Goli Innocent 
Manufacturers Association of Nigeria (MAN) on Friday reacted to the latest increase in the interest rate announced by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN).
New Telegraph had earlier gathered that the CBN MPC increased its monetary policy interest rates to 18.5 per cent.
The CBN unanimous decision was reached at a meeting held by the apex bank MPC on Wednesday, May 24.
According to the reports, the members of the MPC are said to have voted to increase the benchmark interest rate by 50 basis points to 18 per cent.
However, Reacting to the development, MAN noted that the latest policy measure undermines real sector growth.
The increase will compound the imminent recession in the manufacturing sector and negatively impact its operations in so many ways,” the Director General of MAN, Segun Ajayi-Kadir, noted in a statement made available to newsmen on Thursday, May 25.
Ajayi-Kadir warned that the MPR hike can, among other challenges, lead to an “Increase in the cost of borrowing that will further discourage investments in the sector; High cost of production which will lead to higher commodity prices and inventory of unsold manufactured products; Decline in capacity utilization owing to high-interest rate and reduction in sales.
“Reduction in the output of the sector which will further reduce the national productivity and per capita income; Decline in government revenue as a result of low productivity of the manufacturing sector and the resulting low taxes; and High product prices owing to rising factor costs, which will, in turn, render the sector less competitive.”
He also said: “It is evident that the continuous and consistent increase in MPR is not yielding the desired growth in the economy.
The Nigerian economy remains fragile and bedevilled with numerous challenges that inhibit growth.
Therefore, the monetary authority needs to pay closer attention to rethink the policy mix, bearing in mind the parlous state of the economy, especially the effect of a high MPR on the manufacturing sector and the economy.
“The increase in MPR from 18% to 18.5% will certainly lead to an increase in lending rates and worsen the uncompetitiveness of the manufacturing sector.
This increase, like the previous ones, is evidence that the CBN is either unperturbed about the plight of the productive sector or is unable to fathom a more creative policy mix that would reflate the sector.
Therefore, it is necessary for the government to think outside the conventional monetary policy framework and take pragmatic steps to quell the inflationary pressure and reposition the economy.”
