Manufacturers claim that the CBN’s new 14 percent lending rate will cause hardship for Nigerians.
The Manufacturers Association of Nigeria (MAN) has criticized the Central Bank of Nigeria’s (CBN) Monetary Policy Committee’s (MPC) recent upward revision of the Monetary Policy Rate (MPR) as unfavorable to Nigerians.
According to MAN, the new interest rate not only makes it more difficult for the CBN to establish a single rate, but it also makes commodities in the nation highly costly, among other negative impacts.
After keeping the MPR at 11.5 percent for approximately two and a half years, the CBN’s MPC lifted the benchmark interest rate by 150 basis points to 13% in May and again in June.
On Saturday, MAN issued a statement titled “The preliminary view of MAN on the Monetary Policy Committee of the Central Bank of Nigeria’s decision of July 19, 2022.”
According to the organization, this was another degree of increase in loanable funds interest rates, which would amplify the intensity of the crowding-out impact on private sector businesses as firms had less access to funds in the credit market.
According to the statement, among other things, the rate rise will “intensify demand crisis stemming from Nigerians’ substantially eroded disposable income, reducing access of families and individuals to inexpensive funds.”
It further stated that the scenario would “lead to increased manufacturing input costs, which would automatically transfer to higher goods prices, low sales, and a tremendous number of unsold inventories.”
“MAN is thus worried about the rippling effects of this decision and its consequences for the manufacturing sector, which is plainly struggling to withstand the multiple strangulating fiscal and monetary policy measures and reforms,” the statement continued.
“As a result, businesses are hoping that the rigorous conditions for accessing potential development funding windows with the CBN would be loosened, allowing for a greater flow of long-term loans to the manufacturing sector at single-digit interest rates.”