The Manufacturers Association of Nigeria (MAN) has pleaded with the Central Bank of Nigeria (CBN) to reduce interest rates to prevent the collapse of the country’s industrial sector.
The Monetary Policy Committee of the CBN at its 300th meeting on Tuesday retained the Monetary Policy Rate (MPR) at 27.5 per cent, alongside the asymmetric corridor of +500/-100 basis points, the Cash Reserve Ratio (CRR) at 50.0 per cent for Deposit Money Banks and 16.0 per cent for Merchant Banks, while the Liquidity Ratio was held steady at 30.0 per cent. The committee retained the rates to curb the inflation which eased to –in April.
However, in a statement on Wednesday, MAN said the continued retention of the Monetary Policy Rate (MPR) at 27.5 percent, a figure that has still been unchanged since November 2024 is suffocating its members.
According to MAN, while other economies around the world, including the United Kingdom, China, India, and members of the Euro Area, have moved decisively to reduce interest rates to stimulate production and reverse economic stagnation, Nigeria is heading in the opposite direction. The association described this monetary stance as dangerously out of step with the needs of the real economy, warning that it could deepen the struggles of manufacturers and undermine national efforts to revive growth.
Segun Ajayi-Kadir, Director General of MAN, said the country’s manufacturing base is being choked by credit costs that are among the highest in the world. With local manufacturers accessing loans at rates often exceeding 37 percent, Nigeria has become the sixth most expensive country globally to borrow money, emphasising that no country can successfully industrialise when credit is priced beyond the reach of those who produce goods and create jobs.
“The high-interest rate regime is not just inflationary; it is suffocating our members. From small businesses to large-scale manufacturers, many are barely surviving,” Ajayi-Kadir stated. “Factories are slowing down, operational costs are rising, and expansion plans are being shelved. When credit is too expensive, production stalls—and what follows is a flood of imports and rising poverty.”
He warned that Nigeria’s ambitious “Nigeria First” policy, which aims to promote local production and reduce dependence on imports, is under serious threat due to the current lending environment. The cost of financing operations has soared, increasing by 44 percent from ₦1.43 trillion in 2023 to ₦2.06 trillion in 2024. This steep rise, MAN noted, has led to a decline in productivity and a growing inability among manufacturers to use their full production ability.
Confidence in the sector, once cautiously optimistic, has now dimmed. MAN’s internal survey, the Manufacturers CEO Confidence Index, fell from 50.7 points to 48.3, signaling growing pessimism among business leaders. The association expressed concern that this downward trend reflects a broader economic risk: the erosion of trust in Nigeria’s industrial outlook.
Ajayi-Kadir further criticized the policy tilt toward attracting foreign portfolio investments at the expense of long-term industrial stability. While high interest rates may temporarily appeal to speculative investors seeking quick returns, the long-term damage to domestic industries, he argued, is far more dangerous. “We cannot afford to reward intermediaries while punishing producers. A thriving economy is built on manufacturing, not on fleeting capital flows,” he said.
The association also highlighted the irony in the current monetary climate: while banks are thriving on fat interest margins, manufacturers are grappling with shrinking profits, rising debts, and falling productivity. “This is an economic paradox,” Ajayi-Kadir noted. “Our banks are flush, but our factories are gasping. We must ask ourselves: are we building a stable future or just fuelling short-term gains?”
MAN reiterated that recent reforms by the federal government, while commendable, may fall flat if the CBN’s policies continue to stifle the real sector. The delayed disbursement of the ₦1 trillion earmarked for manufacturers under the Stabilization Plan, coupled with the unsettled $2.4 billion forex forward contracts, has further strained the sector’s ability to run efficiently. Access to raw materials, especially those not locally available, is still a growing concern.
The association also called for a more predictable policy on customs duty exchange rates, especially for essential industrial inputs like machinery and raw materials, warning that the current volatility is contributing to inflationary pressures across the board.
“Nigeria cannot afford to lose momentum at a time when the world is preparing for a new wave of industrial transformation,” Ajayi-Kadir cautioned. “If we do not act now, we risk stagnation and the erosion of our manufacturing backbone. The CBN must urgently rethink its stance. Let our factories breathe again.”
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