The Manufacturers Association of Nigeria (MAN) has expressed deep concerns over the Central Bank of Nigeria’s (CBN) decision to maintain the Monetary Policy Rate (MPR) at 27.5 percent since November 2024.
MAN argues that this policy posture is suffocating the capacity of the manufacturing sector, making it difficult for manufacturers to access affordable credit.
With the benchmark interest rate held at 27.5 percent, Nigeria has become the 6th most expensive country to source credit, with local manufacturers grappling with an average lending rate of over 37 percent.
This has led to a sharp increase in finance costs for manufacturers, surging by over 44 percent from ₦1.43 trillion in 2023 to ₦2.06 trillion in 2024.
The high cost of credit has diminished the flow of investments into the manufacturing sector, dulled the return on existing investments, and led to underutilization of industrial capacity.
Small and Medium Industries have been hit the hardest, with confidence in the industrial outlook waning.
MAN has called on the CBN to urgently reconsider its monetary stance and cut the benchmark interest rate significantly to reflect current realities.
The association also urges the CBN to deploy moral suasion and policy incentives for commercial banks to facilitate single-digit, concessionary interest rates to the manufacturing sector.
MAN demands that the CBN: – Facilitate the approval of the ₦1 trillion earmarked for manufacturers under the Stabilization Plan
– Facilitate a significant increase in the capital base of the Bank of Industry (BOI) to meet the sector’s growing credit demands,
– Settle the outstanding $2.4 billion Forex Forward Contracts to restore manufacturers’ confidence, and
– Facilitate a policy direction to peg the customs duty exchange rate for importing industrial inputs to prevent further inflationary pass-through effect.
MAN emphasizes that industrial confidence is a fragile currency and once broken, it takes time to rebuild.
The association urges the CBN to act decisively and in synergy with the fiscal authority to ensure that Nigeria’s manufacturing sector does not sink deeper into stagnation.
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