Peter Obi, the former Governor of Anambra State and prominent political figure, has drawn attention to the significant economic challenges facing Nigeria, as detailed in a recent report by the Manufacturing Association of Nigeria (MAN). In a series of tweets, Obi highlighted the adverse effects of the country's current monetary and fiscal policies, emphasizing the urgent need for reevaluation and reform.
The MAN report, which Obi referenced, paints a bleak picture of the manufacturing sector in 2023. It revealed that: 767 companies have shut down, while 335 are struggling to stay afloat.
Capacity utilization in the sector has declined sharply to 56%. The effective interest rate has soared to over 30%, making borrowing prohibitively expensive for businesses.
The backlog of unsold finished products has increased dramatically to N350 billion.
Real growth** in the sector has slowed to a mere 2.4%.
Obi argued that these figures starkly illustrate the detrimental impact of Nigeria’s current economic policies. He stated, “These harsh economic policies, both on the monetary and fiscal sides, have continued to slow down our economic growth, drive multinationals out of the country, stifle our small businesses, and discourage the inflow of foreign direct investment.”
The high interest rates and restrictive fiscal measures have created a challenging environment for businesses, particularly in the manufacturing sector. Companies struggle to obtain affordable credit, essential for expansion and innovation, while facing increased costs for importing raw materials and production machinery due to unfavorable foreign exchange conditions.
Obi's critique aligns with broader concerns among economic experts and business leaders who argue that the current policy framework is unsustainable. The inability of businesses to thrive under these conditions not only hampers economic growth but also leads to job losses and diminished competitiveness on a global scale.