The Manufacturers Association of Nigeria (MAN) has called on the Central Bank of Nigeria (CBN) to urgently cut the Monetary Policy Rate (MPR), warning that the continued retention of the rate at 27.5 percent is threatening the survival of the country’s manufacturing sector and endangering long-term economic growth.
In a strongly worded statement on Monday, the association said the current monetary stance, which has remained unchanged since November 2024, is out of step with global trends and is stifling industrial productivity.
“We are perturbed that while most progressive economies are cutting rates to stimulate industrial recovery and macroeconomic stability, Nigeria’s high-interest regime is doing the opposite,” said MAN Director General, Segun Ajayi-Kadir, mni.
According to him, countries such as the United Kingdom, China, India, Thailand, and Egypt have slashed their benchmark rates to support production and economic rebound. In contrast, Nigeria has maintained one of the highest interest rates globally, making it the sixth most expensive country to access credit.
Ajayi-Kadir noted that Nigerian manufacturers now face average lending rates of over 37 percent, which has made borrowing “prohibitively expensive” and has weakened the capacity of businesses—small, medium, and large—to survive and grow.
“This policy posture is not only inflationary, it is choking productivity,” he said. “The inability of manufacturers to access affordable credit is pushing many towards collapse, reducing production, and effectively importing poverty.”
The association also raised concerns over the rising cost of finance in the sector. According to MAN, finance costs surged by over 44 percent—from ₦1.43 trillion in 2023 to ₦2.06 trillion in 2024—due to the high cost of borrowing, while investor confidence has declined, reflected in a drop in the Manufacturers CEO’s Confidence Index from 50.7 to 48.3 points.
Ajayi-Kadir warned that Nigeria’s economic priorities appear skewed toward attracting speculative foreign portfolio investment at the expense of the real sector. He described this as a “dangerous paradox” where banks are posting record profits on the back of elevated interest margins, while manufacturers grapple with rising debts and shrinking margins.
“No economy can grow by starving its manufacturers of affordable credit,” he said. “What we are seeing is a banking sector flush with idle capital, while the productive sector—the engine of job creation and industrial value—is gasping for air.”
To address the crisis, MAN issued a list of recommendations for the CBN and the federal government. These include:
- A significant reduction in the MPR to ease borrowing costs for manufacturers.
- Policy measures and incentives to encourage commercial banks to offer single-digit, concessionary loans to industrial players.
- Immediate disbursement of the ₦1 trillion Stabilization Fund earmarked to support the manufacturing sector.
- Expansion of the Bank of Industry’s capital base to increase its ability to provide long-term, affordable financing.
- Settlement of the $2.4 billion in outstanding forex forward contracts, which has impacted access to raw materials.
- Stabilization of the customs duty exchange rate for importing industrial inputs to guard against inflationary pressures.
Ajayi-Kadir warned that the current situation, if left unchecked, could unravel the gains of recent government reforms and undermine Nigeria’s ambition of becoming a globally competitive manufacturing hub.
“Industrial confidence is a fragile currency,” he said. “Once broken, it takes time to rebuild. The CBN must act now—and decisively—to reverse the downward spiral in the manufacturing sector.”
The association emphasized its readiness to continue working with the government and other stakeholders to restore macroeconomic stability, but insisted that immediate action is needed to prevent further industrial decline.
“The time to act is now,” Ajayi-Kadir concluded. “Every delay further constrains our capacity to build a resilient and self-reliant economy.”
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