Nigerians to suffer consequences of CBN’s interest rate hikes

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The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, has stated that manufacturers and Nigerians will bear the brunt of the 18.5 per cent interest rate set by the Central Bank of Nigeria (CBN).

Ripples Nigeria had reported on Wednesday that CBN Governor, Godwin Emefiele, announced that the Monetary Policy Committee (MPC) increased the Monetary Policy Rate (MPR) or interest rate to 18.5 per cent from 8 per cent to curb inflation.

Ajayi-Kadir, in a statement reported on Friday, said increasing the interest rate will make credit too expensive for manufacturers to borrow, resulting in producers passing the cost on to customers through higher prices for their products.

“The increase in MPR from 18 per cent to 18.5 percent will certainly lead to an increase in lending rates and worsen the uncompetitiveness of the manufacturing sector.

READ ALSO: Emefiele says CBN’s MPC may further raise interest rate in coming months

“The Association has been clamouring for single-digit lending rates to allow manufacturers access to needed funds to boost the performance of the sector.

“This increase, like the previous ones, is evidence that the CBN is either unperturbed about the plight of the productive sector or is unable to fathom out a more creative policy mix that would reflate the sector.

“Therefore, it is necessary for government to think outside the conventional monetary policy framework and take pragmatic steps to quell the inflationary pressure and reposition the economy,” he said in the statement.

Ajayi-Kadir also stated that the CBN’s continuous MPR hikes are not yielding expected growth, as the Nigerian economy remains fragile with several challenges impeding its growth.

“It is evident that the continuous and consistent increase in MPR is not yielding the desired growth in the economy. The Nigerian economy remains fragile and bedevilled with numerous challenges that inhibit growth.

“Therefore, the monetary authority needs to pay closer attention to rethink the policy mix, bearing in mind the parlous state of the economy, especially the effect of a high MPR on the manufacturing sector and the economy,” the MAN said.

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