Manufacturers, LCCI demand interest rate reduction

The Manufacturers Association of Nigeria (MAN) yesterday called for the urgent interest rate cut in order to protect Nigeria’s industrial base. The body expressed deep concern over the continued decision of the Central Bank of Nigeria (CBN) to maintain the Monetary Policy Rate (MPR) at 27.5 percent from November 2024. This is just as the […]

The Manufacturers Association of Nigeria (MAN) yesterday called for the urgent interest rate cut in order to protect Nigeria’s industrial base.

The body expressed deep concern over the continued decision of the Central Bank of Nigeria (CBN) to maintain the Monetary Policy Rate (MPR) at 27.5 percent from November 2024.

This is just as the Lagos Chamber of Commerce and Industry (LCCI) insisted that the current MPR “Remains prohibitively high for private sector development.”

Daily Trust reports that the MPC again retained the monetary policy rate (MPR), which benchmarks interest rates in the country, at 27.50 per cent.

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The CBN’s governor, Olayemi Cardoso, announced the committee’s decision at a press conference on Tuesday after the panel’s 300th meeting in Abuja.

But MAN in a statement by its Director General, Segun Ajayi-Kadir, stated that the apex bank retained the interest rate despite a global wave of interest rate reductions aimed at revitalising economic productivity and combating stagflation.

“We are perturbed that when most progressive economies are charting a course toward industrial recovery and macroeconomic stability, Nigeria’s monetary stance tends to lead us in a different direction.

“Over the last quarter, countries such as members of the Euro Area, the United Kingdom, Denmark, Australia, China, India, Thailand and Egypt have implemented interest rate cuts to bolster economic growth and support productive sectors.

“Yet, our rigidity continues to create unintended consequences that may deepen the parlous performance of the productive sector,” the DG said in a statement.

According to him, a nation cannot industrialise on the back of prohibitively expensive credit.

With the benchmark interest rate held at 27.5 per cent, he said Nigeria has become the 6th most expensive country to source credit as local manufacturers grapple with an average lending rate of over 37 per cent.

“This policy posture is not only inflationary, but is suffocating the capacity of the manufacturing sector. Compounded by other limiting factors, our members—small, medium and even large-scale—are finding it increasingly difficult to stay afloat, expand production lines, or even meet basic operational costs. When credit is priced highly, production declines and the nation “imports poverty,” he said.

He said the association’s concerns go beyond the “Debilitating impact on our numbers business,” but noted that the “Nigeria First Policy”, which seeks to strengthen local industry and reduce import dependence, may be under severe threat.

Ajayi-Kadir further expressed worry that the current interest rate regime constrains finance costs for manufacturers, surging “by over 44 per cent from N1.43 trillion in 2023 to N2.06 trillion in 2024 and rising.”

The body MAN called on the CBN to cut the benchmark interest rate significantly to reflect current realities and ease the credit burden on manufacturers.

On its part, the LCCI noted that the MSMEs, which represent the “Engine of job creation and productivity in Nigeria, are being squeezed by the high cost of credit.”

He said, “Without affordable financing, their capacity to grow, compete, and contribute to economic development is severely limited.

“Moreover, it is increasingly clear that monetary policy alone cannot curb inflation that stems from structural and supply-side inefficiencies. Coordinated action with fiscal authorities is essential to address the root causes of inflation, such as insecurity, infrastructure deficits, and food supply disruptions.”

The LCCI asked the CBN to remain consistent with the reforms that support price stability through increased production in the real economy.

LCCI DG, Dr. Chinyere Almona in a statement advised that development finance institutions like the Development Bank of Nigeria, Bank of Agriculture, NEXIM Bank, and the Bank of Industry need better funding and directions towards supporting the productive and industrial sectors of the economy.

The chamber further urged the monetary authorities to promote transparency in bank lending rates to ensure borrowers are not unfairly burdened by excessive spreads above the MPR.