High Interest, Exchange Rates Killing Agriculture – Minister
The Minister of Agriculture and Rural Development, Chief Audu Ogbeh has rued the impacts of the outrageous exchange rate and interest rate on agro-allied produce in the country.
Ogbeh revealed this in a chat with New Telegraph in Lagos.
Specifically, he said that interest rate of between 25 and 32 per cent for Micro Small and Medium scale Enterprise (MSME) owners, farmers, outgrowers and agro-allied operators would continued to stifle economic growth and Nigeria’s ambition plan to attain industrialisation.
He said no country like Nigeria with such a high interest rate of 25 per cent would see a boom in its economy.
Ogbeh explained that government needs to intervene in the country’s high interest rate regime in order to bring succour to the economy.
He suggested that it is necessary to have preferential interest rate for agriculture at nine per cent.
The minister, however, noted that Federal Government’s advocacy motive to use foreign direct investment (FDI) to boost the economy is ruining local operators and industries.
He noted that these investors are immediate beneficiaries of government’s gesture at the detriment of the local operators.
The minister noted: “At interest rates of between 25 per cent and 32 per cent, what – on God’s green earth – can you do? You can’t do much. But these foreigners can borrow at two per cent, bringing a $100 million or $200 million to invest. Of course, they will create some jobs, but essentially low level jobs – for outgrowers and others. In a sense, they are jobs.
“But the way we are heading, what it means is that if these interest rates persist for much longer, the only people who will dominate agro-industry, and indeed major industrialisation, in this country are foreigners.”
Ogbeh queried:” Is that necessarily a good thing? It’s good in some ways. But if they take absolute control, then we are in danger. This is the complexity. And I keep complaining, for instance, about the interest rates, although many people don’t seem to agree with me. Where in the world have interest rates remained at over 25 per cent for 30 years and that country still claims the economy is growing? How does it grow?”
On stakeholders’ parley with the bankers, the minister said: “A massive nationwide debate has to take place between the bankers, the CBN, businessmen, manufacturers’ association, agricultural engineers, input producers and suppliers, policy economists and others.”
Besides, he said questions on Foreign Direct Investments (FDIs) and interest rates need to be pondered upon. “Are we doing the right thing? Or, why is it then necessary to have preferential interest rate for agriculture at nine per cent? We seem to agree that if it hadn’t happened, some of the progress made in the last two years would have been impossible.
“Even the nine per cent is still too high. The highest in the world today is India, at 3.5 per cent.
In the rest of the world, it is two per cent, or 2.5 per cent. So these are very serious problems, although people may skip over them and pretend that all is fine, but all is not really fine. All is not fine; especially as our population is growing and our credit is still a crucial issue. We thank God power seems to be stabilising.