The federal government of Nigeria has made handsome efforts in the past months to alleviate the economic hardships the citizens find themselves going through under the administration of President Bola Tinubu, yet the manufacturing industry finds itself in a fix with the high 26.75 percent interest rate hanging around their necks painfully like a noose.

A day after the Central Bank of Nigeria 296th meeting of the Monetary Policy Committee, which ended on July 23, 2024, the Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir released a statement to explain how much the current rate affects both his colleagues and the consumers.

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The manufacturing sector in Nigeria plays a vital role in the country’s economy, says the director general in Wednesday’s statement. However, it is facing a multitude of challenges that threaten its sustainability and contribution to economic growth. Therefore, the continued increase in the cost of borrowing, which is one of our major challenges, will lead to three disruptive things.

It had been baffling in the statement, noting that regardless of past efforts to consistently raise the monetary rate over two years, from May 2024 back to 24 months prior, there had been no quantifiable positive outcome when it came to taming inflation.

Confirming an extreme situation, Mr Ajayi-Kadir observed a record 34.19 percent rate of inflation in June, something generally considered the highest since March 1996. The new rate will further constrain the growth of the manufacturing sector, as the purchasing power of consumers, production levels, competitiveness and sales will face further decline, he says.

#CBNMPC raises MPR by 50bps from 26.25% to 26.75% pic.twitter.com/xPErl1RiNF

— Central Bank of Nigeria (@cenbank) July 23, 2024

Three dire consequences lying ahead will be hard to avoid if manufacturers do not get relief from enormous financial burdens. One of these is connected to the cascading effect of the quite steep loans that MAN members may have to buy when they approach banks.

According to their director general, the situation will escalate production costs and consequently the prices of finished goods, with consequential effects on unemployment and social instability. It will further compound the prevailing low consumer demand, capacity utilisation and profitability.

In addition, says Director General Segun Ajayi-Kadir, high interest rates and inflation will stifle [the] capacity to make new and further investments, innovation and curtail opportunities for growth. It will also lead to Nigerian manufacturers being unable to compete with peers regionally, talk less of operating on a global stage.

What the manufacturers’ association wants in order to check all these is for the Central Bank of Nigeria to moderate its monetary policy rate in a manner that does not inflict further pain.

Added to the financial burdens they bear, there is also a psychological twist that has discouraged stakeholders in the manufacturing sector, hence a question being asked subconsciously concerning the possibility of any of them being labelled monopolists.

A week ago, the Nigerian Midstream and Downstream Petroleum Regulatory Authority Chief Executive, Mr Farouk Ahmed, had to defend his agency in an Abuna media chat over comments surrounding an attempt to scuttle Dangote Refinery.

To critics, Mr Ahmed’s comment talking of the Dangote Refinery and saying we cannot rely heavily on one refinery to feed the nation because the company is requesting that we should suspend or stop all importation of petroleum products, especially AGO and Jet Kero, and direct all marketers to the refinery was unpatriotic.

And so as a July month of emotional outbursts by companies and government officials via social media press releases draws to an end, Mr Aliko Dangote, who is the President and Chief Executive Officer of Dangote Group, confirmed last weekend that the conglomerate will be pulling out of a local steel production venture that the CEO has been mulling publicly in recent months.

This decision was reached after an agreement with board members, which got Dangote passing the baton to other investors with capacity who would rather take their monies abroad. Let other Nigerians go and do it. We are not the only Nigerians here. There are some Nigerians with more cash than us. They should bring that money from Dubai and other parts of the world and invest in our own fatherland.

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