The Manufacturers Association of Nigeria is calling on the Central Bank of Nigeria to cut interest rates, arguing that the current high cost of borrowing is crippling the manufacturing sector.
While MAN acknowledged the CBN’s recent decision to hold the benchmark Monetary Policy Rate at 27 per cent, it described the lending environment as “punitive,” stifling production and harming competitiveness.
At its 303rd meeting on November 25,the Monetary Policy Committee held its benchmark interest rate steady at 27 per cent.
The committee also made several other key decisions: it adjusted the Standing Facilities Corridor to +50/-450 basis points, and retained the Cash Reserve Ratio at 45 per cent for commercial banks and 16 per cent for merchant banks, while keeping the liquidity ratio at 30 per cent.
MAN,however, cautioned that the real sector’s struggles require more decisive action.
The association’s Director-General, Segun Ajayi-Kadir, stated that while manufacturers appreciate the MPC’s decision to halt rate increases, they had expected an actual reduction to lower borrowing costs.
He revealed that manufacturers still face lending rates between 30 per cent and 37 per cent, which he described as “high, restrictive, and damaging to competitiveness.”
He said, “The rate hinders production and reduces the competitiveness of the sector. While the emphasis on exchange rate stability and improved forex liquidity is crucial, it is essential to reduce the cost of funds to encourage borrowing for expansion and investment.”
The Association warned that without lower lending rates,manufacturers, especially small and medium-sized enterprises, will continue to be starved of affordable credit.
This financial pressure is severely compounded by persistent structural issues, including poor infrastructure, high logistics costs, erratic electricity, soaring energy tariffs, and insecurity.
MAN stressed that this combination of high borrowing costs and operational bottlenecks cumulatively cripples production and erodes the sector’s competitiveness.
To address these challenges,MAN urged the Central Bank to strengthen its coordination with fiscal authorities and adopt reforms that unlock the sector’s potential.
Its key recommendation is a decisive cut to the interest rate in future meetings to ease the burden of high borrowing costs and incentivize long-term investment, especially in capital-intensive industries.
MAN also called for new policy tools from the central bank to direct credit to the real sector.It simultaneously urged the Federal Government to enforce fiscal discipline and increase investment in infrastructure like roads, electricity, and logistics to boost supply.
Regarding the exchange rate, MAN pushed for closer collaboration between the government and the CBN to stabilize the Naira and mitigate the risk of capital flight, a potential side effect of the new MPC measures designed to encourage bank lending.
The association further advocated for complementary fiscal measures to support industrial development,drive structural reforms in key sectors like agriculture, manufacturing, and energy, and alleviate inflationary pressures. It also emphasized the urgent need to resolve insecurity in agricultural and industrial zones, warning that stabilizing raw material supplies and food output is impossible without a secure environment, which it called “critical to sustained industrial growth.”
