Food, And Oil Production Will Increase If You Address Insecurity – Obi Tells Tinubu

Posted by African Examiner Featured, Latest Headlines, News Across Nigeria Thursday, February 29th, 2024

(AFRICAN EXAMINER) – Former governor of Anambra State, Mr Peter Obi, is of the opinion that if the Federal Government addresses the issues of insecurity appropriately, then the country will see a great increase in the production of food and oil.

In a statement shared on X (formerly Twitter) on Thursday, Mr Obi noted that the Monetary Policy Committee’s decision to increase the Monetary Policy Rate (MPR), to 22.5% and the Cash Reserve Ratio (CRR), to 45%, is a counterproductive measure to easing Nigeria’s current economic crisis.

Obi who was Labour Party’s Presidential Candidate in the last election, was of the opinion that tightening liquidity in the financial system does not improve productivity, i.e. food production, which he asserts is the major cause of inflation in Nigeria.

In proffering a way out of the economic hardship, Mr Obi noted that “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,” Obi opined.

According to him, what the Nigerian economy needs at the moment is hard-headed practical originality and results.

“Tinkering with classical economic theories can only deepen our crisis,” the LP flagbearer stressed.

Below is his full take on the economic situation at this time in Nigeria’s history.

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.

Tightening liquidity in the financial system does not improve productivity, i.e 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.

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.