The Manufacturers Association of Nigeria (MAN) has launched a fervent appeal to the Central Bank of Nigeria (CBN), insisting that the current interest rates are nothing short of crippling for the manufacturing industry. The association has labeled the 27 percent Monetary Policy Rate (MPR) as a “punitive” burden that suffocates production and threatens the very competitiveness of Nigeria's manufacturers.

After the recent Monetary Policy Committee (MPC) meeting, where the decision was made to keep the MPR stagnant, MAN is raising alarms about the dire consequences for the real sector. While the MPC touted a minor positive in the form of a slowing inflation rate,down to 16.05 percent in October,MAN’s Director-General, Segun Ajayi-Kadir, is clearly unimpressed, pointing out that manufacturers are still facing outrageous borrowing costs between 30 and 37 percent.

Ajayi-Kadir has criticized the MPC for failing to recognize the urgent need for a rate decrease. He boldly stated, "The rate hinders production and reduces the competitiveness of the sector," echoing the frustrations of an industry desperate for relief. He insists that the CBN must act quickly to reduce borrowing costs to stimulate investment and expansion.

In a stark warning, MAN has highlighted that the high interest rates are not just a minor inconvenience but a significant barrier for small and medium-sized manufacturers struggling to access affordable credit. Compounding this crisis are severe structural challenges: poor infrastructure, exorbitant logistics costs, unreliable power supply, escalating energy prices, and rampant insecurity,all of which are pushing production costs to unsustainable levels.

MAN is not holding back in its demands, urging the CBN and government authorities to step up and implement reforms that will enable the manufacturing sector to reach its industrial potential. The association insists on a "downward review of the rate in subsequent MPC meetings" to free manufacturers from the chokehold of high borrowing costs and incentivize essential long-term investments.

The association is also calling for the introduction of innovative monetary instruments aimed at boosting credit flow to the real sector and a notable increase in government spending on infrastructure to bolster supply capacity. Additionally, MAN is demanding that the government work hand-in-hand with the CBN to stabilize the naira, fearing that the recent adjustments in the MPC corridor could lead to a risky capital flight.

Moreover, MAN is emphasizing the critical need for complementary fiscal measures to promote industrial development and tackle inflationary pressures. The association insists that resolving insecurity in agricultural and industrial zones is paramount, stating, "A secure environment is critical to sustained industrial growth."

Gabriel Idahosa, President of the Lagos Chamber of Commerce and Industry, remains cautiously optimistic, suggesting that a decrease in borrowing costs may be on the horizon. He noted that the MPC’s decision reflects a commitment to achieving a target inflation rate of 15 percent by December, a benchmark that many believe could trigger forthcoming rate cuts.

Similarly, Segun Kuti-George, National Vice President of the National Association of Small-Scale Industrialists, interprets the MPC's retention of the rate as a sign of satisfaction with the current economic stability, but he warns that complacency could hinder necessary reforms.

As discussions around interest rates heat up, the manufacturing sector stands at a critical juncture, clinging to hopes for a more favorable lending environment that could ignite growth and reinvigorate Nigeria's economy.