By Onome Amuge
The Manufacturers Association of Nigeria (MAN) has warned that the increase in the country’s monetary policy rate (MPR) by the Central Bank of Nigeria (CBN) from 18 per cent to 18.5 per cent will will certainly lead to an increase in lending rates and worsen the uncompetitiveness of the manufacturing sector.
MAN, in its reaction to the interest rate hike said the policy measure would further undermine real sector growth and negatively impact its operations.
Segun Ajayi-Kadir, director-general of MAN, said the MPR hike would, among other challenges, lead to an increase in the cost of borrowing which would further discourage investments in the sector.
Ajayi-Kabir also stressed that it would also lead to a high cost of production which would lead to higher commodity prices and inventory of unsold manufactured products.
The association in a statement said, “It is evident that the continuous and consistent increase in MPR is not yielding the desired growth in the economy. The Nigerian economy remains fragile and bedevilled with numerous challenges that inhibit growth.
This increase, like the previous ones, is evidence that the CBN is either unperturbed about the plight of the productive sector or is unable to fathom out a more creative policy mix that would reflate the sector.”
MAN also stressed that it has been clamouring for single-digit lending rates to enable manufacturers access to needed funds to boost the performance of the sector.
It,therefore, advised the monetary authority to pay closer attention to rethink the policy mix, bearing in mind the parlous state of the economy, especially the effect of a high MPR on the manufacturing sector and the economy.
The association also emphasised the need for the government to think outside the conventional monetary policy framework and take pragmatic steps to quell the inflationary pressure and reposition the economy.
