Tuesday, 05 March 2024 04:36

CBN’s rates hike will shrink Nigeria’s economy - Obaseki

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Edo State Governor, Godwin Obaseki, has criticised policies recently introduced by the Central Bank of Nigeria (CBN), saying they cannot support the economic growth of the country.

The governor said the interest rates that are raised would hinder small business owners from getting loans to expand their businesses which are detrimental to the growth of the country.

Obaseki made this known at an event organised by the Edo Zone of Bankers’ Committee in Benin City, the state capital.

According to the governor, Nigeria needs not to worry over interest rates but to create an enabling atmosphere for Nigerians to produce the goods and services we consume and reduce reliance on imported goods.

He said, “Policies that have just been rolled out by the central bank, unfortunately, will not support the growth of our economy. Interest rates are already very high, and jacking up interest rates clearly will not allow small borrowers, small businesses to have access to credit at the price to help them grow their businesses. When an economy is in this state, it meets all the push and support.”

The governor said the motive behind increasing the monetary policy rate (MPR) cannot support economic growth, stressing that the exchange rate is not a remedy to the nation’s economic upheavals.

He empahsised that there should be job creation for the teeming Nigerian youths to transform the country into a productive economy.

“I understand the monetary rationale for increasing MPR fundamentally and fiscally, it is not going to lead to growth in our economy. We must focus on the fundamentals which are increasing production, making sure our citizens produce goods and services we consume, and depend less on imports.

“Our economic policy and monetary policy cannot be determined by exchange rate alone, so the issue of increasing cash reserves in the bid to tighten the liquidity is going to be detrimental to our economy.

“I understand the challenge the monetary authorities face, but unfortunately, you cannot clap with one hand. The economy is about fiscal and monetary policies – both must work hand-in-hand and when they don’t as they don’t in Nigeria, there can be a crisis.

“We should focus on fiscal issues so that we can grow our economy out of the challenges we had. We should not panic too much because of foreign exchange. We must focus on how we can do things within our economy, and how we can grow our economy and earn more foreign exchange if foreign exchange is our problem, but I believe creating jobs for young people should be more of a priority for us as people at this time,” Obaseki stated.


Daily Trust

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