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The Manufacturers Association of Nigeria (MAN), on Monday, called on the Monetary Policy Committee (MPC) of the Central Bank of Nigeria, to go beyond monetary policy tightening for Inflation Controls.
" It is worth noting that the Central Bank of Nigeria (CBN)'s approach of increasing the MPR has been adopted for almost two years without positive result," said MAN.
Segun Ajayi-Kadir, the Director-General of MAN, noted that the apex bank raised the MPR by 200 basis points to 24.75 per cent from 22.75 per cent during its held its 294th meeting on the 25th and 26th of March 2024.
The MPC also adjusted the asymmetric corridor around the MPR to +100/-300 basis points; retained the Cash Reserve Ratio (CRR) of Deposit Money Banks at 45.0 per cent; adjusted the Cash Reserve Ratio of Merchant Banks from 10.0 per cent to 14.0 percent and retained the Liquidity Ratio at 30.0 percent.
"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," he said.
He said that rather than the further monetary tightening, the Association urges the new CBN administration to consider other measures to combat the pressure particularly addressing the causes of the increase which are majorly cost-push factors.
"MAN urges the MPC to carefully consider the impact of these monetary policy measures on the manufacturing sector and the broader economy.
" It is crucial to strike a balance between addressing macroeconomic challenges and supporting the growth and sustainability of the manufacturing industry.
"In the light of the afore mentioned, we recommend a robust synergy between the monetary and fiscal authorities as well as the consideration of the following policy measures:
* Ensure adequate security in farming areas and business environment by fast-tracking the passage of the Police Reform Bill and investing significantly in data platforms, surveillance systems and community policing.
* Stabilise the value of the naira by managing the floating exchange rate within a business-friendly threshold and intensify ongoing reforms to boost the level of liquidity and degree of transparency in the official forex window.
*Prioritise forex and credit allocation to the manufacturers and fast track the proposed recapitalization of the banking sector.
* Further reduce the reliance of the country on imported products and raw materials by providing incentives for investment in backward integration and local sourcing to reduce the pressure on the dollar to the barest minimum.
*Prioritise the provision of infrastructure in industrial hubs and boost nationwide investment in renewables to reduce logistics cost and promote competitiveness.
