The Manufacturers Association of Nigeria (MAN) has said the recently increased interest rate would drag on new job creation and subsequently lead to job loss amid Nigeria’s already worrisome unemployment rate.
In a statement signed by the Director-General of MAN Segun Ajayi-Kadir, manufacturers disclosed that the increase in the Monetary Policy Rate and the Cash Reserve Ratio portended worrisome negative consequences for the manufacturing sector.
MAN noted that the increase in MPR from 14 percent to 15.5 percent would rub off negatively on other rates and dash the hope for a single-digit lending rate for the productive sector of the economy.
It further said that the recent development would lead to an increase in the cost of borrowing by manufacturers, further beyond the double-digit rate, which would disincentivize new investments in the sector.
The statement read in part, “The observed continuous contractionary monetary policy posture without complementary fiscal support may not effectively reduce the prevailing inflationary pressure on the economy.
“This is not unconnected with the fact that the current increase in consumer price index as reported by NBS is not largely driven by the monetary phenomenon, as self-inflicted weak foreign exchange rate management can be linked to the pressure.”
MAN disclosed that the rate hike would cause increased factor costs which will inflate the price of products, stating that it was hopeful that the CBN would creatively go beyond the conventional monetary management system because global economic dynamics were changing and conventional measures might no longer be effective.
The statement further read, “It is important that the monetary authority strategically set in motion mechanism for holistic balancing of the real interest rate, which is critical to investment and not just following leading economies to adjust Interest rate without considering domestic peculiarities.”