The President of the Dangote Group Industries Ltd, Alhaji Aliko Dangote has stated that no economic growth will happen unless the bank interest rate at 30% declines.
Alhaji Dangote stated this while delivering the first keynote address during the Manufacturers Association of Nigeria (MAN), 2024 summit in Abuja.
According to the Chairman of Dangote Group, 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”
Need to protect local industries
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.
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.
Backstory
The Central Bank of Nigeria (CBN) since the beginning of this year has hiked interest rates by a combined 750 basis points over three consecutive Monetary Policy Committee (MPC) meetings. Over the past three MPC meetings, interest rates have risen from 18.75% to 26.25%.
Stakeholders in the business committee have questioned the effectiveness of MPR hike at taming inflation stating that it hurts the real economy by increasing the cost of accessing capital.
