Stakeholders differ on CBN’s withdrawal from manufacturers’ intervention fund

Industry stakeholders in Nigeria have voiced divergent opinions regarding the Central Bank of Nigeria's (CBN) decision to withdraw from direct intervention financing for the manufacturing sector. Dr. Chinyere Almona, Director General of the Lagos Chamber of Commerce and Industry (LCCI), expressed concern that this move leaves manufacturers heavily reliant on commercial banks, which are not structured to provide the long-term financing essential for industrial development.

Almona argued that withdrawing intervention financing without a suitable replacement has pushed manufacturers into a credit market ill-equipped for their needs. She noted that channeling development finance through commercial banks diminishes concessional benefits, discourages lending to small and medium-scale manufacturers, and contributes to declining industrial credit. While optimistic about potential investments spurred by industrial policies, Almona stressed that effective implementation, not just policy announcements, is crucial for restoring investor confidence.

She urged the Federal Government to promptly release the proposed N1 trillion Manufacturing Stabilisation Fund, recapitalize the Bank of Industry (BoI) with SME-focused credit guarantees, and review the Cash Reserve Ratio (CRR) to improve banking sector liquidity. "Nigeria cannot industrialize on promises," Almona warned, emphasizing that policy execution will determine the country's industrial future.

Echoing these concerns, Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), identified access to affordable finance as a major hurdle for manufacturers. He pointed to high government borrowing rates, nearing 20 percent, crowding out the private sector and making credit access difficult. Yusuf stressed that while short-term facilities suffice for working capital, significant investments in machinery and factories require long-term financing at competitive rates, advocating for BoI recapitalization to offer single-digit interest loans.

However, Dr. John Isemede, a former Director-General of NACCIMA, supported the CBN's withdrawal, arguing the apex bank should concentrate on its core monetary policy mandate. He cited the limitations of central bank-led development financing and suggested that institutions like BoI, with commercial bank support, are better positioned to provide industrial credit. Isemede called for stronger alignment between monetary and fiscal policies, improved exporter incentives, and a comprehensive industrial roadmap for sustainable manufacturing growth.

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Nigeria cannot industrialize on promises.