CBN has increased interest rates by a total of 750 basis points across three consecutive Monetary Policy Committee (MPC) meetings.
The President of the Dangote Group Industries Ltd, Aliko Dangote, on Tuesday said that the Central Bank of Nigeria's (CBN) interest rate is stifling economic growth and job creation in the country.
The billionaire spoke on Tuesday at a three-day summit in Abuja organised by the Manufacturers Association of Nigeria (MAN).
Mr Dangote drew attention to the contrasting economic responses during the COVID-19 pandemic between Africa and the G7 countries.
"Mr Vice President, I know that today we are battling with very high interest rates. This interest rate is now saying that we should fight inflation. I'm not an economist, I'm just a local businessman. The other countries, why did they jack up interest rates? Because during COVID-19, the G7 countries pumped money into their economies to the tune of 18.9 trillion. So, in their economies, there was so much of money chasing few goods. This means that everything is going to go up," he said.
He also highlighted the stark difference in Africa's approach during the pandemic.
"During COVID, we didn't do anything at all. The only thing we did was food palliative and I'm talking about Africa in general. Right now, at 30 per cent, there is no way anybody can create jobs because we are actually stifling growth. So the interest rate can remain at 30 per cent but no growth will happen unless that interest rate comes down," he said.
Since the start of the year, the CBN has increased interest rates by a total of 750 basis points across three consecutive Monetary Policy Committee (MPC) meetings. During this time, interest rates have risen from 18.75 per cent to 26.25 per cent, with the central bank maintaining that high interest rates are necessary to curb inflation.
However, some experts have expressed doubts about the effectiveness of these rate hikes in controlling inflation, arguing that they harm the real economy by increasing the cost of capital.
Import Concerns
Mr Dangote said a country relying on imports equates to importing poverty while urging the government to support existing businesses, particularly manufacturers, by creating a conducive environment for their success.
He argued that to tackle unemployment, poverty, and insecurity, the manufacturing sector must be empowered to operate effectively.
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He said that Nigeria possesses the potential to develop and sustain a globally competitive manufacturing sector but emphasised the need to rethink the country's industrialisation policy.
The business magnate said Nigeria needs to follow the example of leading countries in the West and East that actively safeguard their domestic industries. In the same way, the country should introduce policies to shield our local industries and cultivate them into home-grown champions that will generate the jobs and prosperity we urgently require.
He acknowledged the various factors contributing to the manufacturing sector's underperformance but highlighted government policy and its approach to investments and investors as the crucial issues needing attention.
He stressed that industrial or manufacturing entities differ from trading entities and expressed his belief that the government's primary role should be to promote investments in manufacturing, attract investors, and ensure these investments are nurtured and protected to facilitate growth and sustainability.
"But since the Mid 1980s, non-industrialised countries and their leaders have been discouraged from protecting and supporting such investment and forced to expose them to unfair competition from stronger, older competitors in their own internal market, even before the newcomers are commissioned. Yet these same older/bigger players are well supported in their home markets," he said.
