The Manufacturers Association of Nigeria (MAN) has expressed dissatisfaction with the Central Bank of Nigeria (CBN) over the continuous increase in interest rates.
MAN said the apex bank by its policily is favouring the financial sector.
Director General of MAN, Segun Ajayi-Kadir, stated this in reaction to the latest hike in the Monetary Policy Rate (MPR) by the CBN.
The Monetary Policy Committee (MPC) of the apex bank last week, increased the MPR by 150 basis points to 26.25 percent from 24.75 percent, while the Liquidity Ratio (LR) was left unchanged at 30.0 percent.
The committee also opted to maintain the Cash Reserve Ratio (CRR) of Deposit Money Banks at 45.0 percent.
Ajayi-Kadir said that the MPC decisions will further exacerbate the challenges of the manufacturing sector.
He said tightening credit interventions and increasing loan costs would raise production costs, limit fund accessibility, and erode investment and competitiveness within the manufacturing sector.
The MAN DG said that the current monetary stance would lead to constraints on investment and expansion, hindering manufacturers’ ability to invest in innovative technologies, expand production capacities, or venture into new markets.
His words: “The persistent macroeconomic instability in Nigeria, resulting from sustained monetary policy decisions over the past two years has negatively impacted the manufacturing sector.
“This instability, compounded by various constraints affecting sectoral performance, continues to disrupt production plans, undermine investments, and cast uncertainty over prospects.
“Furthermore, recent decisions by the MPC exacerbate these challenges by further tightening credit interventions, increasing loan costs, raising production cost, limiting fund accessibility, and eroding investment and competitiveness within the manufacturing sector.
“It is evident that the MPC leans towards prioritising the financial sector over the real sector, rather than striving for a balanced approach between the two.
“These effects are intensified by the current monetary stance, contributing to constraints on investment and expansion and further decline in manufacturing competitiveness.
“The decision by the MPC will further compound the already high cost of doing business, consequently diminishing the competitiveness of Nigerian products in the global market.
“The high lending rate exceeding 30 percent will increase the cost of borrowing and make Nigeria’s goods less competitive to products from other nations,” he said.
Ajayi-Kadir acknowledged the efforts of CBN in confronting the economic challenges facing the country, notably the fluctuations in inflation and exchange rates, but urged the apex bank to consider the impact on the real sector and the multiplier effect on the nation.
He stressed that collaboration with fiscal authorities was essential to reinforce the sector’s traditional role in driving significant employment, heightened productivity, steady foreign exchange earnings, and sustained economic progress.
According to him, the strategy of raising the MPR had persisted for nearly two years without yielding positive results, hence the need for CBN to explore alternative measures to address the underlying causes of inflation, primarily cost-push factors.
Ajayi-Kadir added, “MAN earnestly urges the MPC to carefully evaluate the effects of these monetary policy actions on both the manufacturing sector and the broader economy. “Achieving a delicate equilibrium between addressing macroeconomic challenges and fostering the growth and resilience of the manufacturing industry is crucial.
“Therefore, MAN advocates for robust collaboration between monetary and fiscal authorities and implementation of targeted interventions aimed at alleviating the financial burden on manufacturers.”
