Alhaji Aliko Dangote, President of Dangote Group Industries Ltd, has stated that economic growth will not occur unless the bank interest rate of 30% is reduced.
Alhaji Dangote made this statement while delivering the first keynote address at the Manufacturers Association of Nigeria (MAN) 2024 summit in Abuja.
According to the Chairman of the Dangote Group, the cause of inflation in major advanced economies in Europe and the United States, which necessitated interest rate hikes, differed from that in developing countries, primarily in Africa.
He attributed the cause of inflation in North America and Europe to the cash transfer programme implemented by governments during the pandemic period in 2022, stating that approximately $18 trillion was distributed to individuals and businesses during that time.
He pointed out that nothing of this magnitude occurred across African economies.
He said, “Mr. Vice President, we are currently dealing with extremely high interest rates. This interest rate now indicates that we should fight inflation. I am not an economist; I am simply a local businessman. Why did other countries raise interest rates during COVID-19? The G7 countries pumped money into their economies totalling 18.9 trillion. As a result, their economies were overburdened with money, chasing a limited supply of goods. This means that everything will go up.”
“During COVID, we did nothing. The only thing we did was provide food to soothe, and I’m speaking generally about Africa. Currently, at 30%, no one can create jobs because we are stifling growth. So, the interest rate can remain at 30%, but no growth will occur unless that interest rate falls.
Need to protect local industries.
Furthermore, Alhaji Dangote advocated for the protection of local industries, particularly those in manufacturing, across the country, tracing the decline of the country’s manufacturing sector since 1970.
He stated that local investment is the only way to attract foreign direct investment. He provided examples of how countries that advocate for free trade actively implement policies to promote their local industries to become national treasures, ranging from the West to China and India.
Backstory
Since the beginning of this year, the Central Bank of Nigeria (CBN) has raised interest rates by 750 basis points at three consecutive Monetary Policy Committee (MPC) meetings. Over the last three MPC meetings, interest rates have risen from 18.75% to 26.25%.
Stakeholders in the business committee have questioned the effectiveness of the MPR hike in reducing inflation, claiming that it harms the real economy by raising the cost of accessing capital.
