The Manufacturers Association of Nigeria (MAN) has urged the Central Bank of Nigeria (CBN) to cut interest rates, arguing that the current monetary policy is inadequate in tackling inflation and fostering economic growth. According to MAN’s Director-General, Segun Ajayi-Kadir, maintaining the Monetary Policy Rate (MPR) at 27.5% and other restrictive monetary tools only increases the cost of borrowing, dampening investment in the productive sectors of the economy.
Ajayi-Kadir emphasized that the ongoing high interest rate environment has significantly raised borrowing costs for manufacturers, with average lending rates surpassing 35% as of January 2025. He warned that this trend is unsustainable and detrimental to industrial productivity, as it negatively impacts the cost of production, competitiveness, and the ability of local industries to sustain operations.
In 2024, capacity utilisation among manufacturers declined to 57%, while unsold inventory surged from N1.1 trillion in 2023 to N2.14 trillion, highlighting a troubling buildup of inefficiencies in the sector. These economic indicators, according to MAN, reflect how the contractionary policy stance of the Monetary Policy Committee (MPC) continues to suppress growth and deter long-term investment.
MAN has called for a coordinated approach between monetary and fiscal authorities. They recommend reducing interest rates while supporting fiscal initiatives that promote access to long-term financing, particularly for the manufacturing and agricultural sectors. The association believes such steps will enhance productivity and help stabilize the economy more effectively.
Additionally, MAN urged the government to fully implement the “Nigeria First Policy” to boost local sourcing of materials and reduce reliance on foreign exchange. Addressing insecurity in farming communities, improving logistics, and enhancing income redistribution were also listed as critical to reducing food inflation and strengthening the welfare of Nigerian citizens.
Source: Leadership