MAN warns CBN rate cut may not lower manufacturers' borrowing costs
FGN's Central Bank cut the benchmark Monetary Policy Rate by 350 basis points to 23% at its September 21-22, 2026 meeting, describing the move as an operational reset amid easing inflation (15.39% in August) and Q2 GDP growth of 4.43%. However, the Manufacturers Association of Nigeria says the cut will have little effect unless commercial banks lower their lending rates, which currently remain between 27% and 30% despite the MPR reduction. MAN Director-General Segun Ajayi-Kadir warned that at such rates Nigerian factories cannot compete with peers in Egypt, Morocco or South Africa where loans cost 8%-12%. He urged the CBN to use regulatory tools and moral suasion to ensure banks pass on the cut, and called for a lower cash reserve ratio, activation of the N1 trillion Manufacturing Stabilisation Fund at 9% interest, a special single-digit lending window for manufacturers, and development finance for SMEs at 5%. Ajayi-Kadir also noted that electricity, foreign exchange, logistics, infrastructure deficits and multiple taxation add more than 40% to production costs, meaning interest rate cuts alone will not solve manufacturers’ cost pressures. Will manufacturers see cheaper credit if banks obey the CBN's signal, or will they continue to rely on expensive loans while policymakers tackle the broader cost-of-production challenges?