High Lending Rates in Nigeria Strangling Production, MAN Urges CBN to Cut Interest Rates
The Manufacturers Association of Nigeria (MAN) has raised fresh concerns over the country’s high lending rates, warning that steep borrowing costs are crippling production and eroding the competitiveness of local industries. The association urged the Central Bank of Nigeria (CBN) to consider further rate cuts to ease financial pressure on manufacturers, many of whom are struggling to stay afloat under mounting operational costs.
Reacting to the outcome of the Monetary Policy Committee meeting held on November 24–25, MAN acknowledged the CBN’s decision to retain the Monetary Policy Rate at 27 percent but described the current lending environment as “punitive for manufacturers.” While the MPC held key indicators steady—including the Cash Reserve Ratio at 45 percent and liquidity ratio at 30 percent—the committee expressed confidence in recent macroeconomic improvements, citing a continued slowdown in inflation, which eased to 16.05 percent in October.
Despite these gains, MAN insists the real sector requires more supportive monetary conditions. Director-General Segun Ajayi-Kadir said manufacturers expected an interest rate cut that would reduce borrowing costs and stimulate investments. He noted that many manufacturers still face lending rates between 30 and 37 percent—levels he described as restrictive, damaging to production, and harmful to Nigeria’s ability to compete globally. He emphasized that stabilizing the exchange rate, while essential, must be matched with cheaper access to credit.
The association also warned that persistent high rates are shutting out small and medium industries from affordable financing, aggravating existing challenges such as poor infrastructure, high logistics costs, unreliable electricity supply, and rising energy expenses. These structural bottlenecks, MAN said, collectively inflate production costs and weaken the sector’s capacity to support economic growth. The group urged the CBN and fiscal authorities to work more closely to unlock industrial potential and strengthen policy consistency.
Looking ahead, MAN recommended that the CBN consider lowering interest rates at subsequent MPC meetings and adopt new tools that boost credit flow to the real sector. It called for stronger fiscal investments in roads, power, agriculture, logistics, and security, arguing that a safe and well-supported industrial environment is essential for job creation and sustained growth. While commending the MPC’s recent efforts, MAN reiterated that coordinated action between monetary and fiscal policymakers remains vital to ensuring that Nigeria’s manufacturing sector recovers and thrives.
source: punch