LAGOS – The Manufacturers Association of Nigeria (MAN) has attributed the N1.24 trillion value of unsold goods to rise in the Monetary Policy Rate (MPR) to 27.25 per cent by the Central Bank of Nigeria (CBN).
The Director General, Segun Ajayi-Kadir of MAN, who made the disclosure to Daily Independent, said the MPR rate impact goes beyond compounding the challenges of manufacturers as it is stifling opportunities for investment in crucial areas such as technology, retooling, and expansion within the manufacturing sector.
“With the increase in borrowing costs, manufacturers will now pay over 35 per cent on their credit facilities. This will lead to an increase in production costs, higher prices of finished goods, lower competitiveness and production capacity expansion.
“Manufacturers will, all the more, be compelled to choose to service existing credit facilities over expansion and investment in new product lines. For instance, over the first six months of the year, manufacturers incurred more than N730bn in capital expenses due to the continuous rise in interest rates imposed by commercial banks.
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“The value of unsold finished goods inventory surged by 42.93 percentage points, reaching N1.24 trillion compared to N869.37bn at the close of 2023.
“This underscores the difficulties manufacturers face in a weakening market.
“In broad terms, MAN is worried about the implications of the continuous rate hikes on the productive sector and earnestly expects the CBN to stop the rate hike but explore more of the monetary-fiscal policy handshake option to curb inflation”.
The association bemoaned the MPR hike while urging the government to accelerate the disbursement of the N1tn single-digit loan plan for the sector.
