MAN to CBN: Cut interest rates further, unlock credit for manufacturers

Stanley Ihedigbo

Manufacturers Association of Nigeria (MAN) has welcomed the Central Bank of Nigeria’s decision to cut the Monetary Policy Rate (MPR) by 350 basis points to 23 per cent, describing the move as a positive step towards creating a more supportive financing environment for manufacturers.

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), at its 307th meeting held on September 21 and 22, 2026, reduced the MPR from 26.5 per cent to 23 per cent.

The committee also adjusted the Standing Facilities Corridor to +50/-300 basis points around the MPR, while retaining the Cash Reserve Ratio (CRR) at 45 per cent for Deposit Money Banks and 16 per cent for Merchant Banks. The Liquidity Ratio was retained at 30 per cent.

In its assessment of the decision, MAN said the 350-basis-point reduction represented a significant easing of monetary policy and could help reduce borrowing costs and improve the operating environment for businesses, particularly manufacturers that depend heavily on working capital and investment financing.

The association, in a statement signed by its Director-General, Segun Ajayi-Kadir, mni, said the decision was consistent with its expectation that monetary easing should follow a period of economic stabilisation.

According to MAN, the rate reduction could strengthen manufacturers’ ability to finance inventories, raw materials, production cycles, equipment acquisition and business expansion.

It also noted that the revised Standing Facilities Corridor could improve liquidity management within the banking system and support more efficient pricing of short-term funds.

MAN Raises Concern Over 45% CRR

Despite welcoming the MPR cut, MAN expressed concern over the continued retention of the 45 per cent CRR for Deposit Money Banks.

The association said while reserve requirements remained important for financial and monetary stability, the relatively high CRR could continue to limit the amount of deposits available for lending to productive sectors.

MAN warned that the benefits of the lower MPR might not be fully realised if credit expansion to the real sector remained constrained by limited lending capacity.

“It is obvious that improved liquidity conditions could increase credit availability and strengthen businesses’ ability to meet short-term financing needs,” the association said, while noting that the high CRR could restrict funds available for lending and investment.

MAN also observed that the MPR reduction was likely to result in lower yields on short-term government securities, including Treasury Bills and Open Market Operations instruments.

It added that the move could reduce the Federal Government’s debt-servicing and borrowing costs, while potentially narrowing the yield differential for foreign portfolio investors.

‘More cuts needed’

The manufacturers’ body said the extent to which businesses would benefit from the rate cut would depend largely on how quickly monetary policy was transmitted into actual lending rates.

It stressed that complementary fiscal and structural interventions would also be required to address persistent challenges confronting manufacturers.

These, according to MAN, include unreliable electricity supply, high logistics and transportation costs, infrastructure deficits, insecurity and other constraints affecting the ease of doing business.

“MAN sees the MPR reduction as a good opportunity to create a more supportive financing environment for manufacturing. Yet, more cuts are needed to achieve meaningful impact,” the association said.

It, however, cautioned that lower interest rates alone could not resolve the structural challenges responsible for high production costs.

MAN’s policy recommendations

To maximise the impact of monetary easing and support sustainable industrial growth, MAN called for stronger coordination between monetary and fiscal authorities.

The association recommended the expansion of concessionary, single-digit financing for manufacturers, particularly small and medium-sized industrial enterprises and businesses operating in strategic sectors.

It also called for a progressive review of the high CRR for Deposit Money Banks, subject to prevailing macroeconomic conditions, to increase lending capacity for productive sectors while maintaining financial system stability.

MAN urged the CBN, deposit money banks and the Bankers’ Committee to ensure that the 350-basis-point reduction translates into lower prime and maximum commercial lending rates for manufacturers.

The association further called for intensified efforts to reduce electricity, transportation and logistics costs, improve infrastructure and address insecurity affecting industrial operations.

It advocated stronger interventions 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, promote local sourcing of raw materials, reduce import dependence and stimulate demand for locally manufactured goods.

The association called for full implementation of the recent Memorandum of Understanding between the Ministry of Finance and the CBN, saying the agreement should result in measurable improvements in policy coordination, investor confidence and the predictability of the business environment.

It also proposed a dedicated and transparent foreign exchange window for legitimate manufacturers importing capital equipment and essential raw materials not available locally, while reducing reliance on parallel-market premiums.

Call for manufacturing stabilisation fund

MAN called for stronger credit guarantee mechanisms for industrial SMEs through NIRSAL and similar institutions to encourage banks to lend without imposing excessive collateral requirements.

It also urged the government to revitalise structured, low-interest intervention programmes through the Bank of Industry (BOI) and Development Bank of Nigeria (DBN), targeting raw-material processing, machinery imports and local equipment fabrication.

A major demand was the operationalisation of the proposed N1 trillion Manufacturing Stabilisation Fund at a nine per cent interest rate through the BOI, with transparent eligibility requirements, efficient administration and timely disbursement to qualified manufacturers.

MAN additionally advocated development financing for manufacturing SMEs at an interest rate of five per cent, supported by appropriate loan tenors and repayment structures that reflect the production and investment cycles of manufacturing businesses.

The association also called for future MPC meetings to place greater emphasis on the impact of monetary policy decisions on manufacturing and other productive sectors.

According to MAN, the ultimate focus should be on accelerating productivity, industrial investment, employment generation and sustainable economic growth.

The association said it appreciated the MPC’s latest move towards a less restrictive monetary policy environment, while urging continued policy calibration that balances macroeconomic stability with the urgent need to stimulate productive investment and industrialisation.