Manufacturers under the aegis of the Manufacturers Association of Nigeria (MAN) have described the recent hike in interest rates by the Central Bank of Nigeria (CBN) as a complication of the numerous challenges facing the nation’s manufacturing sector.
The President of the Association, Otunba Francis Meshioye, who stated this, in Lagos, at the public presentation of the MAN CEO Confidence Index Report, Q1, 2024, argued that another hike would add to some of the challenges, such as inadequate power supply, insecurity, over-regulation, poor access to credit, poor infrastructure, and low patronage, already bedevilling the sector.
For instance, he added, over 48 per cent of manufacturers’ expenditures are being deployed on alternative energy to enable them to stay in business.
Meshioye therefore called on the federal government to give manufacturing a priority, rather than resort to policies that continue to stifle growth in the sector.
One such priority, he stated, is the establishment of a Manufacturing Bank, specially meant to take care of the needs of the sector.
“The establishment of a Manufacturing Bank has become imperative since some of these commercial banks do not really understand what manufacturing is all about. That is why they prefer lending money to traders, rather than manufacturers, since they believe in quick returns on their investments.
“I believe if we can have a Bank of Agriculture, what makes it odd to have that of manufacturing?” he queried.
Meshioye also tasked the government to think out of the box and come up with policies that would stabilize the nation’s currency, adding that incessant hikes in interest rates, by the apex bank, have not achieved the much-desired results.
According to him, the new interest rate hike has left manufacturers with two options either accepting the non-business-friendly policy and continuing to struggle with the high interest rates, or shut down.
“With interest rates over 30 per cent, the association believes this would only worsen the plights of members, especially those servicing one loan or the other in different banks. And I think the choice manufacturers would be left with, at the end of the day, would be to either take it, and pass some of the costs to the consumers, or go under.
“But no business would want to take the option of going under, but would rather prefer some of the costs passed down to the consumers. This, at the end of the day, would make such goods become more expensive, and, may end up enjoying low patronage from the consumers,” he stated.
While acknowledging the efforts of the Monetary Policy authorities at stabilising the nation’s currency, Meshioye would however want the authorities to weigh the impact of such policies on the real sector before they are promulgated.
He expressed the association’s delight in the 51.8 to 53.8 rise in the confidence of the nation’s captains of industry, in the economy, as revealed in the First Quarter 2024 MAN CEO Confidence Report, describing it as the first time, in the last six quarters, such confidence would be expressed by the CEOs.
The MAN boss however warned that such gains might be imperiled with the recent interest rate hike.
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