BREAKING: Peter Obi projects CBN’s new MPR will worsen Nigeria’s economy, cause job losses

The candidate of the Labour Party during the 2023 presidential election, Peter Obi, has projected that the new Monetary Policy Rate (MPR) of the Central Bank of Nigeria (CBN) will worsen the country’s economy, cause job losses and lead to other negative results.

The Central Bank recently decided through the Monetary Policy Committee (MPC) to increase Nigeria’s Monetary Policy Rate to 22.5% and the Cash Reserve Ratio (CRR) to 45%.

“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,” Obi posted on X.

“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.”

Obi said tightening liquidity in the financial system does not improve productivity, such as food production, which is the major cause of inflation in Nigeria.

He stated that moreover, only about 12% of N3.6 trillion of the total money in circulation is in the banking system.

This, according to him, simply means that 88% which is about N3.2 trillion is outside the banking system.

Obi believes that this measure would rather be counterproductive as it would not address the intended purpose of managing the money supply.

The former governor of Anambra state added that these new measures will worsen the fragile economy as the supply of funds would dry up for the real sector.

Obi said that 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.

This would then result, obviously, in increased bad loans, and worsening the nation’s economic situation.