The Manufacturers Association of Nigeria (MAN) and the Nigeria Employers’ Consultative Association (NECA) have expressed concerns over the recent increase in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN). According to MAN, this rate hike will worsen the impending recession in the manufacturing sector and have negative effects on its operations. Additionally, MAN highlighted that the increased cost of borrowing resulting from the MPR hike will discourage investments in the sector.
The Manufacturers Association of Nigeria (MAN) expressed concerns about the recent increase in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN), highlighting its potential consequences. MAN warned that the rate hike would result in a high cost of production, leading to increased commodity prices and a buildup of unsold manufactured products. The association called for a reevaluation of the policy mix, considering the fragile state of the economy and the negative impact of a high MPR on the manufacturing sector. MAN emphasized the need for single-digit lending rates to support manufacturers and criticized the lack of measures to stimulate the sector.
Similarly, the Nigeria Employers’ Consultative Association (NECA) urged the government, particularly the monetary policy authority, to address inflation by tackling the issue of imported inflation. NECA emphasized the importance of addressing the factors contributing to rising prices to ensure stability in the economy.
NECA’s Director General, Mr. Wale Oyerinde, emphasized the need for the Central Bank of Nigeria (CBN) to collaborate closely with the fiscal authority in monitoring the current trend in price development and addressing the drivers of inflation. He advised the government, particularly the monetary policy authority, to tackle inflation by addressing the issue of imported inflation.
Earlier predictions by analysts suggested that the CBN and the Monetary Policy Committee (MPC) might raise lending rates in their recent meeting. The CBN had already implemented six consecutive rate hikes, increasing the Monetary Policy Rate (MPR) from 11.5 percent last year to 18 percent in March this year.
Oyerinde expressed concern that the 18.5 percent increase in the MPR could lead to higher production costs, potentially resulting in increased inflation. He recommended a reevaluation of the CBN’s decision to tighten the monetary space and discouraged further lending rate increases. Instead, he suggested coordinated monetary and fiscal measures to stimulate economic growth. Oyerinde emphasized the importance of addressing high energy prices, transportation costs, and security challenges, as these factors contribute to higher production costs and inflation.