Let Me Confess About Nigerian Economy, Says Peter Obi

The 2023 presidential candidate of the Labour Party, Mr. Peter Obi has spoken on the reality of his understanding about the economy of Nigeria, and the challenges it faces.

Mr. Peter Obi also proffered solutions to the current economic challenges facing the country while condemning President Bola Ahmed Tinubu’s measures to curb the economic chaos.

He stated that his economic expertise should not be mistaken for the mere trading trait known to the people doing business in Onitsha. He claimed his expertise is derived from his long-term involvement in the professional economic sector.

He said: “Let me confess that the label of being a vintage Onitsha-based trader does not in any way confer on me the status of an economic expert. With my vast trading knowledge and my involvement in the real sector, I am of the strong opinion that the recent decision of the Monetary Policy Committee to increase the Monetary Policy Rate, MPR, to 22.5% and the Cash Reserve Ratio, CRR, to 45% will further worsen the economic situation of most Nigerian households as it is bound to cause more job losses in the productive sector, especially manufacturing and other sectors that rely on bank loans and credit facilities for their funding needs.

Condemning the monetary policies rolled out by the administration of President Bola Ahmed Tinubu, and listing the projected challenges that the policies may incur, he said “Tightening liquidity in the financial system does not improve productivity, that is food production, which is the major cause of inflation in Nigeria. Moreover, only about 12% of N3.6 trillion of the total money in circulation is in the banking system which means that 88%, about N3.2 trillion is outside the banking system.

So, this measure would rather be counterproductive as it would not address the intended purpose of managing the money supply. These new measures will worsen the fragile economy as the supply of funds would dry up for the real sector, and the new MPR rate hike will push the interest rate on loans to above 30%, which would be very difficult for the real sector operators especially manufacturers and SMEs to repay; resulting, obviously, in increased bad loans, and worsening the nation’s economic situation.

Highlighting solutions to the challenges confronting the Nigerian economy, Mr. Peter Boi said “The most critical way to manage our high rate of inflation and decline in production is for the government to address the issue of insecurity in the country, which will allow for increased food, and crude oil production, and an overall increase in production, which will make products, especially food, cheaper. This way we would increase our productivity as well as restore the confidence of FDIs and FPIs to come back to the country.

Mr. Peter Obi cautioned that what the Nigerian economy needs now is hard-headed practical originality and results. Tinkering with classical economic theories can only deepen our crisis.