"We need to reverse course and only initiate policies that can lead to growth and the birth of a new Nigeria."
Peter Obi, presidential candidate of the Labour Party in the 2023 election, has urged the Nigerian government to address concerns raised about the interest rates and reverse key monetary policies.
In a statement posted on his X handle, Mr Obi highlighted the detrimental impact of the Central Bank of Nigeria's (CBN) interest rate hikes on the economy.
Mr Obi reiterated the concern of the President of the Dangote Group Industries Ltd, Aliko Dangote.
Mr Dangote had earlier in the week criticised the monetary policy decisions of the apex bank, noting that interest rate hikes stifle productivity.
Mr Obi in his statement argued that these increases, which have pushed interest rates on loans above 30 percent, are making it exceedingly difficult for manufacturers and Micro, Small, and Medium Enterprises (MSMEs) to borrow and repay loans.
"If Dangote, the richest person in Africa and foremost industrialist, can complain, then imagine the negative impacts of these policies on MSMEs who are the engine of economic growth," he said.
He made reference to a recent report from the Manufacturing Association of Nigeria (MAN), which revealed that in 2023, 767 companies were shut down and 335 became distressed.
According to him, the report also indicated a decline in capacity utilization to 56 percent, an effective interest rate above 30 percent, and an increase in the inventory of unsold finished products to N350 billion. Additionally, the real growth rate has dropped to 2.4 percent.
He emphasised that these harsh economic policies are slowing down economic growth, driving multinationals out of the country, stifling small businesses, and discouraging foreign direct investment.
"Again, I maintain that we must urgently reverse this ugly trend which is seriously resulting in further job losses, discouraging production in our nation, and has continued to hinder our movement from consumption to production.
"We need to reverse course and only initiate policies that can lead to growth and the birth of a new Nigeria," he said.
Background
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.
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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.
Mr Dangote, at a three-day summit in Abuja organised by the Manufacturers Association of Nigeria (MAN) said that the CBN's high interest rate is stifling economic growth and job creation in the country.
"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.
"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.
