LAGOS, Nigeria (VOICE OF NAIJA)-Less than 48 hours after the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) raised Nigeria’s interest rate to 26.25 per cent, the Manufacturers Association of Nigeria (MAN) has condemned the act.
Speaking at the official presentation of the bi-annual MAN CEO’s Confidence Index (MCCI) on Thursday 23rd, MAN’s President Otunba Francis Meshioye said the MPC’s strategy of raising the Monetary Policy Rate (MPR) has persisted for nearly two years without yielding positive results.
He said the decision have far-reaching implications on the manufacturing sector.
According to him, the Nigerian economy has encountered significant challenges in recent years, including foreign exchange volatility, escalating energy costs, and food insecurity.
“The challenges have intensified inflationary pressures, adversely impacting consumers’ purchasing power and impeding the growth of the manufacturing sector he said production levels have declined, leading to reduced competitiveness within the industry,” he said.
Although MAN says it acknowledges the efforts of the MPC in confronting the economic challenges facing the country, including the fluctuations in inflation and exchange rates, it said it is crucial for the committee to thoroughly assess the potential impact on the real sector and the multiplier effect on the nation.
READ ALSO: Experts Knock MPC Over New Interest Rate
According to him, MAN had hoped that the CBN would explore alternative measures, particularly in addressing the underlying causes of inflation, primarily cost-push factors.
“MAN, earnestly urges the MPC to carefully evaluate the effects of these monetary policy actions on both the manufacturing sector and the broader economy.
“Achieving a delicate equilibrium between addressing macroeconomic challenges and fostering the growth and resilience of the manufacturing industry is crucial,” he said.
The association called for a robust collaboration between monetary and fiscal authorities as well as suggested that the MPC some policy measures including implement targeted interventions aimed at mitigating the underlying cost-push factors driving inflation, thereby alleviating the financial burden on manufacturers.
Others are: “Prioritise forex and credit allocation to the manufacturers and fast track the proposed recapitalization of the banking sector.
“Emphasize the development of infrastructure within industrial hubs and bolster nationwide investments in renewable energy sources to alleviate logistical expenses and enhance competitiveness.
“Further reduce the reliance of the country on imported products and raw materials by providing incentives for investment in backward integration and local sourcing to reduce the pressure on the dollar to the barest minimum.”
About The MCCI
READ ALSO: CBN MPC Meeting Focuses on Interest Rates Amid Inflation Concern
Speaking about the MCCI, Mr Meshioye said the report, since its inception in 2019, has marked a significant milestone in the journey of the manufacturing industry in Nigeria.
He said the manufacturing sector plays a pivotal role in the economic growth and development of the nation, and the report sheds light on the current state of the industry, its challenges, and the opportunities that lie ahead.
“Today’s presentation serves as an opportunity to engage in constructive dialogue and exchange ideas that will contribute to the advancement of the manufacturing sector in Nigeria,” he said.
On his part, the Director General, MAN, Mr Segun Ajayi-Kadir said the gathering was necessary to provide stakeholders with another opportunity to deliberate on the content of the report; inform on the status of the sector; assess the level of progress of the sector, if any and obtain valuable feedback on the advocacy positions of MAN on vital manufacturing indicators.
Represented by the Director, Special Purpose Vehicle, Mr. Ambrose Oruche the DG said since 2019, the MCCI has effectively served as a veritable advocacy instrument for quarterly review of the performance and expectations of operators in the manufacturing sector.
MAN Records Increase In AIS From 51.8 To 53.5
READ ALSO: Analysts Warn Of Economic Risks Ahead Of CBN, MPC Meeting
He said the report confirms a moderate improvement in the Aggregate Index Score (AIS) evidenced by the meagre increase from 51.8 points to 53.5 points for the first time in the last six quarters.
Continuing he said, even though the difference is very little, it shows that the manufacturing sector is set on the path of restoration and recovery, “at least to the level recorded in Q3 2022 with the hope of improvement in the next quarter.”
He noted that the sectoral and zonal performance, along with positive confidence projections for the upcoming quarter, are at risk due to conflicting emerging policies.
“This positive outlook is credited to manufacturers’ resilience, Naira gains, potential diesel price reductions, and expectations of seamless disbursement of presidential intervention funds.
The manufacturing sector is crucial for economic growth, foreign exchange inflow, and shared prosperity,” he said.
He said MAN urges the Government to prioritize this sector by implementing the recommendations for sustainable growth and development.