Dangote Urges Nigerian Government to Reduce High Interest Rates to Stimulate Investment

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Africa’s richest man, Aliko Dangote, has called on the Nigerian government to lower the high interest rates, currently around 30%, to stimulate investment in the country. Dangote highlighted that such an environment stifles businesses and leads to factory closures.

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Speaking at the Manufacturers Association of Nigeria (MAN) summit in Abuja, Dangote stressed that urgent measures are needed to improve Nigeria’s economy, warning that without such steps, the country might turn into a mere trading hub.

The Central Bank of Nigeria (CBN) has set the monetary policy rate at 26.25%, with banks lending at rates as high as 35-40%. These interest rate hikes are intended to control inflation and stabilize prices.

Dangote criticized Nigeria’s reliance on imports, describing it as a major hindrance to industrial growth and development. He emphasized that affordable financing is crucial for industrialization and prosperity, noting that lack of such financing leads to insecurity and poverty.

He pointed out that the strength of a country’s manufacturing sector is crucial for its global trade competitiveness. Countries with robust manufacturing sectors, such as China (93%), South Korea (93%), the European Union (83%), Malaysia (86%), India (73%), and the USA (70%), dominate global trade in manufactured goods. In contrast, Nigeria’s manufacturing sector accounts for less than 5% of its merchandise exports.

Dangote argued that investment projects in manufacturing need time and a conducive environment to mature and become competitive. However, non-industrialized countries like Nigeria have been forced to expose their nascent industries to unfair competition.

A report by MAN revealed that Nigeria spent about N3 trillion on importing raw materials in 2023. The report called for market expansion, cost reduction, improved logistics, brand building, collaborations, and better environmental, social, and governance (ESG) practices. It also urged the government to increase budget allocations for infrastructure, promote locally made products, and encourage foreign direct investment (FDI).

The report highlighted challenges such as high energy costs, inflation, and unemployment, noting that inflation has risen from 14% in 2018 to 33.9% currently. The unification of the exchange rate in 2023 also negatively impacted the sector, with job losses and business closures.

Despite these challenges, the report noted that Nigeria exported more goods and services in 2023 than it imported. However, the manufacturing sector remains in distress, with 335 companies experiencing difficulties and 767 businesses shutting down. The report recommended tax holidays, industrial park subsidies, and a focus on human capital development, trade, and export promotion to revive the sector.

Dangote concluded by warning against Nigeria becoming a country focused solely on buying and selling without production, calling it a dangerous trend for the nation’s economic future.

Adeniyi Ogunfowoke, The Naija247news
Adeniyi Ogunfowoke, The Naija247newshttps://naija247news.com/
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