The Manufacturers Association of Nigeria (MAN) has urged the government to expand access to concessionary single-digit financing and create a dedicated foreign exchange window for manufacturers. This call follows the Central Bank of Nigeria's (CBN) recent 350 basis points cut in the Monetary Policy Rate (MPR). MAN commended the CBN for the easing, describing it as a positive move. The reduction is expected to support manufacturers' capacity to finance inventory, raw materials, production cycles, equipment acquisition, and business expansion.
MAN's director-general, Segun Ajayi-Kadir, signed a position paper stating that the MPR reduction will have a positive impact on the manufacturing sector. However, he noted that retaining the Cash Reserve Ratio (CRR) at 45 per cent means a substantial proportion of banks' deposits will continue to be held as reserves. This, he argued, will constrain lending to productive sectors, and the benefits of the MPR cut may not be fully realized if credit expansion remains constrained.
Ajayi-Kadir also noted that the cut will lead to a downward shift in fixed income yields on Treasury bills and OMO bills. This will reduce the federal government's debt-servicing costs. To translate the policy easing into real growth, MAN DG called for stronger coordination between monetary and fiscal authorities. He recommended expanding access to concessionary, single-digit financing for manufacturers, particularly small and medium industries.
MAN urged the government to address structural constraints, including electricity costs, logistics, road infrastructure, and insecurity. The association advocated for stronger interventions to reduce industrial energy costs through improved electricity supply and greater domestic gas utilisation. Ajayi-Kadir also called for accelerated implementation of the Nigeria First Policy to strengthen local value chains and reduce import dependence.
The association recommended utilizing the growing external reserves buffer to create a dedicated, transparent FX window for legitimate manufacturers importing capital equipment and raw materials not locally available. MAN also called for strengthening NIRSAL and similar credit guarantee schemes to reduce collateral demands on industrial SMEs.
MAN urged the re-energizing of low-interest intervention windows through the Bank of Industry and Development Bank of Nigeria for raw material processing and equipment fabrication. Ajayi-Kadir further called for operationalisation of the N1 trillion Manufacturing Stabilisation Fund at nine percent interest through the Bank of Industry with transparent eligibility criteria and timely disbursement.
The association also advocated facilitating development finance for manufacturing SMEs at five percent interest with tenors that reflect production cycles. The implementation of the Memorandum of Understanding between the Ministry of Finance and the Central Bank of Nigeria will boost investor confidence and business predictability.
Key points
- The Manufacturers Association of Nigeria seeks single-digit loans and a dedicated FX window.
- The CBN's 350 basis points MPR cut aims to support manufacturers' financing capacity.
- MAN recommends stronger coordination between monetary and fiscal authorities.
