…Manufacturers Seek Direct Credit Transmission as Monetary Policy Relaxes
The Manufacturers Association of Nigeria (MAN) has commended the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) for slashing the Monetary Policy Rate (MPR) by 350 basis points from 26.50 percent to 23.0 percent following its 307th meeting on September 21–22, 2026. Describing the policy shift as a positive and timely intervention, the association noted that the decision aligns with its previous forecasts calling for monetary easing after a prolonged period of economic stabilization. MAN expressed optimism that the lower benchmark rate would significantly relieve the operational pressures on local producers, who rely heavily on working capital and external credit to finance raw materials, inventory, production cycles, and equipment acquisition.
While acknowledging the significance of the 350-basis-point drop, MAN emphasized that the current 23 percent policy rate remains high for optimal industrial competitiveness. The industrial body stressed that lower interest rates alone cannot guarantee business growth unless commercial banks rapidly reflect the rate cut in their actual prime and maximum lending rates. Furthermore, MAN raised concerns over the committee’s decision to retain the Cash Reserve Ratio (CRR) at 45 percent for Deposit Money Banks and 16 percent for Merchant Banks. According to the group, keeping high cash reserves sterilizes substantial banking deposits, limiting the total volume of credit available to support productive economic operations.
To ensure the monetary policy shift achieves its intended impact, MAN called for tighter collaboration between the monetary and fiscal authorities to address broader macroeconomic and structural bottlenecks. The association highlighted persistent challenges—such as high electricity tariffs, inadequate infrastructure, elevated transport and logistics costs, and persistent insecurity—as major drivers of production costs that monetary policy alone cannot resolve. MAN urged the government to implement complementary structural interventions to reduce the cost of doing business and build a resilient environment for industrial expansion.
Among its key recommendations, MAN urged the CBN to partner with commercial banks and the Bankers’ Committee to ensure the benchmark reduction translates directly into cheaper borrowing costs for real-sector operators. The association advocated for a progressive review of the 45 percent CRR and recommended expanding single-digit financing opportunities, particularly for Small and Medium Enterprises (SMEs) and strategic industrial sub-sectors. Additionally, MAN pressed for the immediate operationalization of the N1 trillion Manufacturing Stabilisation Fund at a 9 percent interest rate via the Bank of Industry (BOI), alongside dedicated low-interest facilities for development finance.
To further safeguard industrial growth, MAN proposed leveraging the country’s growing external reserves to establish a transparent, dedicated foreign exchange window for legitimate manufacturers needing to import capital machinery and essential raw materials not available locally. The group also recommended strengthening credit guarantee initiatives, such as the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), to cover industrial SME risks and reduce dependence on exorbitant collateral demands. Accelerating the “Nigeria First Policy” to deepen domestic value chains and promote local raw material sourcing was also highlighted as critical to domestic industrial growth.
In conclusion, MAN reaffirmed its support for the MPC’s transition toward a less restrictive monetary stance, urging the central bank to continuously evaluate the real-world impact of its policy rates on the productive sector. The association stressed that future MPC deliberations must prioritize concrete productivity assessments to align financial stability with national goals of industrialization, employment generation, and sustainable economic growth.
For additional analysis on the Central Bank of Nigeria’s policy decision and its broader impact on market rates, you can watch United Capital Group’s discussion on the CBN MPC 350BPS Rate Reset. This video offers valuable insight from financial experts examining how the 350 basis points reduction changes liquidity and commercial lending dynamics across the economy.
