Nigeria Manufacturers Urge Central Bank to Cut Lending Rates Below 20%

Nigeria's manufacturing sector is pushing for significant interest rate cuts, with the Manufacturers Association of Nigeria (MAN) urging the Central Bank of Nigeria (CBN) to bring the Monetary Policy Rate (MPR) below 20%. The current 26.5% rate makes bank credit prohibitively expensive, hindering industrial growth.

MAN's Director-General, Segun Ajayi-Kadir, highlighted that the Manufacturing CEOs Confidence Index (MCCI) rose to 52.1 in the second quarter of 2026, up from 48.7 in the previous quarter. This increase signals a return of confidence among business leaders, largely attributed to recent government reforms, including tax laws and the "Nigeria First" policy.

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The aggregate MCCI for Q2 2026 was 52.1. This was 3.4 points higher than that of Q1 2026, which stood at 48.7. Specifically, within the second quarter of 2026, manufacturers reported a return of confidence in doing business in Nigeria. This confidence was more related to the expected commercial environment than to the economy’s hitherto business and employment conditions.

However, manufacturers continue to face substantial hurdles. These include restricted access to finance, unreliable power supply, elevated production costs, foreign exchange shortages, weak demand for local goods, and multiple taxation. Ajayi-Kadir specifically pointed to the high cost and scarcity of bank credit as a major concern, directly blaming the CBN's high MPR for enabling commercial banks to charge excessive interest rates.

The association also advocated for priority in foreign exchange allocation for manufacturers and the full implementation of the "Nigeria First" policy, which mandates government agencies to source at least 80% of their goods from local producers. These measures are seen as crucial for revitalizing the manufacturing sector.

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Manufacturers’ CEOs expressed dissatisfaction with the cost and size of credit from commercial banks to the manufacturing sector. They bemoaned high interest rates on bank loans, which they directly blamed on the CBN’s high Monetary Policy Rate. With the MPR at 26.5 per cent, commercial banks generate spreads by charging manufacturers higher loan rates.