Peter Obi advises Tinubu that addressing insecurity will significantly boost food and oil production, emphasizing the need for stability.
Mr. Peter Obi, the ex-governor of Anambra State, believes that if the Federal Government effectively tackles insecurity concerns in Nigeria, there will be a significant rise in both food and oil production.
Mr. Obi expressed that the increase of both the Monetary Policy Rate (MPR) and Cash Reserve Ratio (CRR), to 22.5% and 45%, respectively, by the Monetary Policy Committee in a statement shared on X (formerly Twitter) on Thursday is an unhelpful approach towards alleviating Nigeria’s ongoing economic troubles.
According to Obi, who ran for the presidency under the Labour Party in the previous election, a reduction of liquidity within the financial system does not enhance productivity with regards to food production. He argues that it is instead responsible for causing inflation in Nigeria.
Mr. Obi suggested that resolving the insecurity in the country is essential to overcome economic hardships, as it would increase food and crude oil production, consequently leading to a decline in inflation and an overall boost in productivity—a key solution for reducing product prices such as food.
Obi expressed that by following this approach, our productivity would go up and we could also regain the trust of FDIs and FPIs to invest in the country.
Hard-headed practical originality and results are what he believes the Nigerian economy requires presently.
The LP flagbearer emphasized that attempting to modify classical economic theories will merely exacerbate our crisis.
I must admit that being recognized as a traditional trader from Onitsha does not automatically grant me the title of an economic specialist.
Having extensive trading expertise and real sector engagement, I firmly believe that the recent decision of the Monetary Policy Committee to raise both the Monetary Policy Rate (MPR) to 22.5% and Cash Reserve Ratio (CRR) to 45%, will exacerbate Nigeria’s economic crisis. This policy change is anticipated to generate more job losses in sectors such as manufacturing, which relies heavily on bank loans and credit facilities for their funding requirements thereby impeding most household finances further.
Improving productivity in sectors such as food production is the primary solution for inflation issues in Nigeria, rather than tightening liquidity within the financial system. Additionally, a mere 12% of N3.6 trillion total currency circulation exists within banking systems while approximately 88%, or N3.2 trillion remains outside of it.
Implementing this measure could have the opposite effect and fail to achieve its intended goal of managing money supply. The introduction of these measures may exacerbate an already fragile economy, causing a reduction in available funds for the productive sector. Coupled with increased interest rates on loans following a rise in MPR rate above 30%, manufacturers and SMEs will find it exceptionally challenging to repay debt leading to further proliferation of bad loans that would contribute towards negative economic growth trends within the country.
In order to effectively combat the high inflation rate and decrease in production, it is essential for the government to tackle the problem of insecurity within our country. This will create opportunities for higher levels of food and crude oil output, generating an overall increase in productivity that can lead to more affordable products – especially food items. As a result, we would boost both our productivity level while simultaneously restoring confidence among FDIs and FPIs about investing further into this nation’s future.
It’s important to warn that the Nigerian economy requires a pragmatic approach focused on innovation and tangible outcomes. Making adjustments to traditional economic doctrines will only worsen our current predicament.
