Obi echoes Dangote’s concern on high interest rates

The 2023 Labour Party presidential candidate, Peter Obi, has reinforced his criticism of the current government’s monetary policy, citing recent comments by Africa’s richest man, Aliko Dangote.

Obi’s statement comes in response to Dangote’s outcry against the current 30 per cent interest rate, which both business leaders argue is stifling economic growth and job creation in Nigeria.

“Dangote’s recent outcry against the current interest rate of 30% underscores my earlier cry in February on the negative effects of the monetary policy of the present Federal Government,” Obi said in a statement on Thursday via X.

On Tuesday, the Chairman and Chief Executive Officer of the Dangote Group, Dangote, said rising interest rate hikes would hurt local manufacturers.

Dangote made the assertion at the opening session of a three-day National Manufacturing Policy Summit organised by the Manufacturers Association of Nigeria at the Banquet Hall of the State House, Abuja.

Dangote said, “Before I delve into my paper, let me start with some key messages.

“Nobody can create jobs with an interest rate of 30 per cent. No growth will happen. No Power, no prosperity. No affordable financing, no growth, no 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 per cent to 26.25 per cent.

Elaborating his points on Thursday, Obi emphasised the consequences of such high rates, quoting Dangote’s assertion that “no jobs will be created with such a high interest rate because there will be no growth in the economy.”

Obi recalled his opposition to the Monetary Policy Committee’s decision in February to increase the Monetary Policy Rate (MPR) to 22.5 per cent and the Cash Reserve Ratio (CRR) to 45 per cent.

He argued that these increases would “push interest rates on loans to above 30%, which would be very difficult for manufacturers and MSMEs to borrow and repay.”

The former Anambra State governor highlighted recent data from the Manufacturing Association of Nigeria to illustrate the situation.

“In 2023, 767 companies were shut down and 335 became distressed. The capacity utilization in the sector has declined to 56%,” he noted, adding that “the interest rate is effectively above 30%,” Obi quoted MAN

Obi further warned of the broader economic implications, stating, “These harsh economic policies, both on the monetary and fiscal sides, have continued to slow down our economic growth, drive multinationals out of the country, stifle our small businesses and discourage the inflow of foreign direct investment.”

Calling for urgent action, Obi emphasised the need to “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,” Obi added.