The Manufacturers Association of Nigeria (MAN), the Lagos Chamber of Commerce and Industry (LCCI), and the Nigerian-American Chamber of Commerce (NACC), have fumed at the hiking of the monetary policy rate by the Central Bank of Nigeria (CBN).
BizWatch Nigeria had reported that CBN Governor Godwin Emefiele, after the third Monetary Policy Committee (MPC), meeting on Tuesday, May 24, 2022, noted that the committee backed the raising of the benchmark interest rate from 11.5% to 13.5%.
Reacting to the development, President of the MAN, Mansur Ahmed, stated that the move would compound the plight of manufacturers, especially the small-scale segment of the productive sector.
Ahmed said, “Commercial loans are already beyond the reach of manufacturers, especially the small and medium manufacturers. The continuous rising in food prices is worrisome. Then, exchange rate continues to go up. Where are we going as a country? The CBN leadership will have to do something about it.”
He was, however, aware that the continuous rising of inflation locally and internationally had necessitated the move, noting that it was unfortunate that Nigeria was not reaping the gains of high oil prices in the current oil boom.
On his part, Deputy President of the LCCI, Gabriel Idahosa, described the development as an inevitability, considering the recent upward inflationary trend.
“It was actually expected because inflation has gone up to 16 per cent. The CBN target is 13 per cent, so we have lost the downward trending inflation rate that has been on for quite a number of months. By last week, the financial community expected the CBN to increase the interest rate, starting with the one just announced. It was predictable.”
He said the lending rate increase would give rise to more hardship due to the higher cost of borrowing that would apply to all sectors of the economy.
“It means more hardship. It means higher cost of borrowing,” he noted, saying that all sectors of the economy would now feel the pinch.
Similarly, the Director-General of the NACC, Sola Obadimu, condemned the decision by the CBN. He further stated that indiscriminate increase of lending rate by the CBN would inevitably drive up the cost of doing business.
He said, “There is no way you can effectively operate business at such rates. All these things have been talked about a million times by the private sector because realistically, you can’t get loans at the bank at the rate (13%). It’s just another input in the range of factors that affect the cost of doing business.”