The Manufacturers Association of Nigeria has continued to bemoan the high interest rates in the country, noting that the situation has placed the nation’s manufacturing sector at a competitive disadvantage against other countries of the world.
The Director General of MAN, Segun Ajayi-Kadir, expressed optimism that the recent 50 basis points reduction in the Monetary Policy Rate by the Central Bank of Nigeria’s will pave the way for deeper cuts in lending rates, which are needed to boost the struggling manufacturing sector in the country.
Ajayi-Kadir lamented that over the past five years, manufacturers have endured high borrowing costs driven by an aggressive tightening policy stance from the CBN.
He argued that the recent economic reforms make it an opportune time for the CBN to relax rates, stating: “With recent reforms moderating inflation, stabilizing the exchange rate, and improving investor confidence, the timing is right for the central bank to gradually relax rates.”
He emphasized the crippling effect of high rates on competitiveness, arguing: “We are definitely looking forward to further reduction. If you give a manufacturer anything more than 5% to pay as interest, competitiveness is compromised, as our rivals are borrowing at much lower rates. You are not going to get anything out of it because those with whom you compete are not borrowing at that rate.”
Ajayi-Kadir reiterated the need for a special financing window for manufacturers to enable them to access loans at rates below the MPR.
He maintained that such a concession is pivotal for driving industrial growth, urging the apex bank to make an “intentional decision” to create conditions that make commercial banks more willing to lend to manufacturers, thereby contributing significantly to economic growth.
The Monetary Policy Committee of the apex bank had last week, at its 302nd meeting in Abuja, reduced the MPR by 50 basis points, lowering it from 27.5 percent to 27 percent.
Alongside the MPR cut, the committee also narrowed the asymmetric corridor around the benchmark rate to +250 and -250 basis points, from the previous +500/-100 basis points.
