The Manufacturers Association of Nigeria (MAN) has criticised the recent interest rate increase by the Central Bank of Nigeria (CBN).

The Director General of MAN, Mr. Segun Ajayi-Kadir, made the association’s position known on Thursday in a statement titled ‘Reaction of MAN on the Report of MPC Meeting on September 23-24, 2024’.

Investors King reported that on September 24, 2024, the apex bank announced another increase in its Monetary Policy Rate (MPR) to 27.25% from 26.75 percent.

The decision was made during the Monetary Policy Committee (MPC) meeting chaired by CBN Governor, Yemi Cardoso.

Reacting to the development, MAN noted that with the higher interest rate, the cost of production will increase.

According to him, the impact of the increase goes beyond the manufacturers, it will stifle investment opportunities.

“With the increase in borrowing costs, manufacturers will now pay over 35 percent on their credit facilities. Clearly, this will lead to increase in production costs, higher prices of finished goods, lower competitiveness and production capacity expansion.

“The impact of higher interest rates goes beyond compounding the challenges of manufacturers; it stifles opportunities for investment in crucial areas such as technology, retooling, and expansion within the manufacturing sector.

“Manufacturers will, all the more, be compelled to choose servicing existing credit facilities over expansion and investment in new product lines.

“For instance, over the first six months of the year, manufacturers incurred more than N730 billion in capital expenses due to the continuous rise in interest rates imposed by commercial banks.

“This dilemma hampers innovation, productivity and growth,” Ajayi-Kadir added.

Furthermore, the Director General of MAN revealed that the recent increase will impact the Nigerian economy.

He noted that the country’s capacity to employ its growing youth population diminished significantly.

“This growing stockpile of unsold products underscores the difficulties manufacturers face in a weakening market. The broader implications of these challenges threaten not only the manufacturing sector but also the Nigerian economy as a whole.

“As higher borrowing costs lead to poor access to funds, lower capacities and potential business closures. Truth be told, the capacity to absorb the country’s growing youth population into meaningful employment has diminished significantly with the attendant adverse socioeconomic and security implications.

“We also note that this increase is coming at a time that central banks in other climes are either retaining or cutting rates.

“It is, therefore, expedient that government adopt a holistic and balanced approach to policy formulation and decisions, with due consideration of their overall impact on the various sectors of the economy, particularly the productive sector.

“Undoubtedly, price stability is crucial, and so is the survival and growth of the manufacturing sector. This should be top priority at this time and is in line with the government avowed commitment to growing domestic production, creating more jobs and alleviating poverty,” Ajayi-Kadir added.

On Wednesday, the federal government of Nigeria proposed the implementation of the Naira for transactions to reduce pressure on the foreign exchange (FX) market and to strengthen the Naira against foreign currencies.

This proposal was declared by the Special Adviser to the President on Information and Strategy, Bayo Onanuga, who spoke on Wednesday during a press briefing at the state house in Abuja.

It could be recalled that Naira has significantly depreciated from N471.67 per USD to N1667.42 per USD in the official market as of Wednesday. Therefore, as part of the government’s effort to reduce the demand for dollars, the federal government reiterated that on October 1, the sale of crude oil in Naira to the Dangote refinery, and other local refineries would commence.

According to Onanuga, the federal government will implement policies that would force the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Port Authority (NPA) to transact in Naira.

“The second one has to do with the operating laws guiding NIMASA and Nigerian Port Authority (NPA). The amendment under that in the economic stabilisation bills is that all their fees, charges, levies, fines, and other monies accruing to them and payable to those agencies will now be paid in Naira at the applicable exchange rate.” He said.

He added that this is part of the economic stabilisation bills (ESBs) to be presented by President Bola Tinubu to the national assembly.

“Hitherto, those agencies were charging in dollars but now collect it in Naira. This government wants to put a lot of emphasis on our national currency instead of everything being dollarised in our economy.”

The Flour Mills of Nigeria Plc (FMN) has perfected plans to buy out minority shareholders to focus on strengthening its position as the future of African food businesses.

Boye Olusanya, the group managing director, stated that the company has received approval from the Nigerian Exchange Limited (NGX) and the Securities and Exchange Commission (SEC) to proceed with the purchase.

FMN disclosed on Tuesday that the buyout would be executed through a scheme of arrangement, supervised by relevant regulatory bodies.

According to Olusanya, this move aligns with FMN’s goal to become the leading Pan-African food business, improving its ability to innovate and grow, while focusing on long-term value for stakeholders.

He said the buyout would enhance FMN’s operational efficiency and decision-making agility.

The company plans to apply to the Federal High Court for approval to convene a shareholders’ meeting, where the resolution to buy out minority shareholders will be discussed.

Olusanya said the resolution would pass if at least 75% of shareholders, either in person or by proxy, approve it at the Court-Ordered Meeting (COM). FMN’s board has already recommended the offer to shareholders, citing the buyout’s potential advantages for innovation and sustainable growth.