MAN urges MPC to carefully evaluate effects of monetary policies on real sector
The Manufacturers Association of Nigeria (MAN) has reacted to the recent increase on the interest rate urging the Monetary Policy Committee (MPC) to thoroughly assess the potential impact on the real sector and the multiplier effect on the nation.
It advised that collaborating with fiscal authorities is essential to reinforce the sector’s traditional role in driving significant employment, heightened productivity, steady forex earnings, and sustained economic progress.
Recall that the CBN)had raised the interest rate by 150 basis points from 24.75 per cent to 26. 25 per cent.
Following a two-day meeting, the apex bank’s MPC agreed to increase the Monetary Policy Rate(MPR) for the third straight time to rein in the country’s soaring inflation levels pegged at 33.69% in April 2024.
Reacting to the development in a state by its Director General Segun Ajayi-Kadr, MAN acknowledged the efforts of the MPC in confronting the economic challenges facing the country, notably the fluctuations in inflation and exchange rates.
It noted that while the association understands the reason behind the MPC’s decision, it is crucial for the committee to thoroughly assess the potential impact on the real sector and the multiplier effect on the nation. Collaborating with fiscal authorities is essential to reinforce the sector’s traditional role in driving significant employment, heightened productivity, steady forex earnings, and sustained economic progress.
“It is notable that the strategy of raising the Monetary Policy Rate (MPR) has persisted for nearly two years without yielding positive results. MAN had hoped that the Central Bank of Nigeria (CBN) would explore alternative measures, particularly in addressing the underlying causes of inflation, primarily cost-push factors, “ the statement said.
“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.
Therefore, MAN advocates for robust collaboration between monetary and fiscal authorities and suggests considering the following policy measures:
• Implement targeted interventions aimed at mitigating the underlying cost-push factors driving inflation, thereby alleviating the financial burden on manufacturers.
• 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.
