MAN flays MPR hike, says it will further weaken manufacturing

The Manufacturing Association of Nigeria (MAN) has flayed the increase in the Monetary Policy Rate (MPR) to 18.5 per cent, saying it would increase the lending rate and worsen the low competitiveness of the manufacturing sector.

Speaking on behalf of the association, MAN’s Director-General, Segun Ajayi-Kadir, pointed out that his team has been clamoring for single-digit lending rates to allow manufacturers to access needed funds to boost the sector’s performance.

He added that the hike, like the previous ones, is an evidence that the Central Bank of Nigeria (CBN) is either unperturbed about their plight or unable to fathom out a more creative policy mix that would reflate the sector.

The MPC raised the MPR to 18.5 per cent from 18 per cent which was fixed at the 290th meeting of the committee held less than two months ago. According to CBN governor, Godwin Emefiele, the decision is to curtail the rising inflation, which stood at 22.22 per cent according to the National Bureau of Statistics (NBS) in April 2023.

The MPR increase was the seventh in a stretch but the inflation rate continues to rise despite the many increases, suggesting that the continuous increase is not yielding the desired result.

Ajayi-Kadir said the increase would compound the imminent recession in the sector and negatively impact its operations in so many ways, including an increase in the cost of borrowing, a high cost of production, a decline in capacity utilisation and a reduction in sales.

He further advised the government to think outside the conventional monetary policy framework and take pragmatic steps to quell the inflationary pressure and reposition the economy, while recommending that priority attention be given to improving the size of available special funding windows while making them accessible to the industries at liberal conditionality.

“The Federal Ministry of Finance, Budget and National Planning and CBN should collaborate to develop an implementable, non-contradictory and well-synthesised monetary and fiscal policy that supports domestic manufacturing and the productive sector in general. By doing this, the supply of goods and local production will increase relative to current demand thereby improving aggregate output.

Immediate and concrete action should be taken to address the manufacturers’ forex needs and local raw material development and procurement should be encouraged. Also, government should enhance infrastructure development, obviate prohibitive electricity tariffs, increase productivity in key industries like manufacturing, tackle smuggling and insecurity,” he said.