The Director-General of the Manufacturers Association of Nigeria (MAN), Mr. Segun Ajayi Kadir, has voiced strong concerns over the recent decision by the Central Bank of Nigeria (CBN) to raise the monetary policy rate (MPR) by 150 basis points.
Speaking at a press conference in Lagos on Thursday, Ajayi-Kadir warned that this move will further escalate the already high cost of doing business in the country.
Ajayi-Kadir explained that the increase in the MPR would significantly impact the manufacturing sector by raising production expenses, limiting access to funds, and reducing investment and competitiveness. He noted that the recent decisions by the Monetary Policy Committee (MPC) are exacerbating the challenges faced by the sector.
“The MPC seems to prioritize the financial sector over the real sector, rather than seeking a balanced approach,” Ajayi-Kadir stated. He emphasized that this monetary stance will constrain investment and expansion, hindering manufacturers’ ability to invest in innovative technologies, expand production capacities, or explore new markets. The combination of increased borrowing costs and reduced liquidity will further restrict manufacturers’ capabilities in these areas.
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Ajayi-Kadir warned, “As a result, this could lead to delays or cancellations of planned initiatives, ultimately constraining the sector’s potential for growth and its overall contribution to economic growth and development. 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.”
He pointed out that the high lending rate, which now exceeds 30%, will increase the cost of borrowing and make Nigeria’s goods less competitive compared to products from other nations.
Despite acknowledging the MPC’s efforts to address the country’s economic challenges, such as inflation and exchange rate fluctuations, Ajayi-Kadir urged the committee to consider the impact on the real sector and its broader effects on the nation. He emphasized the importance of collaboration with fiscal authorities to bolster the sector’s traditional role in driving significant employment, productivity, foreign exchange earnings, and overall economic progress.
Ajayi-Kadir also noted that the consistent increase in the MPR over the past two years has not yielded positive results. He called on the CBN to explore alternative measures to address the underlying causes of inflation, primarily focusing on cost-push factors.
“The high lending rate exceeding 30% will increase the cost of borrowing and make Nigeria’s goods less competitive to products from other nations,” he concluded, reiterating the need for a balanced approach that considers the long-term health and growth of the manufacturing sector.
