How to Make Your Savings Work for You

The Central Bank of Nigeria (CBN) has called on commercial banks to boost lending, following a recent recapitalisation that raised N4.65 trillion. The apex bank wants banks to invest in sectors that generate jobs, improve productivity, and generate foreign currency. This move could offer greater access to credit for those who need it.

Experts believe that increased capital for banks could lead to lower loan rates and more affordable borrowing for both consumers and businesses. The recapitalisation also reassures depositors that the financial system is stronger and better able to endure both domestic and external shocks. This exercise affects both savers and borrowers, and understanding these implications is vital for making informed financial decisions.

For borrowers, the hope is for affordable loans, although there are concerns that banks may raise rates or favor larger entities over smaller ones. Savers, however, face a dilemma with the Monetary Policy Rate (MPR) remaining at 26.5 percent. Additionally, the Cash Reserve Ratio (CRR) at 45 percent can reduce the amount banks can lend, leading to lower deposit rates.

Savers should consider high-yield investments, such as treasury bills, government bonds, and money market mutual funds, depending on their risk tolerance. Financial advisers recommend diversifying investment portfolios based on individual goals, cash flow needs, and risk appetite. Opportunities in the stock market, real estate, and sectors like retail, ICT, and the creative industry are also mentioned as potential avenues for stronger returns.

Entrepreneurship in these sectors can be lucrative, with some investors benefiting from substantial gains in recent years.