Nigerian manufacturers are still borrowing at interest rates of about 30 per cent despite the banking sector recapitalisation exercise, raising concerns that the reforms have yet to translate into cheaper credit for businesses and improved industrial competitiveness.
Ifeanyi Okoye, president of the Manufacturers Association of Nigeria (MAN), said the high cost of borrowing continued to undermine domestic producers, particularly as they compete with foreign manufacturers who have access to cheaper financing.
Speaking during a panel session on Helping Nigeria Prosper at the 32nd Nigerian Economic Summit in Abuja, Okoye said manufacturers were yet to benefit from lower lending rates following the recapitalisation exercise, which began in 2024 and reached its deadline in March 2026.
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“Even today, as I’m talking to you, the interest rate is not lower for manufacturers. It is even higher than it was before the capitalisation,” he said.
According to him, the cost of credit puts Nigerian manufacturers at a disadvantage against competitors in countries such as China, where some producers can access loans at interest rates as low as three per cent.
“If the Chinese are coming and succeeding, why can’t the Nigerian manufacturers succeed?” Okoye asked.
He said banks had not significantly reduced their lending rates to manufacturers, despite the recapitalisation of the sector.
“The banks won’t come to you to tell you the rate is supposed to be lower now. They say they want to do you a favour. If were giving you 30 per cent, we will give you now 29 per cent,” he said.
Okoye argued that affordable financing was necessary for manufacturers to expand production, create jobs and provide a reliable market for agricultural produce.
“The manufacturers are ready to contribute if they have been given the finance,” he said, urging policymakers and financial institutions to ensure that reductions in the monetary policy rate translate into lower commercial lending rates.
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The concerns over the cost and accessibility of credit were echoed by Charles Odii, director-general of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), who said stringent lending conditions were preventing many small businesses from accessing available funds.
Odii disclosed that SMEDAN had placed about N600 million with Jaiz Bank for small business financing, but only 12 entrepreneurs were able to access the fund.
“It was Jais Bank to be precise. And to my surprise, it was only 12 entrepreneurs that were able to access that fund,” he said.
He explained that the arrangement required the bank to bear the lending risk and repay the money, leading to stringent conditions that limited access for small businesses.
Odii said banks needed to adopt lending models that reflected how small businesses operate, rather than applying the same requirements used for large manufacturers.
“The way a large manufacturer will access money from a commercial bank will be very different from the way a small business will access money,” he said.
He urged commercial banks to consider transaction-based lending, using businesses’ daily turnover and cash flow to assess their capacity to repay loans.
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“For our small businesses, we are appealing to First Bank and the likes to look at the transactional system where you can see how much this small business is doing on a daily basis.
“If First Bank can start to look at lending from that perspective, or the commercial banks can start to look at lending from that perspective, our small business will have a lot of access to credits,” he noted
Odii said some small businesses generated substantial revenue but still struggled with short-term financing gaps while waiting for customers to settle invoices.
He gave the example of a business with monthly turnover of about N5 billion that needed financing to bridge the period between delivering goods or services and receiving payment.
SMEDAN has also worked with MoneyPoint to support small business financing, as part of efforts to improve access to credit for enterprises that often lack the collateral and formal records required by conventional lenders.
Odii said the agency had spoken to about two million businesses out of Nigeria’s estimated 39,654,385 nano, micro, small and medium enterprises. The feedback identified four major constraints: people, power, infrastructure and financing.
Beyond access to finance, he said SMEDAN was testing shared industrial facilities to help small businesses overcome the cost of acquiring and maintaining equipment.
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At its Abuja office, the agency has established a facility equipped with power and about 200 sewing machines, allowing entrepreneurs to produce garments without individually investing in machinery.
“What I’m wearing right now is made in that factory,” he said.
The agency is also building an Abuja Centre for Entrepreneurship with support from the Korean government and revamping its entrepreneurship curriculum in partnership with the German government.
Odii said SMEDAN remained open to partnerships that could address the challenges facing small businesses, reduce unemployment and create sustainable jobs.
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