Mohammed Shosanya
The Manufacturers Association of Nigeria, MAN, has expressed disgust over the continuous increase in the country’s Monetary Policy Rate, saying the development will collapse manufacturing sector.
Segun Ajayi-Kadir,Director General of MAN,in a statement on Wednesday,said the development will escalate production costs and consequently the prices of finished goods, with consequential effect on unemployment and social instability. It will further compound the prevailing low consumer demand, capacity utilization and profitability.
According to him,it will stifle capacity to make new and further investments, innovation and curtail opportunities for the growth.
He said,the development will constrained the capacity of the sector to compete effectively in regional and global markets, and if unchecked, may trigger critical distress of more manufacturing concerns.
He also said the hike in interest rate,will constrain reinvestment for expansion and introduction of new brands, as significant portion of revenue of manufacturing concerns is directed towards interest payments.
It will further restrain access to capital, judging from the fact that only 16% of total commercial bank credit was disbursed to the manufacturing sector in the first quarter of the year.
He said,it will reduce the flow of investments into the sector and funds required for retooling, upgrading facilities and procurement of new technologies.
“It is noteworthy to state that the worrisome trend occasioned by increase in cost of borrowing is corroborated by the report of NBS, to the effect that manufacturing investment declined significantly in the second quarter of the year.
“This drop underscores the critical link between domestic investment confidence and foreign investor sentiment. In addition, the share of manufactured exports in non-oil exports also declined from 21.4% in Q4 2023 to 15.1% in Q1 2024”
