The Manufacturers Association of Nigeria (MAN) has issued a stern warning to the federal government regarding the recent decision to increase interest rates by 200 basis points.
MAN contends that this move will exacerbate macroeconomic instability, particularly impacting the manufacturing sector.
Segun Ajayi-Kadir, the Director-General of MAN, expressed deep concern over the decision, emphasizing its potential to disrupt production plans, jeopardize investments, and cloud the sector’s prospects.
He highlighted that the hike to 24.75 percent would escalate the cost of loans, leading to increased production costs and reduced access to funds for manufacturing investment.
Ajayi-Kadir underscored the adverse effects of macroeconomic instability on the manufacturing industry, citing challenges such as foreign exchange fluctuations, rising energy prices, and food insecurity.
These factors have not only heightened inflationary pressures but have also significantly eroded consumers’ purchasing power.
The association lamented that the decision would further limit credit interventions, making it harder for manufacturers to access affordable financing.
Moreover, MAN pointed out that the move contradicts efforts to boost competitiveness in the global market, as Nigerian manufacturing export values remain significantly lower than those of other countries in the region.
Highlighting the sector’s crucial role in driving employment, productivity, and economic growth, MAN urged the Monetary Policy Committee (MPC) to reconsider its decision.
It called for a more balanced approach that takes into account the challenges facing the manufacturing sector and collaborates with fiscal authorities to support sustainable growth.
With concerns mounting over the potential fallout from the interest rate hike, manufacturers are calling for urgent action to mitigate the adverse effects on the economy and safeguard the future of the manufacturing industry.