In a powerful address at the ongoing summit organized by the Manufacturers Association of Nigeria (MAN), Africa’s richest man, Aliko Dangote, issued a stark warning to the federal government about the pressing need to reduce the country’s soaring interest rates.
Dangote explained that the current high-interest environment is stifling business growth and leading to widespread factory closures, which could plunge Nigeria into economic decline.
Dangote, who delivered the keynote address, stated the detrimental effects of the high interest rates, which are currently around 30 percent or more in banks.
“No power, no growth, no prosperity. Similarly, no affordable financing, no growth, no prosperity. There is no industrialization without protection. Ignoring these facts is what gives rise to insecurity, banditry, kidnapping, and abject poverty,” Dangote stated.
The Central Bank of Nigeria (CBN) recently raised the monetary policy rate to 26.25 percent, with banks lending at rates as high as 35-40 percent to businesses. These hikes are intended to control inflation and stabilize prices.
However, Dangote argued that these measures are counterproductive, causing more harm than good to the economy.
Highlighting the impact on the manufacturing sector, Dangote noted that Nigeria’s manufacturing exports accounted for less than 5% of its merchandise export in 2022.
In stark contrast, countries like China and South Korea have manufacturing export percentages as high as 93%.
“There is evidence that the strength of a country’s manufacturing sector determines its capacity to compete in global trade. Countries that have industrialized and have a robust manufacturing sector can grow their economies through global trade,” he explained.
Dangote warned that unless urgent steps are taken to address these economic issues, Nigeria risks becoming a mere trading hub, reliant on imports rather than fostering local manufacturing and production.
This import dependence is one of the greatest challenges to Nigeria’s industrial growth and development, he added.
The report presented at the summit by MAN revealed that about N3 trillion was spent on importing raw materials in 2023.
The report called for market expansion, cost reduction, improved logistics, and better environmental social and governance (ESG) practices.
Furthermore, the report recommended several measures to revitalize the manufacturing sector, including increasing budgetary allocations for infrastructure at industrial hubs, promoting made-in-Nigeria products, encouraging foreign direct investment (FDI), avoiding multiple taxation, and implementing energy sector reforms.
“Inflation and the core macroeconomic metrics have significantly impacted the sector, with inflation rising from 14% in 2018 to 33.9% currently. The unification of the exchange rate in 2023 also had a negative impact, with many losing their jobs,” the report stated.
The report also highlighted the need for government intervention to provide tax holidays, subsidies, and the development of industrial parks.
It highlighted the successful strategies of other countries, such as South Africa’s promotion of locally produced goods, Egypt’s creation of special economic zones, and Malaysia’s focus on a high-tech economy.
Concluding his address, Dangote stressed the urgency of the situation. He said “We don’t just want this country to be a place of buying and selling without producing anything. This is dangerous for us. The federal government must act now to reduce interest rates and create a conducive environment for businesses to thrive. Only then can we hope to avoid economic decline and ensure a prosperous future for Nigeria.”
As the summit continues, stakeholders are hopeful that Dangote’s passionate appeal will spur the government into action, paving the way for significant economic reforms and a brighter future for Nigeria’s industrial sector.
