The 2023 Labour Party presidential candidate, Peter Obi, has intensified his criticism of the current administration’s monetary policies, citing recent comments by Africa’s richest man, Aliko Dangote.
Obi's statement came in response to protests by Dangote, who claimed the current 30 percent interest rate was stifling economic growth and job creation in Nigeria.
“Mr Dangote’s recent vehement protest against the current 30 per cent interest rate underlines my complaint in February about the adverse effects of the current Federal Government’s monetary policy,” Obi said in a statement via X on Thursday.
Mr Dangote, chairman and CEO of the Dangote Group, said on Tuesday that the interest rate hike would hurt the local manufacturing industry.
Dangote made the assertion at the opening ceremony of a three-day National Manufacturing Policy Summit organised by the Nigerian Association of Manufacturers at the State House Banquet Hall, Abuja.
“Before I get into the substance of the paper, I would like to start with a key message,” Dangote said.
“You can't create jobs with interest rates at 30 per cent. Growth won't happen. Without electricity there is no prosperity. Without affordable finance there is no growth and development,” he said.
His comments come weeks after the CBN’s Monetary Policy Committee agreed to increase the monetary policy rate for the third consecutive time from 24.75% to 26.25%.
Elaborating on his argument on Thursday, Obi cited Dangote’s assertion that “with interest rates this high, there will be no economic growth and therefore no jobs created,” highlighting the consequences of such high interest rates.
Obi recalled that he had opposed the Monetary Policy Committee’s decision in February to increase the Monetary Policy Rate (MPR) to 22.5% and the Cash Reserve Ratio (CRR) to 45%.
He argued that these rising interest rates would “push loan interest rates above 30 percent, making it extremely difficult for manufacturers and small, medium-sized enterprises to borrow and repay.”
The former Anambra State Governor explained the situation by presenting the latest data from the Nigerian Association of Manufacturers.
“In 2023, 767 companies closed and 335 entered into difficulties. The sector's capacity utilization rate fell to 56 percent,” he noted, adding that “interest rates are effectively above 30 percent.” Obi was quoted as saying by MAN.
Obi also warned of the impact on the broader economy, saying: “These stringent economic policies, both monetary and fiscal, continue to slow our economic growth, drive multinational corporations out of the country, stifle small and medium-sized enterprises and discourage foreign direct investment inflows.”
Obi called for urgent action, stressing the need to “reverse this ugly trend that continues to cause serious further unemployment, discourage production in our country and impede the transition from consumption to production.”
“We need to change course and embark on only policies that will lead to growth and the birth of a new Nigeria,” Obi added.