• Business - Economy
  • Updated: May 28, 2024

Manufacturers accuse CBN of prioritising financial sector over real sector

Manufacturers accuse CBN of prioritising financial sector ov

The Manufacturers Association of Nigeria, MAN, has accused the Central Bank of Nigeria, CBN, of prioritising the financial sector over the real sector in the country.

Segun Ajayi-Kadir, the Director General of MAN, stated this in reaction to the latest hike in the Monetary Policy Rate by CBN

Recall that the MPC, last week, increased the MPR by 150 basis points to 26.25 percent from 24.75 percent.

Speaking on the implications for the manufacturing sector, Ajayi-Kadir said that the MPC decisions will further exacerbate the challenges of the manufacturing sector.

According to him, further tightening credit interventions and increasing loan costs would raise production costs, limit fund accessibility, and erode investment and competitiveness within the manufacturing sector, noting that the current monetary stance would lead to constraints on investment and expansion, hindering manufacturers’ ability to invest in innovative technologies, expand production capacities, or venture into new markets.

He said, “The persistent macroeconomic instability in Nigeria, resulting from sustained monetary policy decisions over the past two years has negatively impacted the manufacturing sector. 

“This instability, compounded by various constraints affecting sectoral performance, continues to disrupt production plans, undermine investments, and cast uncertainty over prospects.

“Furthermore, recent decisions by the MPC exacerbate these challenges by further tightening credit interventions, increasing loan costs, raising production costs, limiting fund accessibility, and eroding investment and competitiveness within the manufacturing sector. 

“It is evident that the MPC leans towards prioritising the financial sector over the real sector, rather than striving for a balanced approach between the two.

“These effects are intensified by the current monetary stance, contributing to constraints on investment and expansion and further decline in manufacturing competitiveness.

“The decision by the MPC will further compound the already high cost of doing business, consequently diminishing the competitiveness of Nigerian products in the global market.

“The high lending rate exceeding 30 percent will increase the cost of borrowing and make Nigeria’s goods less competitive to products from other nations,” he said. 

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