The Manufacturers Association of Nigeria (MAN) has urged the Central Bank of Nigeria (CBN) to ease several conditions in its foreign exchange policy to support local manufacturers.
Chief Bioku Rahman, the outgoing Chairman of MAN in Kwara and Kogi, made this appeal on Tuesday during the Association’s 10th Annual General Meeting (AGM) in Ilorin.
Rahman also called on the Bank of Industry (BOI) to approve and swiftly implement further reductions in its lending rates for industries. Additionally, he requested the CBN to lower the interest rate by at least 1%, emphasizing that the central bank should alleviate the burden on local manufacturers.
“We are asking the CBN to waive many conditions of its foreign exchange policies for local manufacturers,” Rahman said.
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He further suggested that the CBN expand the foreign exchange window for local industries and urged the Federal Government to harmonize taxes and levies across 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,” he added. “The CBN should also instruct commercial banks to reduce interest rates on industrial loans. The interest rates charged on industrial loans and other loans provided as COVID-19 palliatives should be significantly reduced to one percent.”
Chief Francis Meshioye, President of the Manufacturers Association of Nigeria (MAN), noted in his address that the relationship between the state government and MAN has been cordial. He also urged the state government to improve the infrastructure around industrial estates.
What You Should Know
The depreciation of the naira over the past year has been a major concern for manufacturers, impacting all aspects of their operations. The rising cost of imported raw materials has led to an increase in overall operating expenses for manufacturers.
On the financial side, manufacturers nationwide have seen a significant increase in their finance costs over the years. Since February 2024, the CBN has raised interest rates by 800 basis points to 26.75%. This follows a consistent increase in interest rates by the CBN since May 2022, aimed at curbing inflation and stabilizing the foreign exchange market.
An earlier analysis by Nairametrics revealed that the finance costs for consumer goods companies in the first half of 2024 had increased by over 1000% due to higher finance costs and exchange rate depreciation.
However, the CBN has acknowledged these concerns, with Governor Cardoso stating that interest rates will decrease when inflation begins to slow down.
