The Manufacturing Sector across the country might soon collapse, as President Muhammadu Buhari, through the Central Bank of Nigeria, CBN, has decided to retain the Monetary Policy Rate, MPR, at 14 percent, despite current economic hardship in the country.
The development is coming at a time, when most Manufacturers were anticipating a paradigm shift in the nation’s monetary policies, as the present policies have so far proved counterproductive.
The Apex Bank, which made its stance known on Tuesday, November 22, at the end of the Monetary Policy Committee, MPC, meeting in Abuja, unanimously agreed to retain the MPR at 14 percent; Cash Reserve Ratio, CRR, at 22.5 percent; Liquidity Ratio at 30.00 percent; and the asymmetric window at +200 and -500 basis points around the MPR.
By its decision, the interest rate has remained unchanged in the last 4 months, and would remain so till at least January 2017, prompting protests from Manufacturers, who desired a lower lending rate, so they could access credit, and invest in their businesses.
The CBN Governor, Godwin Emefiele, who spoke to Newsmen at the end of the meeting, said: “Considering the importance of price stability, and being mindful of the limitations of Monetary Policy in influencing output and employment, the Committee decided unanimously in favour of retaining the current stance.
“The Committee observed that total foreign exchange inflows through the CBN, decreased by 31.85 percent, from $1,404.84 million in September, to $957.37 million in October 2016.“The decrease was due to lower crude oil, and other government revenues in the period under review.“The limitations of Monetary Policy in reversing the current stagflationary condition in the economy, is traced to supply and demand shocks.“Members stressed the need for a robust, and more keenly coordinated macroeconomic policy framework, that would restart output growth, stimulate aggregate demand, and rein in inflation expectations,” Emefiele said.
Speaking further, he said: “MPC urged the Federal Government to urgently assess the extent of its indebtedness to domestic economic agents, and develop a framework for securitizing the debts, in order to settle its outstanding domestic contractual obligations, which cuts across all sectors of the economy.“These accumulated debts have slowed business activities of economic agents; most of who are indebted to the banking system, thus, compromising the integrity of the financial system.“It also advised the Bank, to commit to greater surveillance, and deployment of early warning systems in managing the banking system,” Emefiele added.
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