A former Governor of Anambra State and successful businessman, Peter Obi, has said that Nigerians are getting poorer because the government is borrowing for the wrong reasons.
Obi, who was also the vice presidential candidate of the Peoples Democratic Party (PDP) in the 2019 general election said that Nigeria is borrowing for consumption rather than for productivity.
This was made known by Mr Obi while appearing as a guest on a Channel’s Television Programme, Sunday Politics, on Sunday, September 12, 2021.
Obi argued that while it is not a crime to borrow money, the funds must be used solely for productions that enhance the lives of the citizens and enrich the economy.
What the Former Governor of Anambra State said
Obi pointed out that the country’s Gross Domestic Product (GDP) cannot be growing while the people are getting poorer adding that the growth that is needed is the one that pulls people out of poverty by making their disposable enough to feed themselves
He said, “Are you borrowing for productivity or are you borrowing for consumption? My worry here is that we are borrowing for consumption.
“I am saying that the country is not productive and there is nothing wrong in borrowing; if you are borrowing, then it shouldn’t be for consumption and that’s why more and more people are getting poorer.’’
Going further, Mr Obi said that the country needs the kind of growth that will educate the children and provide primary health care for all communities.
He explained that for the country to move forward, government needs to support micro, small and medium enterprises, which is the biggest engine for economic growth
“These are critical areas we want to go into,” the statesman stressed, noting that Nigeria must do away with speculative growth that is given media hype without positively affecting the masses.
“That engine today is not being supported in Nigeria. Nigeria has a total of 40 million SMEs but there is not properly articulated fiscal and monetary policy to support the critical sector.
“The entire loan to the private sector in Nigeria today is about N30 trillion. Less than N1.5 trillion is going to SMEs. This is less than five per cent of the entire loan. This means Nigeria is not supporting its engine that can enhance the nation’s economic growth.
“The SMEs are the biggest employer of labour in many advanced countries of the world. We need fiscal monetary policies that would invest in this engine of growth in order to create jobs.”
What you should know
- It can be recalled that a few weeks ago, the National Bureau of Statistics (NBS), in its recent report, said that Nigeria’s GDP grew by 5.01% (year-on-year) in real terms in the second quarter of 2021.
- The increase in GDP marked 3 consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020.
- However, this has not reflected in the living conditions of Nigerians, most of who are living below poverty line with inflation rate still as high as 17.75% and unemployment rate as high as 32.5%.
- Food inflation is 21.83%, down from 22.28% in the last NBS report.