27% lending rates exploitatively high for manufacturing — MAN

THE Manufacturers Association of Nigeria (MAN) has described the cost of borrowing at an average of 27 percent prime lending rates and 36.5 percent maximum lending rates in major commercial banks, for manufacturers, as of May 2026, as exploitatively high for the sector.

The association, in its report tagged: “Manufacturers Association of Nigeria’s Position on The Sharp Decline in Credit To The Manufacturing Sector,” noted that such rates create an environment that makes borrowing for long-term expenditure financially unviable.

Identifying exorbitant cost of borrowing as the primary barrier between manufacturers and financial bank liquidity, MAN noted that while the Central Bank of Nigeria (CBN) recently made slight policy adjustments by trimming the Monetary Policy Rate (MPR) to 26.5 percent, to signal disinflation, commercial lending rates still remain actively hostile to manufacturing sector expansion.

According to MAN, CBN’s maintenance of stringent Cash Reserve Ratio (CRR) of up 45–50 percent for commercial banks, effectively constrained a large portion of loanable banking liquidity.

It also described reliance on commercial banks to act as Participating Financial Institutions (PFIs), as a critical flaw in the architecture of government interventions.

“The CBN provides the liquidity at lower rates, but PFIs assume the credit risk. Consequently, commercial banks impose their standard, risk-averse commercial criteria on these developmental funds.

“Manufacturers are subsequently asked to provide collateral and meet equity contributions that they cannot afford. Therefore, while the funds exist to help struggling manufacturers, they can only be accessed by large companies that are already highly liquid and secure,” it added.

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MAN decried the continued non-implementation of the N1 trillion Manufacturing Stabilisation Fund, despite its prominent inclusion in the Accelerated Stabilisation and Advancement Plan (ASAP) since 2024.

Describing the initiative as “a promise not kept for the manufacturing sector”, MAN argued that for two years, manufacturers had awaited the fund to ameliorate the credit crunch in the sector and cushion the impact of the twin shocks of currency devaluation and astronomical energy costs, but with no visible effort at delivering on that score.

The association lamented that the delay has left genuine manufacturers to navigate over 30% interest rate environment without the promised fiscal cushion.