The Central Bank of Nigeria’s decision to withdraw from direct intervention financing for the manufacturing sector has sparked mixed reactions from industry stakeholders, with business leaders divided over the impact on Nigeria’s industrial growth.
While some experts believe the move will strengthen the Central Bank’s focus on its core monetary policy responsibilities, others warn that manufacturers could face greater difficulty accessing affordable long term financing.
The Director General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Chinyere Almona, said the CBN’s withdrawal has left manufacturers relying heavily on commercial banks, which she argued are not designed to provide the long term credit required for industrial expansion.
According to her, removing intervention funding without introducing a credible replacement has forced manufacturers into a lending market with high borrowing costs. She also noted that channeling development finance through commercial banks has reduced the benefits of concessionary loans, discouraged lending to small and medium sized manufacturers and contributed to declining industrial credit.
Although optimistic that the Lagos State Industrial Policy and the National Industrial Policy could attract fresh investments, Almona stressed that effective implementation rather than policy announcements would determine their success.
She called on the Federal Government to urgently release the proposed N1 trillion Manufacturing Stabilisation Fund, recapitalise the Bank of Industry (BoI) with credit guarantees targeted at small businesses, review the Cash Reserve Ratio (CRR) to improve banking sector liquidity and strengthen coordination between monetary and fiscal authorities.
“Nigeria cannot industrialise on promises,” she said, adding that policy execution will determine whether the country experiences industrial recovery or prolonged stagnation.
Also speaking on the issue, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, described access to affordable financing as one of the biggest challenges facing Nigerian manufacturers.
He argued that rising government borrowing at interest rates approaching 20 percent has crowded out private sector borrowers, making it increasingly difficult for manufacturers to secure affordable loans.Yusuf explained that while short term loans may support working capital needs, investments in factories, machinery and production facilities require long term financing at lower interest rates. He therefore urged the Federal Government to recapitalise the Bank of Industry to provide manufacturers with single digit interest loans that support industrial growth.
However, not all stakeholders opposed the CBN’s decision. A former Director General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dr. John Isemede, supported the withdrawal, arguing that the apex bank should focus on its primary responsibility of maintaining monetary stability.
According to him, previous intervention programmes exposed the limitations of central bank led development financing. He maintained that institutions such as the Bank of Industry, working alongside commercial banks, are better positioned to provide sustainable industrial financing.
Isemede also called for stronger coordination between fiscal and monetary authorities, improved incentives for exporters and the implementation of a comprehensive industrial development roadmap to drive long term growth in Nigeria’s manufacturing sector.
The differing opinions reflect the ongoing debate over the best approach to financing Nigeria’s industrial sector as manufacturers continue to grapple with high borrowing costs, inflation and rising production expenses.
