Reduce Interest Rates to Stem Inflation, Foster Growth, Manufacturers Appeal to CBN

The Manufacturers Association of Nigeria (MAN) has urged the Central Bank of Nigeria (CBN) to reassess its monetary policy approach by enacting a rate reduction to mitigate inflation and rejuvenate growth within the real sector, particularly manufacturing and agriculture.

This appeal follows the recent resolution of the CBN’s Monetary Policy Committee (MPC), which, at its 301st meeting held on July 21 and 22, 2025, decided to maintain the Monetary Policy Rate (MPR) at 27.5%.

While recognizing the committee’s efforts to stabilize critical monetary indicators, MAN contends that the prevailing high rate is inadequate for combating inflation or encouraging productive investment.

The association reports that the CBN’s prolonged contractionary stance has substantially burdened manufacturers.

It noted that lending rates to the sector have surged to over 35%, resulting in increased production costs, higher prices for finished goods, reduced capacity utilization, and a pronounced rise in unsold inventories.

In 2024 alone, manufacturers’ capacity utilization dwindled to 57%, while unsold inventory more than doubled to N2.14 trillion, up from N1.14 trillion in 2023. MAN emphasized that these trends are stifling production and disrupting investment plans across the sector.

“MAN anticipates a rate cut complemented by a comprehensive fiscal policy framework to facilitate improved access to long-term loans, enhanced productivity, and sustained economic growth,” the association stated.

MAN asserted that lowering the interest rate would decrease borrowing costs, attract investment in the real sector, and invigorate economic activities.

The association further called on the federal government to collaborate with the CBN in implementing supportive fiscal measures that would reestablish manufacturing as a pivotal growth engine.

In its broader bulletpoint recommendations to bolster the real sector, MAN urged the government and monetary authorities to:

*Reduce interest rates to alleviate borrowing costs and foster productive investment.

*Implement a Nigeria First Policy to promote local patronage, backward integration, and domestic raw material sourcing—strategies aimed at alleviating forex demand pressures.

*Enhance food production by addressing insecurity in farming communities and improving agricultural logistics, thereby curbing food inflation.

Promote income redistribution to improve citizens’ welfare and overall economic performance.

Though inflation has slightly eased, decreasing to 22.22% in June 2025 from 22.97% in May, food inflation continues to rise. MAN believes a policy shift supporting domestic production, reducing input costs, and spurring consumer spending is crucial to unlocking sustained economic growth.

At the conclusion of its Monetary Policy Committee (MPC) meeting on Tuesday, July 22, 2025, the CBN announced the retention of the Monetary Policy Rate (MPR) at 27.5%.

CBN Governor Dr. Olayemi Cardoso, who briefed journalists post-meeting, stated that the committee’s decision to maintain the rate was driven by the need to uphold the disinflationary trend in the economy.

All 12 members of the MPC voted unanimously to preserve the MPR at 27.5%, indicating a cohesive stance among policymakers amidst ongoing inflationary pressures and exchange rate volatility.