The President of Dangote Group Industries Ltd, Alhaji Aliko Dangote, said that economic growth won’t happen unless the bank interest rates, currently at 30%, go down.
He said this during a speech at the Manufacturers Association of Nigeria (MAN) 2024 summit in Abuja.
Alhaji Dangote explained that the cause of inflation in countries like Europe and the United States is different from what happens in Africa. In Europe and the US, governments gave out lots of money during the 2022 pandemic, around $18 trillion in total. This made prices go up because there was more money available and not enough goods.
In Africa, nothing like this happened, he said.
He added, “Mr. Vice President, I understand we are struggling with high interest rates. These rates are supposed to fight inflation. I’m not an economist, just a businessman. Other countries increased their interest rates during COVID-19 because they injected $18.9 trillion into their economies, creating too much money chasing too few goods, which raised prices.”
“During COVID, in Africa, all we did was provide food aid. At a 30% interest rate, no one can create jobs because it hinders growth. Unless the interest rate drops, there won’t be growth.”
Need to Support Local Industries
Alhaji Dangote also emphasized the importance of supporting local industries, especially manufacturing. He noted the decline in the manufacturing sector since the 1970s.
He said that the best way to attract foreign investment is by first investing locally. He provided examples of countries like those in the West, China, and India, which protect and promote their industries to make them national treasures.
Background Information
Since the start of this year, the Central Bank of Nigeria (CBN) has increased interest rates by 750 basis points over three consecutive Monetary Policy Committee (MPC) meetings. Interest rates have gone up from 18.75% to 26.25% over these meetings.
Business stakeholders have questioned whether these rate hikes are good for controlling inflation, arguing that it makes borrowing money more expensive, which harms the economy.