Nigerian manufacturers have called on commercial banks to reduce their lending rates following the Central Bank of Nigeria’s decision to cut the Monetary Policy Rate from 26.5 per cent to 23 per cent.
The Manufacturers Association of Nigeria welcomed the decision but said the reduction in the benchmark rate would have limited impact if commercial banks failed to pass the benefits to businesses through cheaper loans.
The CBN’s Monetary Policy Committee announced the 350-basis-point reduction after its 307th meeting in Abuja. The decision came after the committee had maintained the rate at its previous two meetings, following a 50-basis-point reduction announced in February 2026.
The Director-General of the Manufacturers Association of Nigeria, Segun Ajayi-Kadir, said manufacturers had been waiting for a reduction in borrowing costs because high interest rates have continued to increase the cost of running businesses.
According to him, the real concern for manufacturers is not only the MPR but the actual interest rates they pay when they obtain loans from commercial banks.
Ajayi-Kadir said that even with the MPR at 23 per cent, prime lending rates could remain between 27 per cent and 30 per cent, which he argued would continue to make it difficult for manufacturers to compete effectively.
He described the CBN’s decision as a welcome development but said it should be followed by further measures that would allow businesses to access cheaper credit.
MAN also compared Nigeria’s borrowing environment with countries such as Egypt, Morocco and South Africa, where manufacturers, according to the association, can obtain loans at significantly lower rates.
The association urged the CBN to continue reducing the MPR over the medium term while addressing other factors affecting manufacturers, including electricity costs, foreign exchange challenges, logistics and multiple taxes.
MAN also called for a reduction in the Cash Reserve Ratio, which currently stands at 45 per cent for deposit money banks. It requested the operationalisation of the N1 trillion Manufacturing Stabilisation Fund at a nine per cent interest rate, as well as the creation of a single-digit lending window for manufacturers.
The association further proposed a five per cent development finance rate for small and medium-sized enterprises to improve their access to affordable funding.
The National Vice President of the National Association of Small-Scale Industrialists, Segun Kuti-George, also welcomed the rate cut, saying cheaper borrowing could help manufacturers finance inventories, purchase equipment and expand their businesses.
However, he noted that increased money supply could also create inflationary pressure if not properly managed.
The call from manufacturers comes as Nigeria’s financial markets begin adjusting to the lower policy rate. Treasury bill yields have also fallen following the CBN’s decision, indicating that the rate reduction is already affecting short-term government securities.
For manufacturers, the key issue now is whether the reduction in the CBN’s benchmark rate will translate into lower borrowing costs and improved access to credit. Lower financing costs could help businesses manage working capital, invest in equipment and increase production, but other structural challenges will continue to influence the cost of manufacturing in Nigeria.
