By Esther Agbo
The Central Bank of Nigeria (CBN) is facing renewed pressure from the nation’s manufacturing sector as the Manufacturers Association of Nigeria (MAN) calls for a relaxation of stringent foreign exchange policies that have increasingly burdened local industries.
This plea was voiced by the outgoing Chairman of MAN for Kwara and Kogi States, Chief Bioku Rahman, during the Association’s 10th Annual General Meeting in Ilorin.
Chief Rahman highlighted the urgent need for the CBN to reassess its forex policies, which manufacturers claim are stifling their operations amid an already challenging economic environment.
The sector, which heavily relies on imported raw materials, has seen costs skyrocket due to the depreciation of the naira and restrictive access to foreign exchange.
He said, “We are asking the CBN to wave many conditions for its foreign exchange policies to local manufacturers.
“Similarly, CBN can widen the window of foreign exchange to local industries, while urging the Federal Government to harmonise taxes and levies at Federal, State and Local Government levels.
“We therefore ask the Federal Government to urgently direct the Central Bank of Nigeria (CBN) to drastically reduce interest rates on industrial loans.
“The CBN should as well direct commercial banks to reduce interest rates on industrial loans.
“The interest rates charged on industrial loans and other loans released as COVID-19 palliatives should be significantly reduced further to one per cent,” Rahman stated.
Rahman also addressed the escalating interest rates, which have risen sharply following the CBN’s efforts to curb inflation.
He appealed for a reduction of at least 1 percent in the interest rates on industrial loans, emphasising the need for more affordable financing options for manufacturers.
He called on the Bank of Industry (BOI) to further cut its lending rates to support the sector’s growth.
The President of MAN, Chief Francis Meshioye, echoed these concerns, stressing the need for improved infrastructure in industrial estates to support manufacturing activities.
He praised the existing relationship between the state government and MAN but pointed out that better infrastructure could significantly enhance productivity.
The context behind these demands is rooted in the broader economic challenges facing Nigeria’s manufacturing sector.
The naira’s depreciation over the past year has led to soaring costs for imported materials, pushing overall operational expenses to new heights. Compounding this, the CBN’s aggressive interest rate hikes totaling 800 basis points to 26.75 per cent since February 2024 have significantly raised the cost of financing for manufacturers.
An analysis revealed that finance costs for consumer goods companies surged by over 1000 per cent in the first half of 2024, largely due to rising interest rates and the weakening naira.
While the CBN has acknowledged the concerns of manufacturers, Governor Cardoso has maintained that a reduction in interest rates will only be possible once inflation begins to subside.