Ikorodu’s Industrial Collapse: SMEs Suffocate Under CBN’s 27.5% Rate as Federal Policies Crush Local Factories

As Nigeria battles economic turbulence, the industrial clusters in Ikorodu, once a hub for thriving SMEs, are now shadows of their former selves. Out of 15 factories visited in early 2025, some have already shut down, and more are on the verge of closure. The common culprit? A combination of harsh monetary policies, high-interest rates, and stifling regulations under the Federal Government’s economic strategy.

A Balancing Act Gone Wrong

While the Central Bank of Nigeria (CBN) under Governor Olayemi Michael Cardoso insists that the 27.5% interest rate is necessary to curb inflation, the real economy tells a different story. Businesses that form the backbone of local production are collapsing under the weight of expensive credit, import restrictions, and multiple levies from government agencies.

Experts have repeatedly warned that economic stabilization must not come at the expense of local businesses. A more flexible interest rate policy, improved access to low-interest funding, and regulatory reforms are essential. Yet, the Tinubu administration’s policies continue to squeeze SMEs—the very businesses that provide jobs and essential goods to millions of Nigerians.

Factories Closing, Jobs Lost

Ikorodu’s industrial areas now resemble graveyards of abandoned businesses. Where machines once hummed with productivity, silence now reigns. Among the affected businesses is Jide’s Textiles, which once employed 200 workers. Now, it has shut its doors due to soaring production costs and a lack of affordable loans.

Similarly, Amina Foods, a local food-processing company, is struggling to stay afloat. “We’ve had to lay off half of our staff because we can’t afford to keep running,” says Amina Lawal, the company’s owner. “The cost of borrowing is too high, and the government offers no support. They talk about ‘letting the poor breathe,’ but their policies are choking us.”

The Worst Naira Crisis in History

Beyond the struggles of SMEs, Nigeria’s currency has suffered an unprecedented collapse in just two years. The naira, once relatively stable, has plummeted under the current administration’s policies, further worsening inflation and eroding the purchasing power of businesses and consumers alike.

Financial analysts argue that without a strategic intervention, including a clear SME-support policy, Nigeria risks deeper economic contraction. “You cannot grow an economy without a humane approach,” says Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise. “Government policies should have a human face. Otherwise, businesses will continue to shut down, and unemployment will soar.”

What’s the Way Forward?

For Nigeria to strike a balance between economic stabilization and SME survival, a multi-faceted approach is needed:

1. Lower Interest Rates – The 27.5% MPR must be reviewed to make credit accessible for businesses.
2. Targeted SME Funding – Government-backed low-interest loans should be made available for industries affected by the crisis.
3. Regulatory Overhaul – Agencies must reduce excessive levies and simplify business regulations to ease the burden on SMEs.
4. Naira Stabilization – Proactive forex policies should be implemented to restore the naira’s value and reduce inflationary pressures.

A Critical Moment for Policy Reform

If the government truly wants to “let the poor breathe,” it must align its monetary and fiscal policies with that vision. The continued collapse of SMEs, particularly in industrial hubs like Ikorodu, is a warning sign that urgent action is needed.

Nigeria cannot create jobs or achieve sustainable economic growth without policies that support local businesses. If policymakers do not reconsider their approach, SMEs—the backbone of the economy—will continue to vanish, leaving millions of Nigerians gasping for economic air.

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