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The Central Bank of Nigeria’s reduction of its benchmark interest rate may have limited impact on manufacturers if commercial lending rates remain as high as 30%, the Manufacturers Association of Nigeria (MAN) has said.
The position was disclosed by MAN Director-General, Segun Ajayi-Kadir, in a conversation with Nairametrics following the CBN’s recent Monetary Policy Rate (MPR) reduction.
The CBN cut the MPR by 350 basis points from 26.5% to 23% at its September 21–22, 2026 Monetary Policy Committee meeting, describing the adjustment as an operational reset to improve monetary policy effectiveness amid easing inflation and improving economic activity.
Manufacturers seek lower lending rates
Ajayi-Kadir said MAN welcomed the CBN’s decision but maintained that the reduction must translate into lower lending rates for manufacturers to deliver meaningful economic benefits.
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He noted that the key concern for manufacturers was the interest rate they would pay when seeking loans from commercial banks, rather than the benchmark rate alone.
- “However, the elephant in the room remains the interest rate that an average manufacturer will pay when he or she approaches the bank,” Ajayi-Kadir said.
According to Ajayi-Kadir, even with the MPR reduced to 23%, prime lending rates could remain between 27% and 30%, leaving Nigerian manufacturers at a disadvantage compared with competitors in Egypt, Morocco, and South Africa, where he said loans could be accessed at rates between 8% and 12%.
- He added, “For meaningful impact, we need to witness further deep cuts. Even at 23% MPR, prime lending rate will still be 27-30%. This is not a palatable situation for any manufacturer. No manufacturer anywhere in the world can be competitive borrowing at 30%.”
Ajayi-Kadir also questioned the transmission of previous MPR cuts, saying bank lending rates had remained high despite earlier reductions.
- “We need to interrogate the transmission end. This is because our experience is that, despite the last 3 MPC cuts and drop in MPR, bank lending rates remained high,” Ajayi-Kadir said.
He called on the CBN to use regulatory measures and moral suasion to ensure banks transmit the reduction through lower borrowing costs.
CBN resets MPR to 23%
The CBN reduced the MPR by 350 basis points to 23% following its 307th MPC meeting in Abuja, with Governor Olayemi Cardoso describing the move as a “reset” aimed at improving monetary policy effectiveness amid easing inflation and improving economic activity.
The decision takes the MPR to its lowest level since February 2024, when it stood at 22.75%, while the CBN retained the CRR for commercial banks at 45% and merchant banks at 16%.
The MPC said inflation had moderated for the third consecutive month to 15.39% in August 2026, while real GDP growth rose to 4.43% in the second quarter. It also cited a composite Purchasing Managers’ Index of 52.7% as evidence of stronger economic activity.
Cardoso said the adjustment was a recalibration rather than a change in the CBN’s monetary policy stance. The bank also reset the Standing Facilities Corridor to +50/-300 basis points around the MPR, noting that the move was intended to address a disconnect between the benchmark rate and effective market rates.
Cheaper credit needs broader support
Beyond the MPR reduction, MAN called for measures to improve liquidity and expand access to affordable credit for manufacturers. The association wants the CBN to reduce the 45% CRR for deposit money banks and operationalise the N1 trillion Manufacturing Stabilisation Fund at a 9% interest rate, alongside a special single-digit lending window for manufacturers.
- MAN also called for development finance for small and medium-sized enterprises at a 5% interest rate. Ajayi-Kadir said lower interest rates alone would not resolve the structural pressures facing manufacturers, identifying electricity, foreign exchange, logistics, infrastructure deficits, and multiple taxation as factors that add more than 40% to production costs.
- The Centre for the Promotion of Private Enterprise has similarly urged banks to reduce lending rates following the MPR reduction, while Bismarck Rewane of Financial Derivatives Company said the move could affect the attractiveness of naira-denominated assets.
For manufacturers, however, the key issue remains whether the CBN’s rate reset will translate into lower commercial lending rates and help reduce the cost of production.
