THE Manufacturers Association of Nigeria (MAN) has cried out that the continuous adoption of tight monetary policy by the Central Bank of Nigeria (CBN) is worsening the competitiveness of Nigerian products in the global market.
Director General of MAN, Segun Ajayi-Kadir, raised the alarm in reaction to the decision of the Monetary Policy Committee (MPC) of CBN to raise the Monetary Policy Rate (MPR) by 200 basis points to 24.75 percent from 22.75 percent at its 294th meeting held on the 25th and 26th of March 2024.
Ajayi-Kadir lamented that over the last 5 years, the manufacturing export value of Nigeria has declined by 166 percent to N778.44 billion in 2023 from N2.07 trillion in 2019.
He added that the exorbitant lending rate has also resulted into a 57.6 percent drop in the share of manufacturing export to non-oil export to 24.8 percent in 2023 from 82.4 percent in 2019.
On the implications of the MPC’s decision on the manufacturing sector, Ajayi-Kadir stated: “In broad terms, the implications of maintaining the same pattern of monetary policy decisions in the last two years is evident in the continuous macroeconomic instability prevalent in the economy with overwhelming impact on the manufacturing sector in Nigeria.
“This is worsened by the multidimensional binding constraints responsible for the lackluster performance of the manufacturing sector in Nigeria.
“The higher cost of doing business will be further exacerbated by the decision of MPC, thereby worsening competitiveness of Nigerian products in the global market, which is evident in the drastic reduction in global demand for these products.
“Data provided by the World Trade Organisation, revealed that South African manufacturing export value was $46 billion, while that of Nigeria was $3 billion in 2022. Clearly, this is over 15 times greater than Nigeria’s manufacturing export value in that year.
“The reduction in global demand for Nigerian products was further buttressed by a National Bureau of Statistics (NBS) report that confirmed that the manufacturing export value of Nigeria plummeted by 166 percent from N2.07 trillion in 2019 to N778.44 billion in 2023.
“In addition, the exorbitant lending rate of over 30 percent has contributed largely to a drop in the share of manufacturing export to non-oil export from 82.4 percent to 24.8 percent in 2019 and 2023 respectively.”
He said while MAN recognizes that the MPC decision is aimed at addressing the economic challenges facing the country particularly the instability in inflation and exchange rates, it is essential for the committee to carefully consider the potential impact of the decisions on manufacturing.
