The manufacturing sector and the end consumers of manufactured goods will continue to suffer the consequences of the Monetary Policy Rate (MPR), until the Monetary Policy Commission can become creative.
The Central Bank of Nigeria’s (CBN) MPC recently increased the MPR by 50 basis points from 18% to 18.5%
This decision according to Charles Fakrogha, will continue to have negative impact on the players in the manufacturing sector.
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Having increased the MPR for six straight consecutive times without getting the desired result, one would have expected the members of the MPC, to be a little more creative while making this decision.
According to Fakrogha, commercial banks’ lending rate would skydive again, placing lenders in a difficult position with the banks who would immediately review and communicate the increment in a twinkle of an eye.
”Increasing the MPR that has not reduced the high inflation in the economy should have made them not increase it again”
“Commercial banks’ lending rate would now increase to between 22 or 25%, making manufacturing more and more difficult.”
The analyst however urged manufacturers to continue producing their goods at the same quality but at a reduced quantity, in order to realize their profit.
Meanwhile, the leadership of the Manufacturing Association of Nigeria, (MAN) has criticised the MPC for increasing the MPR to 18.5%, saying it would worsen the low competitiveness of the manufacturing sector.
MAN’s Director-General, Segun Ajayi-Kadir, explained that his team had been clamoring for single-digit lending rates to allow manufacturers access needed funds to boost the sector’s performance.
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According to him, the hike, like previous ones, shows that the CBN is either not concerned about manufacturers plight or it is unable to come up with a more creative policy mix that would reflate the sector.
