The President of the Association of Capital Market Academics of Nigeria, Professor Uche Uwaleke has said the aggressive hike in the monetary policy rate by the Central Bank of Nigeria is hurting the overall economy.
The Nasarawa State University Professor expressed his opinion after the first quarter of 2024 GDP released by the National Bureau of Statistics on Friday showed subdued economic growth linked to the hawkish monetary policy stance of the central bank.
The NBS data showed that the GDP grew by 2.98 per cent compared to the 3.49 per cent recorded in the fourth quarter of 2023.
The performance of the GDP in the first quarter of 2024 was driven mainly by the services sector, which recorded a growth of 4.32 per cent and contributed 58.04 per cent to the aggregate GDP.
The GDP growth levels are far below President Bola Ahmed Tinubu’s expectations after promising voters at least 6 per cent GDP growth during his campaign last year.
Uwaleke said in a response to NewsNGR that, “In my view, this identified growth pattern, weighted in favour of the services sector, is not healthy for a developing economy such as ours. Little wonder, economic growth does not appear inclusive reflecting in rising unemployment and poverty levels.
“It is time we reset this faulty economic structure, leveraging technology, in favour of the productive sectors: Industry and Agriculture. Indeed, structural change is strongly recommended (by UNCTAD) as one of the ingredients of building productive capacities.”
In March, the CBN raised the monetary policy rate to 24.75 per cent, a decision to combat inflation. The bank admitted that it was paying less attention to growth due to inflationary pressure.
In the last MPC in May, the bank further hiked interest rates by 150 basis points to 26.75 per cent after weighing several options.
“The key focus of the MPC at this meeting remained to achieve price stability by effectively using tools available to the monetary authority to rein in inflation,” the CBN Governor, Olayemi Cardoso said.
But Uwaleke argued that “The economy is tanking, MPC should pause policy rate hike.”