•It threatens ‘Nigeria First’ policy, manufacturing – MAN

•It reflects a balanced  economic approach  — LCCI

By Yinka Kolawole

The Manufacturers Association of Nigeria (MAN) has expressed deep concern on the decision of the Central Bank of Nigeria (CBN) to maintain the Monetary Policy Rate (MPR) at 27.5 percent since November 2024, warning the stance poses a threat to the actualization of the ‘Nigeria First’ policy of the federal government.

They also said the MPR of 27.5 percent is a high benchmark interest rate that could suffocate the capacity of the local manufacturing sector.

Meanwhile, the Lagos Chamber of Commerce and Industry (LCCI) has called on CBN to adopt a cautious stance on interest rate benchmark while also providing a clear signal of possible future easing, subject to sustained economic improvements.

In a statement, yesterday, Director General of MAN, Segun Ajayi-Kadir, said it was worrisome that CBN is maintaining a high benchmark rate despite a global wave of interest rate reductions aimed at revitalising economic productivity and combating stagflation.

He stated: “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.

“A nation cannot industrialize on the back of prohibitively expensive credit. With the benchmark interest rate held at 27.5 percent, Nigeria has become the 6th most expensive country to source credit as local manufacturers grapple with an average lending rate of over 37 percent.  This policy posture is not only inflationary, but is suffocating the capacity of the manufacturing sector.

“Our concerns go beyond the debilitating impact on our numbers business. The “Nigeria First Policy”, which seeks to strengthen local industry and reduce import dependence, may be under severe threat. At the heart of its successful implementation lies access to affordable financing to boost capacity utilization,”

But in a separate statement, Director General of LCCI, Dr Chinyere Almona, noted that CBN’s maintenance of the current rate reflects a balanced approach, one that avoids inflationary risks while allowing time for consistent macroeconomic trends to emerge.

She, however, urged the Monetary Policy Committee (MPC) of the apex bank to complement this rate hold with a forward-guided, data-driven roadmap for future easing.

She stated: “Such a strategy would provide the business community with the clarity needed for medium- and long-term planning. Key indicators for future rate reductions should include a trend of disinflation over at least two to three months, improved foreign exchange (FX) liquidity and stability, and concrete signs of recovery in the real sector – particularly with respect to credit accessibility to micro, small, and medium-sized enterprises (MSMEs).

“The current MPR level remains prohibitively high for private sector development. MSMEs, the engine of job creation and productivity in Nigeria, are being squeezed by the high cost of credit. 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,” Almona stated.