Manufacturers Optimistic as CBN Interest Rate Cuts Promise Credit Boost Beyond N7tn
Manufacturers in Nigeria are eyeing a rebound in access to bank credit after lending to the sector dropped to N7.09 trillion in September 2025, reflecting tight financial conditions throughout the year. Data from the Central Bank of Nigeria (CBN) shows that lending to manufacturers fell by about N1.44 trillion, or 16.9%, from its peak in early 2025, underscoring the challenges businesses faced in financing production and expansion.
The decline in credit contrasts sharply with 2024, when manufacturers consistently accessed higher funds, peaking at N10.88 trillion in February. Analysts attribute the 2025 drop to high interest rates, tight lending conditions, and the CBN’s historically aggressive monetary tightening, which pushed the Monetary Policy Rate (MPR) to a record 27.5%. The MPR directly influences commercial bank lending rates, which remained prohibitively high for most manufacturers.
Recent policy easing has sparked cautious optimism. In February 2026, the CBN cut the MPR to 26.5%, following a 50-basis-point reduction in 2025. The Manufacturers Association of Nigeria (MAN) believes that deeper rate cuts are necessary to meaningfully lower borrowing costs and stimulate industrial investment. MAN’s Director-General, Segun Ajayi-Kadir, emphasized that even small reductions could relieve the sector if commercial banks pass on lower rates to borrowers.
Industry experts suggest that lower lending rates would enable manufacturers to invest in machinery, expand operations, and boost working capital, ultimately increasing production capacity and creating jobs. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, noted that rate cuts send a positive signal to investors and can gradually strengthen credit flows to the real sector. However, he warned that structural challenges, including high deposit costs and government borrowing, may limit the full impact of monetary easing.
Looking ahead, manufacturers expect the MPR to drop further toward 23% by 2026, a move projected to support stronger credit flows and investment. Stakeholders say that sustained monetary easing, combined with improvements in power supply, logistics, and security, could revive Nigeria’s manufacturing sector, helping businesses expand output and drive economic growth.
source: punch