Peter Obi, Presidential candidate for the Labour Party in the 2023 general election, has voiced apprehension regarding the potential negative impact of raising the Monetary Policy Rate (MPR) and Cash Reserve Ratio (CRR) to 22.75% and 45% respectively on the economy.
In a post on his X Handle, Obi expressed concern that the significant hike in MPR and CRR could lead to job losses in the productive and manufacturing sectors.
Obi argued that the steep increase in these rates is counterproductive, stating that such a policy measure would fail to address the money supply challenges facing the country.
He emphasized the need for a more nuanced approach to monetary policy to safeguard the economy and preserve employment opportunities.
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Peter Obi’s words, “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 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.
“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.
“I must caution that what the Nigerian economy needs now is hard headed practical originality and results. Tinkering with classical economic theories can only deepen our crisis. Obi Concluded.
