MAN to CBN: Current Interest Rates Are Stifling Production, Investment
Manufacturers under the Manufacturers Association of Nigeria (MAN) have renewed calls for a deeper reduction in interest rates, warning that current borrowing costs are choking investment, constraining output, and weakening the sector’s contribution to economic growth.
Their appeal follows the latest Monetary Policy Committee (MPC) decision in Abuja, where the Central Bank of Nigeria (CBN) retained the benchmark Monetary Policy Rate (MPR) at 27 per cent while adjusting the Standing Facilities Corridor to +50/-50 basis points to enhance banking-sector liquidity and stimulate lending. Though the MPC paused further tightening to ease pressure on the real sector, MAN said the current cost of credit remains unsustainably high for manufacturers.
The director-general of MAN, Mr Segun Ajayi-Kadir, noted that while retaining the 27 per cent rate signalled a cautious shift from the aggressive tightening cycle of the past year, manufacturers still face lending rates of between 30 and 37 per cent from commercial banks.
He said such rates make it nearly impossible for factories to expand capacity, invest in new technology, or compete with cheaper imports entering the Nigerian market.
Ajayi-Kadir stressed that the manufacturing sector, which accounts for roughly 10 per cent of GDP and employs millions across value chains, requires affordable and long-term credit to drive job creation and reduce Nigeria’s heavy reliance on imported goods.
He added that despite recent improvements in foreign exchange liquidity and a more stable exchange rate environment, the elevated cost of funds remains a major impediment to growth.
He explained that many manufacturing firms, particularly small and medium-sized enterprises, have been forced to scale down operations or postpone expansion plans due to rising borrowing costs, high logistics expenses, inadequate infrastructure, unreliable electricity supply, escalating energy prices, and security-related disruptions. These combined pressures, he said, have pushed production costs upward and eroded competitiveness across several sub-sectors.
Ajayi-Kadir urged the CBN to adopt a more accommodative monetary stance in subsequent MPC meetings to support credit expansion, arguing that lower interest rates would free up capital for investment in machinery, raw materials and export-oriented production.
He said sustained credit-led growth was essential for restoring the sector’s momentum and strengthening Nigeria’s fragile economic recovery.
He called for stronger coordination between fiscal and monetary authorities, insisting that monetary easing must be supported by targeted fiscal measures, including tax incentives, infrastructure upgrades and reforms in power, agriculture and energy. He said such complementary actions would not only reduce inflationary pressures but also enable manufacturers to scale up production meaningfully.
Ajayi-Kadir further urged the CBN to closely evaluate how previous MPC decisions have affected credit availability to the real sector, stressing that evidence-based interventions would deepen the positive impact of future policy adjustments.
He added that the recent corridor adjustment was a welcome step toward easing liquidity constraints but warned that without a substantial cut in the MPR, credit to productive sectors would remain limited.
He emphasised that managing risks through fiscal discipline, structural reforms and improved capital allocation was crucial for boosting the sector’s performance and supporting sustainable economic development.
He said Nigeria’s manufacturing sector remains capable of driving industrial growth, but only if financing conditions are aligned with the country’s growth ambitions.
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