Dangote criticizes CBN’s 26% interest rate, says there will be no increase

Dangote Group CEO Aliko Dangote has criticised the Central Bank of Nigeria’s decision to raise interest rates to almost 30 per cent.

The most prominent entrepreneur also advocated for policies aimed at protecting domestic industries and developing them into homegrown leaders capable of creating jobs and promoting prosperity in the face of current global economic problems.

Africa’s richest man, while delivering a speech on “Rethinking Manufacturing in Nigeria” as the keynote speaker at the Nigerian Manufacturers Summit, told the gathered manufacturers and investors in Abuja that Nigeria has what it takes to achieve prosperity.

Recall that in May, the Monetary Policy Committee of the Central Bank of Nigeria raised the benchmark interest rate by 150 basis points, from 24.75 percent to 26.25 percent.

The central bank defended its monetary policy, saying high interest rates were necessary to curb inflation.

Speaking at a producers’ summit at the Presidential Villa in Abuja, the Dangote Group chairman said companies were struggling to cope with high prices.

“Nobody can create jobs at 30 percent interest rates. There will be no growth,” he said.

According to him, an import-dependent country is the equivalent of import-dependent poverty.

Dangote called for a fundamental rethink of Nigeria’s approach to production and industrial policy.

Dangote emphasised the key role of industrialisation in sustainable economic growth.

“Import dependence is tantamount to importing poverty and exporting jobs,” Dangote said, underlining one of his key messages.

The business magnate pointed to the stark contrast between Nigeria’s manufacturing sector and that of other countries. “Unfortunately, Nigeria lags far behind, with its manufacturing sector accounting for less than five percent of merchandise exports in 2022,” he said, comparing that to countries like China and South Korea, where manufacturing accounts for 93 percent of exports.

Dangote summed up Nigeria’s industrial history by noting: “After independence, and in fact until the late 1980s, we had a vibrant and increasingly diversified manufacturing industry.”

He then compared this to the current situation, saying, “But as we can all attest, our manufacturing sector has declined over the years.”

The industrialist strongly advocated for the government to protect and support the industry. “I believe that the primary role and responsibility of the government is not only to promote investment and encourage investors to produce, but also to ensure that these investments are nurtured and protected so that they can grow and prosper,” he said.

Addressing common misconceptions, Dangote stated: “We are often told that protecting industries makes a country uncompetitive! This is pure fiction. It is quite the opposite. I am saying that you cannot be competitive unless you protect and support your own industries.”

He cited the Nigerian cement industry as an example of effective government protection leading to competitiveness.

“We are now one of the top 10 most competitive cement producers in the world and the largest cement producer and exporter in Africa,” Dangote said.

Dangote called for urgent action: “We must look to leading countries in the West and East that are actively protecting their domestic industries.

We must enact similar policies that protect our domestic industries and develop domestic leaders who will create the jobs and prosperity we so desperately need.”

Dangote noted that there are many factors contributing to the poor performance of the manufacturing sector, stressing that the most important issue requiring attention is government policies and its approach to investments and investors.

He pointed out that industrial and manufacturing entities are different from commercial entities, stating that the primary role and responsibility of government should be not only to promote investment and attract investors into the manufacturing sector, but also to ensure that these investments are supported and protected to facilitate growth and sustainable development.

He stressed that government protection of industry does not only encompass short- and medium-term regulatory mechanisms such as tax holidays and other incentives, which have their place in industrial policy and should be used when needed to ease investment challenges.

Disputing claims that protecting domestic industries leads to reduced competitiveness, Dangote argued the opposite, citing the examples of China, Korea, India and other Asian countries.

He stressed that these countries have managed to develop strong economies and pose a challenge to the established global economic order precisely because they protect their industries.

He noted that historically, Nigeria had not been competitive in cement production and until 2007 produced less than two million tonnes of cement per year.

He stressed that thanks to the government’s strategic policies and support, Nigeria has become the largest producer and exporter of cement in Africa, ranking among the top ten countries in the world in terms of competitiveness.

Dangote noted that in 2023, Dangote Cement alone generated more tax revenue for the government than the entire banking sector.

According to him, Nigeria has not been competitive in cement production in the past. Until 2007, Nigeria produced less than two million tons of cement per year. Currently, we have about 60 million tons of production capacity and another nine million under construction.

“The foundation for this success story was laid by the administration’s decision to extend full support and protection to the Nigerian cement industry. Today, we are one of the 10 most competitive cement producers in the world and the largest cement producer and exporter in Africa. In 2023, Dangote Cement alone paid more in taxes to government coffers than the entire banking sector.”

Dangote also dismissed claims that protecting industries would lead to monopoly, stating that it was common knowledge that foreign investors only come in when they see that local investors are also doing well.

Stressing that Nigeria has what it takes to develop and sustain a globally competitive manufacturing sector, Dangote called for a rethink of its industrialisation policies, learning from leading Western and Eastern countries that are actively protecting their domestic industries.

The summit, organised to discuss challenges facing the real sector in Nigeria, was attended by key stakeholders including the Vice President and the Executive of the Manufacturers Association of Nigeria.