*The Manufacturers Association of Nigeria contends the increased 14 percent Monetary Policy Rate (MPR) of the Bank will聽 reduce consumer demand for manufactured products, leading to poor sales and turnover, and lower competitiveness as the high inflation rate further mounts pressures on ‘very high-cost operating environment’ in the country

Isola Moses | 绿帽献妻

In regard to the far-reaching effects of the new rate on the real sector of the economy, the Manufacturers Association of Nigeria (MAN) has faulted the recent 14 percent hike in the Monetary Policy Rate (MPR) of the Central Bank of Nigeria (CBN) as a means of curtailing inflation.

The Association also maintains that the move is not manufacturing friendly in the Nigerian economy.

绿帽献妻 reports Mr. Segun Ajayi-Kadir, Director-General of MAN, who said this in a statement, blamed the high inflation rate in Nigeria on macroeconomic inadequacies.

Ajayi-Kadir cautioned that urgent steps must be taken to address the contributing factors to the escalating inflation rate to avoid economic recession.

The MAN Chief stated: 鈥淢AN strongly believes that high inflation is a major indication of macroeconomic inadequacies and failure to take steps to address the contributory factors will further limit economic growth and increase the rate of unemployment in the country.鈥�

He highlighted the implications of the current high inflationary rate for the manufacturing sector to include 鈥渞ising increase in cost of production inputs with trickle down effects on capacity utilisation, inventory and profitability of manufacturing firms; higher MPR and lending interest rate, which will further constrained access to credit and increase the cost of borrowing for manufacturers, especially those in the SMI cadre and upward swing in the value of shares for manufacturing concerns listed on the stock exchange.

MAN also stated: 鈥淚t will also have differing implications like reduction in demand for manufactured products leading to poor sales and turnover; lower competitiveness as the high inflation rate further mounts pressures on the already very high-cost operating environment, which may hinder the prospect of beneficial trade in the region and the continent.”

MAN’s suggestions to address the challenge

However, in order to avert the negative trickle-down effects of high inflation on the economy and the manufacturing sector in particular, MAN has urged the government to, among other things, deploy a bouquet of supply-driven policies back with more structural measures to combat the peculiar inflationary pressures from insecurity, energy and transport cost, and resolve all forex related challenges confronting the productive sector.

The MAN Director-General as well stressed that the hike in MPR represented another level of increase in interest rates on loanable funds, thus upscale the intensity of the crowding out effect on the private sector businesses in Nigeria.