Manufacturers Push for Cheaper Loans After CBN Cuts Interest Rate to 23%
Nigerian manufacturers are calling on commercial banks to reduce lending rates following the Central Bank of Nigeria’s decision to cut its benchmark interest rate by 350 basis points.
The CBN’s Monetary Policy Committee reduced the Monetary Policy Rate (MPR) from 26.5 percent to 23 percent at its September meeting, marking a significant adjustment after the rate had remained unchanged at its previous two meetings.
While manufacturers welcomed the decision, industry leaders said the real benefit would depend on whether banks translate the lower policy rate into more affordable credit for businesses.
Manufacturers seek lower borrowing costs
The Manufacturers Association of Nigeria (MAN) described the rate reduction as a positive development but stressed that manufacturers are more concerned about the actual interest rates charged on loans than the MPR itself.
MAN Director-General, Segun Ajayi-Kadir, said commercial lending rates could still remain around 27 to 30 percent even after the CBN’s reduction, making it difficult for manufacturers to compete effectively.
He called for a deliberate transmission of the policy adjustment into lending rates, arguing that cheaper credit is essential for businesses seeking to expand production, finance inventories and invest in new equipment.
Industry seeks additional measures
MAN also called for complementary measures to make financing more accessible to manufacturers.
Among its proposals are a reduction in the 45 percent Cash Reserve Ratio for deposit money banks, the implementation of the proposed ₦1 trillion Manufacturing Stabilisation Fund at a nine percent interest rate, and the creation of a special single-digit lending window for manufacturers.
The association also advocated a five percent development-finance rate for small and medium-sized enterprises.
According to industry representatives, reducing the benchmark rate alone may not be enough to significantly lower financing costs if other conditions affecting bank lending remain unchanged.
Businesses want rate cut to reach the real economy
The Lagos Chamber of Commerce and Industry and other private-sector groups have similarly urged banks to ensure that the CBN’s decision translates into more affordable loans, particularly for small and medium-sized businesses.
The private sector has argued that lower borrowing costs could improve cash flow, support investment and make it easier for companies to finance expansion and working capital.
However, concerns remain over the transmission of monetary policy to actual lending rates. The CBN has described the latest adjustment as a recalibration designed to improve monetary-policy transmission rather than a complete shift away from its restrictive monetary stance.
What the rate cut means for manufacturers
For manufacturers, the immediate focus is now on how quickly commercial banks respond.
Lower lending rates could reduce the cost of financing raw materials, machinery, inventories and expansion projects. It could also ease pressure on businesses carrying existing loans, depending on the terms of their facilities and how banks reprice them.
The September rate decision therefore marks an important development for the manufacturing sector, but industry leaders say its practical impact will ultimately be measured by the cost and availability of credit businesses can actually access.
With manufacturers continuing to face challenges involving electricity, foreign exchange, logistics and other production costs, the industry is seeking broader measures alongside monetary policy changes to improve the operating environment.
About The Author
