The Central Bank of Nigeria's Monetary Policy Committee has cut the Monetary Policy Rate (MPR) by 350 basis points to 23 percent from 26.5 percent. This decision was made at the end of its 307th meeting in Abuja. The Manufacturers Association of Nigeria (MAN) has welcomed this move, but emphasized that the cost of actual bank loans remains a key issue for businesses. MAN's Director-General, Segun Ajayi-Kadir, described the decision as a positive signal, but stressed that manufacturers are looking for a clear transmission from the policy rate to commercial lending rates.
Despite the rate cut, MAN warned that lending rates of 27–30 percent would remain too high for manufacturers. The group called for lower reserve requirements and dedicated single-digit financing to support industrial investment. Ajayi-Kadir argued that manufacturers in countries such as Egypt, Morocco, and South Africa have access to borrowing rates of about 8–12 percent. He described the new policy rate as "a welcome relief, not yet a stimulus," emphasizing that no manufacturer can be competitive borrowing at 30 percent.
MAN also proposed further monetary and fiscal measures to support the manufacturing sector. These include a reduction in the 45 percent Cash Reserve Ratio, the operationalisation of the N1 trillion Manufacturing Stabilisation Fund at nine percent, and a dedicated single-digit lending window for manufacturers. The association also suggested a five percent development-finance rate for small and medium-sized enterprises. Ajayi-Kadir emphasized that lower interest rates alone would not resolve the competitiveness challenges facing manufacturers.
Ajayi-Kadir called for further easing towards a sub-15 percent MPR over the medium term, alongside measures to reduce power, foreign exchange, logistics, and multiple-taxation costs. These costs add more than 40 percent to production expenses, according to MAN. Segun Kuti-George, National Vice President of the National Association of Small-Scale Industrialists, also welcomed the rate cut, saying cheaper borrowing could make it easier for manufacturers to finance inventories, equipment, and business expansion.
However, Kuti-George cautioned that increased liquidity could add to inflationary pressures if more money circulated without a corresponding increase in productive output. He noted that Nigeria's borrowing costs remain high compared with some other African economies, such as Ghana and Benin Republic, where businesses can access credit at rates of about 11–12 percent. For manufacturers, the immediate test of the CBN's policy shift will be whether commercial lending rates decline sufficiently to reduce financing costs and support new investment.
The CBN's rate cut follows a 50-basis-point reduction announced in February. The decision was made to support economic growth and reduce inflationary pressures. However, MAN and other industry stakeholders are urging commercial banks to transmit the rate cut to their lending rates. The association's proposals aim to support industrial investment and improve the competitiveness of Nigerian manufacturers.
The implementation of the CBN's policy shift will be closely monitored by manufacturers and other stakeholders. The success of the rate cut in reducing financing costs and supporting new investment will depend on the transmission of the policy rate to commercial lending rates. Industry stakeholders are hopeful that the CBN's decision will lead to a reduction in production costs and an increase in industrial activity.
Key points
- - The CBN has cut the Monetary Policy Rate (MPR) by 350 basis points to 23 percent from 26.5 percent. - Manufacturers are seeking lower lending rates, currently around 27-30 percent, to support production and investment. - The Manufacturers Association of Nigeria (MAN) has proposed further monetary and fiscal measures to support the manufacturing sector.
