By Seun Ibiyemi
The Manufacturers Association of Nigeria (MAN) has called for further monetary policy easing and cheaper credit to manufacturers, saying the Central Bank of Nigeria’s (CBN) 350-basis-point reduction in the Monetary Policy Rate (MPR) is only an initial step towards reviving industrial growth.
MAN welcomed the decision of the Monetary Policy Committee (MPC) to cut the MPR from 26.5 per cent to 23 per cent, describing the move as a positive shift from the tight monetary conditions that have constrained manufacturing activities.
In a statement signed by its Director-General, Segun Ajayi-Kadir, MAN said the lower policy rate could reduce borrowing costs and improve manufacturers’ ability to finance raw materials, inventories, production cycles, equipment acquisition and business expansion.
The association, however, said the impact of the rate cut would depend largely on how quickly monetary easing translates into lower lending rates for businesses.
MAN expressed concern over the decision to retain the Cash Reserve Ratio (CRR) at 45 per cent for Deposit Money Banks and 16 per cent for Merchant Banks.
According to the association, the high CRR means a substantial proportion of bank deposits will remain locked as reserves, potentially limiting the funds available for lending to productive sectors.
It said improved liquidity conditions could strengthen businesses’ access to short-term financing, but the benefits of the MPR reduction may be constrained if credit expansion to the real sector remains limited.
MAN therefore urged the CBN to progressively review the high CRR for Deposit Money Banks when prevailing economic conditions permit, while maintaining financial-system stability.
The association also called on the CBN, commercial banks and the Bankers’ Committee to ensure that the 350-basis-point reduction is reflected in prime and maximum lending rates available to manufacturers.
MAN said manufacturers should be able to access concessionary, single-digit financing, particularly small and medium-sized industrial enterprises and businesses operating in strategic sectors.
It also urged the government to re-energise low-interest intervention programmes through the Bank of Industry (BOI) and Development Bank of Nigeria (DBN), with long-term funding targeted at raw-material processing, machinery acquisition and local equipment manufacturing.
The manufacturers’ body called for the operationalisation of the proposed N1 trillion Manufacturing Stabilisation Fund at a nine per cent interest rate through the BOI.
It urged the government to establish transparent eligibility requirements, efficient administration and timely disbursement to qualified manufacturers.
MAN also advocated development finance for manufacturing SMEs at an interest rate of five per cent, with loan tenors and repayment structures aligned with the production and investment cycles of businesses.
Beyond monetary policy, MAN said lower interest rates alone would not resolve the structural challenges driving up production costs.
The association identified electricity costs, transport and logistics expenses, infrastructure deficits and insecurity among the major constraints requiring urgent government intervention.
It called for stronger efforts to reduce industrial energy costs through improved electricity supply, increased domestic gas utilisation and incentives for alternative and renewable energy solutions.
MAN also urged the government to accelerate implementation of the Nigeria First Policy to strengthen domestic value chains, increase local sourcing of raw materials and reduce dependence on imports.
The association further called for a dedicated and transparent foreign exchange window for legitimate manufacturers importing capital equipment and essential raw materials that are unavailable locally.
It said the initiative would help reduce manufacturers’ dependence on the parallel market and the additional costs associated with foreign exchange premiums.
MAN also urged the government to strengthen NIRSAL and other credit guarantee schemes to cover industrial SME risks, enabling banks to lend to manufacturers without imposing excessive collateral requirements.
READ ALSO: Electricity: Nigeria generates 5,403MW, DisCos receive 4,379MW – Report
MAN said future MPC meetings should place greater emphasis on assessing the actual impact of monetary policy decisions on manufacturing and other productive sectors.
According to the association, the key measure of monetary policy effectiveness should be its ability to improve productivity, stimulate investment, create employment and support industrial expansion.
“More cuts are needed to achieve meaningful impact,” MAN said, while stressing that monetary easing must be complemented by fiscal and structural reforms.
The association called for stronger coordination between monetary and fiscal authorities to translate the latest MPR reduction into lower lending costs, improved credit access, increased productive investment and a more predictable operating environment for manufacturers.
MAN said it welcomed the CBN’s move towards a less restrictive monetary policy stance but urged continued policy calibration to balance macroeconomic stability with the need to stimulate industrialisation and sustainable economic growth.
