By Milcah Tanimu
Former Deputy Governor of the Central Bank of Nigeria (CBN), Kingsley Moghalu, has urged President Bola Tinubu’s administration to address the structural bottlenecks hindering the nation’s economic growth. Despite the expansion of Nigeria’s financial sector, Moghalu pointed out that this growth has not translated into broader economic improvement.
Moghalu emphasized the importance of increasing private sector credit to stimulate production and economic activity. He identified several key structural issues that need to be resolved, including inadequate infrastructure, particularly in electricity, as well as high inflation and monetary policy constraints. According to Moghalu, overcoming these obstacles is essential for fostering capital formation, production, and consumption.
“It is remarkable that despite the growth of Nigeria’s financial sector, the ratio of credit to GDP is only 14%. Private sector credit helps boost capital formation, production, and consumption. Figuring out how to overcome this bottleneck is the task of economic management,” Moghalu stated on X (formerly Twitter). “Dealing with structural bottlenecks such as infrastructure (chiefly electricity), inflation, and monetary policy is crucial. Additionally, security issues across the country are undermining the business environment and SME access to credit. Inclusive economic growth is impossible in this scenario.”
Aliko Dangote, Chairman of the Dangote Group, has also expressed concerns about the current economic policies. He disagreed with the CBN Monetary Policy Committee’s (MPC) decision to set the interest rate at 30%, arguing that such high rates impede job creation and economic expansion.
CBN Governor Yemi Cardoso responded to these criticisms, explaining that the MPC’s decisions are based on available data with a primary focus on controlling inflation. Cardoso acknowledged the importance of job creation and economic growth but maintained that curbing inflation is a necessary priority.
“The MPC is not oblivious to the fact that ultimately we do want to grow. The country does need growth. If these hikes were not done at the time they were done, the naira to dollar rate was almost tipping over,” Cardoso stated at the Business CEO Forum in Lagos.
Both Moghalu and Dangote’s comments highlight the urgent need for a strategic approach to address the fundamental issues affecting Nigeria’s economic development.
