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‘Nigerians will start paying higher prices’ — manufacturers speak on CBN’s interest rate hike

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The Manufacturers Association of Nigeria (MAN) says the latest interest rate increase by the Central Bank of Nigeria (CBN) will worsen the imminent recession in the manufacturing sector and negatively impact its operations in many ways.

On Wednesday, the policy-setting committee of the CBN raised the monetary policy rate (MPR) which measures interest rate, from 18 percent to 18.5 percent.

The latest adjustment was the seventh consecutive rise since May 2022.

The monetary policy rate (MPR) is the baseline interest rate in an economy, every other interest rate used within an economy is built on it.

Reacting in a statement on Thursday, Segun Ajayi-Kadir, director-general of MAN, said the MPR hike would, among other challenges, lead to an increase in the cost of borrowing which would further discourage investments in the sector.

Ajayi-Kabir said it would also lead to a high cost of production which would lead to higher commodity prices and inventory of unsold manufactured products.

“It is evident that the continuous and consistent increase in MPR is not yielding the desired growth in the economy. The Nigerian economy remains fragile and bedevilled with numerous challenges that inhibit growth,” the statement reads in part.

“Therefore, the monetary authority needs to pay closer attention to rethink the policy mix, bearing in mind the parlous state of the economy, especially the effect of a high MPR on the manufacturing sector and the economy.

“The increase in MPR from 18 per cent to 18.5 percent will certainly lead to an increase in lending rates and worsen the uncompetitiveness of the manufacturing sector.

“The Association has been clamouring for single-digit lending rates to allow manufacturers access to needed funds to boost the performance of the sector.

“This increase, like the previous ones, is evidence that the CBN is either unperturbed about the plight of the productive sector or is unable to fathom out a more creative policy mix that would reflate the sector.

“Therefore, it is necessary for government to think outside the conventional monetary policy framework and take pragmatic steps to quell the inflationary pressure and reposition the economy.”

Business

With N50 difference, parallel/official exchange rates near convergence

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The naira, on Wednesday, appreciated at the parallel section of the foreign exchange (FX) market, gaining 6.25 percent to trade at N1,350 per dollar.

Currency traders in Lagos, also known as bureau de change operators (BDCs), quoted the buying rate of the greenback at N1,300 and the selling price at N1,350 — leaving a profit margin of N50.

At the official section of the FX market, the local currency appreciated by 5.97 percent to N1,300.43/$ on Wednesday — from N1,382.95 on March 26.

At the FMDQ Exchange, a platform that oversees official FX trading in Nigeria, the naira recorded a high of N1,460 and a low of N1,200.

With a N50 difference, the official and parallel market exchange rates are nearing convergence — a situation that (at a sustained full convergence) could dry up street market patronage in favour of the official side.

On March 26, the Monetary Policy Committee of the Central Bank of Nigeria (CBN) raised the monetary policy rate (MPR) from 22.75 percent to 24.75 percent.

Speaking on the rationale behind the raise, Olayemi Cardoso, CBN governor, said the major objective of the apex bank is to manage inflation, but said the bank is not “unmindful of the impact that the interest rate increases are having”.

He said with the interest rate increases, the FX market “becomes a lot more lively” — a situation the CBN governor said is reducing the exchange rate and cost.

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‘It’s false’ — NNPC debunks adjusting pump prices of petrol, diesel

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The Nigerian National Petroleum Company (NNPC) Limited says it has not adjusted the pump price of premium motor spirit (PMS), known as petrol, across its retail outlets.

There have been speculations that NNPC had reduced the price of petrol to N560 per litre — from N568.

The national oil company was also quoted as increasing the price of diesel to N920 per litre.

In a statement on Wednesday, signed by Femi Soneye, NNPC’s spokesperson, the firm denied the claims.

“NNPC Limited wishes to clarify rumours suggesting a price adjustment for Premium Motor Spirit (PMS) and Automotive Gas Oil (Diesel) at its retail stations nationwide,” the statement reads.

“The company asserts that these reports are false and urges Nigerians to disregard them entirely.

“NNPC Ltd reaffirms its commitment to sustaining the current sufficiency in petroleum products supply across all its retail stations in the country.

On February 9, the NNPC had said there would not be any increase in the cost of petrol.

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Easter: Rivers, Kano, Enugu, Ogun passengers pay more for air tickets

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Ahead of Easter celebration, passengers flying through Rivers, Kano, Enugu and Ogun states appear to be the worst hit by the increasing prices of domestic air tickets, Vanguard has gathered.

This is even as air travellers flying through Abia, Kogi, Abuja and Plateau states seem to be less affected by the spike in domestic airfares.

The National Bureau of Statistics, NBS, in its transport fare watch for February 2024, released last weekend, stated that travellers flying through Rivers, Kano, Enugu and Ogun paid between N95,000 and N100,000 on air tickets in February, just as travellers flying through Abia, Kogi, Abuja and Plateau paid between N80,700 and N70,000 in the same period.

NBS also said the average fare paid by air passengers for specified routes for a single journey in February 2024 was N88,000.00, showing a decrease of 2.20 per cent compared to the previous month (January 2024).

The report added that on a year-on-year basis, airfares rose by 18.03 per cent from N74,558.11 in February 2023, noting: “South-West recorded the highest fare of air transport in February 2024 with N90,666.67, followed by North-West with N90,500. North-Central had the least with N83,028.57.”

Commenting on the development, Aviation analyst and Consultant, Sindy Foster, said unless there was an emergency intervention, there may be no respite for air passengers. She said: “The link between costs, revenue and profitability of the airline industry from a commercial perspective needs to be fully understood by all who have an impact and a change of policy direction, systems or processes need to be put in place.”

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Bodex F. Hungbo, SPMIIM is a multiple award-winning Nigerian Digital Media Practitioner, Digital Strategist, PR consultant, Brand and Event Expert, Tv Presenter, Tier-A Blogger/Influencer, and a top cobbler in Nigeria.

She has widespread experiences across different professions and skills, which includes experiences in; Marketing, Media, Broadcasting, Brand and Event Management, Administration and Management with prior stints at MTN, NAPIMS-NNPC, GLOBAL FLEET OIL AND GAS, LTV, Silverbird and a host of others

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