The Manufacturers Association of Nigeria has called on the Central Bank of Nigeria to further reduce interest rates, warning that the high cost of borrowing continues to hinder production and weaken competitiveness in the real sector.
MAN made the appeal in its reaction to the outcome of the Monetary Policy Committee meeting held on November 24 and 25, where the MPC retained the Monetary Policy Rate at 27 per cent.
After its 303rd meeting, the MPC also adjusted the Standing Facilities Corridor to +50/-450 basis points, retained the Cash Reserve Ratio at 45 per cent for commercial banks and 16 per cent for merchant banks, and left the liquidity ratio unchanged at 30 per cent.
The committee cited improving macroeconomic indicators, noting a continued slowdown in inflation, which it said decelerated to 16.05 per cent in October.
But MAN insisted that the lending climate remains “punitive” for the sector.
Its Director-General, Segun Ajayi-Kadir, said manufacturers had expected a further easing to reduce borrowing costs, which currently range between 30 and 37 per cent.
In a statement released on Wednesday, Ajayi-Kadir said the association “appreciates the decision of the MPC to halt the increase in MPR” but insisted that manufacturers had expected “a further reduction in the rate to reduce the cost of borrowing.”
He added, “The rate hinders production and reduces the competitiveness of the sector.
“While the emphasis on exchange rate stability and improved forex liquidity is crucial, it is essential to reduce the cost of funds to encourage borrowing for expansion and investment.”
The association warned that persistently high interest rates would continue to limit access to affordable credit, especially for small and medium-scale manufacturers.
It added that the situation was worsened by structural challenges, including poor infrastructure, high logistics expenses, erratic power supply, soaring energy costs and insecurity, all of which escalate production costs.
MAN urged the CBN and the fiscal authorities to strengthen policy coordination and deepen reforms that unlock industrial potential, stressing the need for a “downward review of the rate in subsequent MPC meetings to lessen the burden of high borrowing costs and incentivise long-term investments,” particularly in capital-intensive sub-sectors.
The group also recommended the introduction of additional monetary instruments to facilitate credit flow to the real sector, alongside increased government investment in infrastructure to boost supply capacity.
On exchange rate management, MAN urged the government to work closely with the CBN to stabilise the naira and manage potential risks linked to capital flight arising from the new MPC corridor adjustment “that will push banks to lend more.”
