CBN Attracts $1.5 Billion into Economy, MAN Raises Alarm Over Impact on Manufacturing Sector
The Manufacturers Association of Nigeria (MAN) has expressed deep concern over the recent decisions of the Monetary Policy Committee (MPC), warning that the increase in the Monetary Policy Rate (MPR) to 24.75% would exacerbate access to credit challenges and harm the competitiveness of the Nigerian manufacturing sector.
In a statement titled “Position of Manufacturers Association of Nigeria on the Report of Monetary Policy Committee Meeting held this week,” MAN’s Director General, Mr. Segun Ajayi-Kadir, criticized the MPC’s decision, stating that it would raise the cost of doing business and further erode the competitiveness of Nigerian products in the global market.
Ajayi-Kadir highlighted the drastic reduction in global demand for Nigerian products, citing data from the World Trade Organisation showing that South African manufacturing export value was $46 billion, compared to Nigeria’s $3 billion in 2022. He also noted a 166% decline in Nigeria’s manufacturing export value from N2.07 trillion in 2019 to N778.44 billion in 2023.
The MAN Director General expressed concern that the high lending rate, which is over 30%, has contributed significantly to the decline in the share of manufacturing export to non-oil export from 82.4% to 24.8% in 2019 and 2023, respectively.
MAN warned that the increase in the cost of servicing loans poses a threat to the financial stability of manufacturing companies and could lead to downsizing, company closures, and increased social vices and insecurity in Nigeria.
The association also criticized the MPC’s decision to increase merchant banks’ Cash Reserve Ratio (CRR) and narrow the asymmetric corridor, stating that these measures would further reduce banks’ capacity to lend to the productive sector, such as manufacturing. MAN emphasized the need for collaboration between monetary and fiscal authorities to support the manufacturing sector and sustain economic growth.
In response to MAN’s concerns, the CBN disclosed that the economy attracted over $1.5 billion due to its monetary tightening stance, which has been appreciated by foreign investors. The CBN’s acting Director, Corporate Communications Department, Mrs. Hakama Sidi Ali, stated that the inflows resulted from the bank’s effort to stabilize the foreign exchange market.
Ali noted that the Naira has continued to record gains in the Autonomous Foreign Exchange market, trading at N1,309/$1 as against N1,611/$1 in the second week of March 2024. She assured that the CBN would remain committed to ensuring the stability of the market and the appropriate pricing of the Naira against other major currencies worldwide.
MAN recommended a robust synergy between monetary and fiscal authorities and proposed policy measures to stabilize the economy and promote competitiveness in the manufacturing sector.
ThisDay News
