The Manufacturers Association of Nigeria (MAN) has issued a statement today to respond to the recent decision by the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) to raise the Monetary Policy Rate (MPR) by 150 basis points to 26.25%.
According to the statement signed by Director General, Manufacturers Association of Nigeria, Segun Ajayi-Kadir, mni, MAN acknowledges the MPC’s efforts to address inflation but expresses concern about the potential negative impact on the manufacturing sector. MAN highlights the ongoing challenges faced by manufacturers, including foreign exchange volatility, energy costs, and food insecurity. These factors, coupled with persistent monetary tightening, create an environment that disrupts production plans, discourages investment, and hinders overall growth.
MAN emphasizes the detrimental effects of the MPC’s decision on investment and competitiveness. Higher borrowing costs and reduced liquidity restrict manufacturers’ ability to invest in new technologies, expand production, and explore new markets. This can lead to stunted growth and a decline in the sector’s contribution to the national economy.
Furthermore, the high lending rates further erode the competitiveness of Nigerian goods in the global market. MAN cites data showing a significant disparity in export values compared to regional competitors like South Africa, Egypt, and Morocco. Additionally, the association’s survey reveals a decrease in manufacturing capacity utilization and sectoral growth.
While acknowledging the need to address inflation, MAN urges the MPC to consider alternative measures, particularly those targeting the underlying cost-push factors driving inflation. They advocate for collaboration between monetary and fiscal authorities to achieve a more balanced approach that prioritizes both economic stability and the growth of the real sector.
MAN proposes specific policy measures to support the manufacturing sector, such as: Implementing targeted interventions to address cost-push inflation, reducing the financial burden on manufacturers and prioritize foreign exchange and credit allocation to manufacturers, alongside accelerating the proposed recapitalization of the banking sector.
Others include: Investing in infrastructure development within industrial hubs and promote renewable energy sources to decrease logistical costs and enhance competitiveness, encourage backward integration and local sourcing of raw materials through incentives, thereby reducing reliance on imports and pressure on foreign exchange reserves.
MAN emphasizes the crucial role of the manufacturing sector in driving employment, productivity, foreign exchange earnings, and overall economic progress. They call for a collaborative approach that fosters a more supportive environment for the industry’s growth and resilience.
