The Manufacturers Association of Nigeria (MAN) has described the recent upward review of the Monetary Policy Rate (MPR) by the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) as unfriendly to Nigerians.
MAN argued that not only did the new interest rate make it even more difficult for CBN to achieve a single rate but also make goods in the country very expensive among other negative consequences.
After holding the MPR constant at 11.5 per cent for about two and a half years, CBN’s MPC raised the benchmark interest rate by 150 basis points to 13 per cent in May and again to 14% in June.
MAN expressed its concerns in a statement on Saturday titled, “The preliminary position of MAN on the July 19, 2022 decision of the Monetary Policy Committee of the central bank of Nigeria.”
The group said this was another level of increase in interest rates on loanable funds, which would upscale the intensity of the crowding-out effect on the private sector businesses as firms had lesser access to funds in the credit market.
According to the statement, the rate hike, amongst other biting consequences would “intensify demand crunch emanating from the heavily eroded disposable income of Nigerians, constraining access of households and individuals to cheap funds.”
It said the situation would also “lead to rising cost of manufacturing inputs, which will naturally translate to higher prices of goods, low sales and enormous volume of inventory of unsold products.”
The statement further read, “MAN is therefore concerned about the ripple effects of this decision and its implications for the manufacturing sector that is visibly struggling to survive the numerous strangulating fiscal and monetary policy measures and reforms.
“Consequently, manufacturers are hopeful that the stringent conditionalities for accessing available development funding windows with the CBN will be relaxed to improve the flow of long-term loans to the manufacturing sector at single-digit interest rate.”
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