Nigeria’s manufacturing sector is mounting pressure on the Central Bank of Nigeria (CBN) to abandon its hawkish monetary policy stance, warning that persistently high interest rates are strangling industrial production and threatening the country’s economic recovery.
The Manufacturers Association of Nigeria (MAN) has issued a strongly worded appeal to CBN Governor Dr. Olayemi Cardoso, calling for immediate rate cuts following the monetary policy committee’s decision to maintain the benchmark rate at a punishing 27.5% during its 301st meeting last week.
The association’s intervention comes as Nigeria’s manufacturing sector grapples with what industry leaders describe as the worst financing conditions in years. Commercial lending rates to manufacturers have soared beyond 35%, creating a cascade of economic pressures that are reverberating throughout the industrial landscape.
Manufacturing in Crisis
The numbers paint a stark picture of an industry under severe strain. MAN’s latest data reveals that manufacturing capacity utilization plummeted to just 57% in 2024, a significant deterioration that signals widespread underproduction across the sector. Perhaps more alarming is the dramatic surge in unsold inventory, which nearly doubled from N1.14 trillion in 2023 to N2.14 trillion last year.
This inventory buildup reflects a perfect storm of reduced consumer purchasing power and elevated production costs that have priced many locally manufactured goods out of reach for ordinary Nigerians. The association warns that these trends are “stifling production and disrupting investment plans across the sector.”
Policy Divide Emerges
The manufacturing sector’s plea highlights a growing divergence between monetary and industrial policy objectives. While the CBN’s monetary policy committee voted unanimously to maintain restrictive rates—citing the need to “sustain the disinflationary trend”—manufacturers argue that this approach is counterproductive to broader economic growth.
Dr. Cardoso’s defense of the current policy stance reflects the central bank’s primary focus on price stability, with inflation having moderated slightly from 22.97% in May to 22.22% in June 2025. However, food inflation continues to rise, complicating the policy outlook and reinforcing MAN’s argument that supply-side interventions may be more effective than demand-side restrictions.
Comprehensive Reform Agenda
Beyond interest rate cuts, MAN has presented a comprehensive policy framework that extends far beyond monetary policy. The association is advocating for what it terms a “Nigeria First Policy” designed to reduce foreign exchange pressures through increased local content requirements and backward integration initiatives.
The manufacturing lobby is also calling for urgent action on agricultural security, noting that persistent insecurity in farming communities continues to drive food inflation despite overall price pressures moderating. This multi-pronged approach reflects growing recognition that Nigeria’s economic challenges require coordinated fiscal and monetary responses rather than reliance on interest rate policy alone.
Economic Implications
The standoff between the manufacturing sector and monetary authorities comes at a critical juncture for Nigeria’s economy. With the industrial sector struggling to maintain production levels and employment, the sustainability of the current high-rate environment is increasingly questioned by business leaders and economists.
MAN’s emphasis on “income redistribution to enhance citizens’ welfare” suggests growing concern about the social implications of prolonged economic adjustment. The association’s call for improved access to long-term financing reflects broader concerns about the structure of Nigeria’s financial system and its ability to support productive investment.
Looking Ahead
As Nigeria navigates competing pressures between inflation control and economic growth, the manufacturing sector’s intervention adds to mounting calls for policy recalibration. The challenge for policymakers will be finding an approach that addresses price stability concerns while avoiding further damage to productive capacity.
The CBN’s next monetary policy meeting will be closely watched for signs of any shift in approach, particularly as manufacturers warn that continued high rates could lead to further capacity reductions and job losses across Africa’s largest economy.
The outcome of this policy debate will likely shape Nigeria’s economic trajectory for the remainder of 2025 and beyond, determining whether the country can achieve the delicate balance between price stability and sustainable growth that has eluded policymakers for much of the past two years.
WHAT YOU SHOULD KNOW
Nigeria’s manufacturing sector is in crisis, with production capacity falling to just 57% and unsold goods nearly doubling to N2.14 trillion due to lending rates exceeding 35%.
The Manufacturers Association is urging the Central Bank to cut the current 27.5% policy rate, arguing that the CBN’s anti-inflation strategy is killing industrial growth and jobs.
While inflation has slightly eased to 22.22%, manufacturers warn that without policy changes to reduce borrowing costs and support local production, Nigeria risks further economic decline. The standoff highlights a critical choice between prioritizing price stability or reviving the country’s struggling industrial base.
