Local Manufacturers Decry 37% Lending Rate, Call for Policy Shift

The Manufacturers Association of Nigeria (MAN) has raised concerns over the Central Bank of Nigeria’s decision to retain the Monetary Policy Rate (MPR) at 27.5%, warning that the elevated interest rate environment is crippling industrial growth and threatening national productivity.

In a formal statement issued to BusinessDay and monitored by Investors King, MAN disclosed that local manufacturers are now facing average lending rates in excess of 37%, making Nigeria one of the six most expensive countries globally to access credit.

“We are perturbed that when most progressive economies are charting a course toward industrial recovery and macroeconomic stability, Nigeria’s monetary stance tends to lead us in a different direction,” said Segun Ajayi-Kadir, Director General of MAN.

The association noted that while central banks across the Euro Area, United Kingdom, China, India, Thailand and Egypt have initiated interest rate cuts to stimulate real sector performance, Nigeria’s CBN has maintained a tight policy posture since November 2024, creating unintended economic consequences.

MAN revealed that the cost of financing for manufacturers surged by over 44%, rising from ₦1.43 trillion in 2023 to ₦2.06 trillion in 2024, driven largely by prohibitive borrowing rates.

The association warned that this has led to underutilization of industrial capacity, lower investment inflows and shrinking margins, particularly among Small and Medium Enterprises (SMEs).

“The current interest rate regime is not only inflationary, it is eroding confidence in the industrial sector,” Ajayi-Kadir stated, citing a drop in the Manufacturers CEO’s Confidence Index from 50.7 to 48.3 points in the most recent quarter.

MAN further cautioned against the prioritization of short-term foreign portfolio inflows over the long-term sustainability of the domestic manufacturing base.

“Any nation that sacrifices its real sector to attract speculative capital is building on a fragile economic foundation,” the statement added.

The group called for a policy shift toward affordable financing mechanisms, warning that without urgent intervention, the country’s “Nigeria First” industrial agenda could be significantly undermined.