Nigeria manufacturers seek cheaper credit and FX window

MAN’s push matters because Nigerian industry remains heavily constrained by financing costs, foreign-exchange shortages and infrastructure bottlenecks that keep factory expenses high. A cut in the policy rate is intended to lower borrowing costs across the economy, but manufacturers say the transmission mechanism is weak unless deposit money banks actually reprice loans and the central bank relaxes other constraints on lending.

The association said retaining the cash reserve ratio at 45% will continue to tie up a large share of bank deposits, limiting credit to productive sectors even after the rate cut. It called for a progressive review of the reserve ratio, stronger coordination between monetary and fiscal authorities and closer work with banks so the policy easing feeds through to prime and maximum lending rates.

MAN also wants the government to use Nigeria’s higher external reserves to create a transparent FX window for manufacturers importing capital equipment and raw materials that are not available locally. For investors, that would reduce one of the biggest operational risks facing industrial companies: unpredictable access to foreign currency for production.

The group pressed for a revival of low-interest intervention schemes through the Bank of Industry and NIRSAL, including a faster rollout of the N1 trillion Manufacturing Stabilisation Fund at 9% interest, plus financing for small and medium-sized factories at 5%. It also urged action on electricity, logistics, roads and insecurity, saying cheaper money alone will not restore industrial competitiveness if structural costs stay elevated.

The key test now is whether the rate cut translates into actual loan repricing and more FX availability, or whether tight banking liquidity and operational bottlenecks keep manufacturers under pressure.