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Chairman of the Dangote Group, Aliko Dangote, has criticised the hike of interest rate to almost 30 per cent by the Central Bank of Nigeria (CBN), saying it might lead to more hardship for Nigerians.
Dangote stated this while delivering the first keynote address during the Manufacturers Association of Nigeria (MAN), 2024 summit in Abuja.
In May, following a two-day meeting, CBN’s Monetary Policy Committee (MPC) agreed to increase the Monetary Policy Rate(MPR) for the third straight time from 24.75 per cent to 26. 25 per cent.
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“The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) held its 295th meeting on the 20th and 21st of May 2024 to review recent economic and financial developments and assess risks to the outlook.
“Decisions of the MPC. The committee’s decisions are as follows: 1. Raise the MPR by 150 basis points to 26. 25 per cent from 24.75 per cent,” CBN Governor, Yemi Cardoso who is also the MPC chairman said.
However, while speaking during the manufacturer’s summit on Tuesday, Dangote noted that “Nobody can create jobs with an interest rate of 30%. No growth will happen.”
He also called on the government to protect existing businesses in the country, especially manufacturers by providing an enabling environment for them to thrive.
According to him, an import-dependence country is equivalent to poverty importation.
He said the cause of the inflation in major advanced economies in Europe and the United States which necessitated interest rate hikes was different from that of developing countries mostly in Africa.
He traced the cause of inflation in North America and Europe to the cash transfer program implemented by governments during the pandemic period in 2022 and stated that in total around $18 trillion was disbursed to individuals and businesses during the period.
He noted that nothing of such significance happened across economies in Africa.
He said, “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 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.”
“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%, there is no way anybody can create jobs because we are actually stifling growth. So interest rate can remain at 30% but no growth will happen unless that interest rate comes down”
Furthermore, Alhaji Dangote called for the protection of local industries, especially in manufacturing, across the country and further traced the decline of the manufacturing sector in the country since the 1970s.
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He said the only way to attract foreign direct investment is local investment and provided examples of how countries who voice the rhetoric of free trade actively enact policies to promote their local industries to become national treasures from the West to China and India.
The MAN also criticised government policies and attitude, saying they were responsible for the low performance of the manufacturing sector in the country.
In his remarks, the President of MAN, Otunba Francis Meshioye said over seventy manufacturers have exited the sector between 2019 and 2022.
He said it was time to take stock and rethink a way to support manufacturing businesses, to achieve the agenda of the current administration.
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