Rate Cut: Manufacturers Demand Single-digit Loans, Special FX Window

The Manufacturers Association of Nigeria (MAN), has called for expanded access to concessionary single-digit financing and a dedicated foreign exchange window for manufacturers, following the Central Bank of Nigeria’s 350 basis points cut in the Monetary Policy Rate.

MAN, in a position paper signed by its director-general, Segun Ajayi-Kadir, commended the CBN for the easing, describing it as a positive move in line with its forecast after a period of stabilization.

“The MPR reduction will support manufacturers’ capacity to finance inventory, raw materials, production cycles, equipment acquisition, and business expansion,” he stated.

He however, said retaining CRR at 45 per cent means a substantial proportion of banks’ deposits will continue to be held as reserves, constraining lending to productive sectors, and that the benefits of the MPR cut may not be fully realized if credit expansion remains constrained.

Ajayi-Kadir also noted that the cut will lead to a downward shift in fixed income yields on Treasury bills and OMO bills and reduce federal government’s debt-servicing costs.

To translate the policy easing into real growth, MAN DG called for stronger coordination between monetary and fiscal authorities.

He recommended expanding access to concessionary, single-digit financing for manufacturers, particularly small and medium industries.

He urged a progressive review of the high Cash Reserve Ratio to create greater lending capacity for productive sectors while safeguarding financial stability.

He also called for partnership with Deposit Money Banks and the Bankers’ Committee to ensure the 350 basis points MPR reduction translates into lower prime and maximum lending rates for manufacturers.

He asked government to address structural constraints, including electricity costs, logistics, road infrastructure and insecurity, advocating stronger interventions to reduce industrial energy costs through improved electricity supply and greater domestic gas utilisation.

He urged accelerated implementation of the Nigeria First Policy to strengthen local value chains and reduce import dependence.

Ajayi-Kadir called for full and effective implementation of the Memorandum of Understanding between the Ministry of Finance and the Central Bank of Nigeria to boost investor confidence and business predictability.

He recommended utilizing the growing external reserves buffer to create a dedicated, transparent FX window for legitimate manufacturers importing capital equipment and raw materials not locally available.

The Association also called for strengthening NIRSAL and similar credit guarantee schemes to reduce collateral demands on industrial SMEs.

MAN urged re-energizing low-interest intervention windows through the Bank of Industry and Development Bank of Nigeria for raw material processing and equipment fabrication.

Ajayi-Kadir further called for operationalisation of the N1 trillion Manufacturing Stabilisation Fund at nine percent interest through the Bank of Industry with transparent eligibility criteria and timely disbursement.

He also advocated facilitating development finance for manufacturing SMEs at five percent interest with tenors that reflect production and investment cycles.