 

Dr. Muda Yusuf, Managing Director/CEO of the Center for the Promotion of Private Enterprise (CPPE) has criticized Nigerian banks for prioritizing profit generation through commissions and fees over their primary role of driving economic growth.  

Dr. Muda disclosed this at the Treasury 360 Conference and Exhibition themed Policy Implications and Building Sustainable Treasury Strategies: Nigerian Perspectives on Tackling Inflation and Interest Rate Uncertainty. 

Dr. Yusuf explained that the financial sector’s focus on high commissions and payments, rather than supporting businesses with affordable credit, is exacerbating the country’s economic challenges.  

Increasingly, we are having a banking financial system that is disconnected from the real economy. And that is not the primary function of the bank. The primary function of the bank is what we call financial intermediation. You channel resources from the surplus end of the economy to the deficit end of the economy is the primary purpose of the bank. But we are failing in that.  

What we are now seeing, especially in our banking, is just managing the payments and charging commissions here and there and imposing huge profits. Because no matter what you say, money will still pass through there. Even if you are making losses, your money will still pass through there,” he stated. 

Rising interest rates 

Dr. Muda Yusuf highlighted the severe impact of Nigeria’s high interest rates, which have surpassed 30%, on key sectors such as manufacturing, agriculture, and real estate. 

“Interest rates have gone to 30% and above. Now how many sectors can fund their business with the current level of interest rates? Can the manufacturing sector support manufacturing investment?  

“Banks are advising companies that they have, as a result of the last MPC. Interest rates have been revised to 38%. Of course, there is no way the financial sector can support manufacturing, under that kind of framework. The same thing in agriculture, how can you, as a farmer, go and borrow money at 30%? Same with the real estate, which is critical for any economy.” 

Need for government intervention 

Yusuf noted that the return to orthodox monetary policies under the new leadership of Central Bank of Nigeria (CBN) Governor Olayemi Cardoso contrasts sharply with the unorthodox approaches implemented by former CBN Governor Godwin Emefiele.

While the former regime relied on heavy state intervention, the new CBN policy is leaning towards more market-driven solutions. 

However, Yusuf warned that the current orthodox approach, while necessary for fiscal discipline, is not without its challenges. The high interest rates resulting from this policy are becoming a major obstacle for businesses, particularly in sectors that depend on credit for growth. 

  • Yusuf highlighted the benefits of combining elements from both orthodox and unorthodox monetary models to create a balanced framework. “None of the models are perfect, but we should leverage the strengths of each to build a more resilient economy,” he stated, 
  • He also highlighted that the Nigerian financial sector could benefit from studying other economies, particularly in Asia, where targeted government interventions have promoted economic development without stifling market forces. 

Yusuf noted that excessive adherence to market principles without adequate state intervention could lead to market failures.

He cited examples from global economies where the state plays a crucial role in steering growth and addressing economic imbalances. 

“While markets are essential for growth, government intervention is necessary when market failures occur. Nigeria needs to ensure that its economic policies strike a balance between free-market principles and targeted state support for key sectors,” he said 


Source: TheTimes.com.ng.