THE POSITION OF THE MANUFACTURERS ASSOCIATION OF NIGERIA ON THE SEPTEMBER 2026 MPC DECISION

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) held its 307th meeting on September 21- 22, 2026, to review the prevailing domestic and global economic conditions and determine the appropriate monetary policy direction. At the end of the meeting, members of the committee agreed and adjusted the monetary policy parameters as follows:

❖ Cut Monetary Policy Rate (MPR) by 350 basis points to 23.0 % from 26.50% ❖ Adjust the Standing Facilities Corridor (SFC) to +50 / -300 basis points around the MPR

❖ Retain Cash Reserve Ratio (CRR) at 45 per cent for Deposit Money Banks and 16 per cent for Merchant Banks

❖ Retain the Liquidity Ratio at 30 per centThe 350-basis-point reduction in the MPR represents a significant easing of the monetary policy stance. The adjustment is expected to lower the borrowing cost and improve the operating environment for businesses, particularly manufacturers whose activities depend heavily on working capital and investment financing.

The Manufacturers Association of Nigeria commends the Central Bank of Nigeria on the decision to reduce the MPR rate, which is a positive move and in line with our forecast that monetary easing should come after a period of stabilization. The reduction signals a gradual shift from the exceptionally tight monetary conditions that have prevailed in recent periods and have contributed to poor performance of the manufacturing sector.

The MPR reduction will support manufacturers’ capacity to finance inventory, raw materials, production cycles, equipment acquisition, and business expansion. While the revised Standing Facilities Corridor of +50/-300 basis points provides a more moderate framework around the policy rate, it would improve liquidity management within the banking system and support more efficient pricing of short-term funds. But, retaining the CRR at 45 per cent for Deposit Money Banks and 16 per cent for Merchant Banks means a substantial proportion of banks’ deposits will continue to be held as reserves.

While reserve requirements remain important for financial and monetary stability, the relatively high CRR may continue to constrain the proportion of deposits available for lending to productive sectors.It is obvious that improved liquidity conditions could increase credit availability and strengthen businesses’ ability to meet short-term financing needs but the benefits of the MPR reduction may not be fully realised if credit expansion to the real sector remains constrained because of the high CRR rate that reduces the available funds for lending or investment.

It is also pertinent to note that the MPR cut will lead to a downward shift in fixed income yields on short term Government security like Treasury bills and Open Market Operations (OMO); it will reduce debt-servicing borrowing costs for the Federal Government and slightly narrow the yield spread for foreign portfolio investors looking for opportunities.

However, the extent of manufacturers’ benefit will depend on the speed and strength of monetary policy transmission to actual lending rates and complementary fiscal and structural interventions, including reliable electricity supply, reduced logistics costs, smooth road infrastructure and favourable ease of doing business.

Broadly, MAN sees the MPR reduction as a good opportunity to create a more supportive financing environment for manufacturing. Yet, more cuts are needed to achieve meaningful impact. Nevertheless, lower interest rates alone cannot resolve the structural constraints that continue to raise production costs.

Therefore, MAN advocates for stronger coordination between monetary and fiscal authorities to ensure that monetary policy easing is complemented by targeted fiscal and structural interventions. Such coordination is necessary to translate the reduction in the policy rate into lower lending costs, improved access to credit, increased productive investment, an improved operating environment, and stronger industrial growth.

In response, MAN recommends the following policy measures for the government’s consideration to support sustainable economic growth and industrial development:

• Expand access to concessionary, single-digit financing for manufacturers, particularly SMIs and businesses operating in strategic sectors.

• Progressively review the high CRR for Deposit Money Banks, where prevailing macroeconomic conditions permit, to create greater lending capacity for productive sectors while safeguarding financial-system stability.

• Partner with deposit money banks (DMBs) and the Bankers’ Committee to ensure that the 350 bps MPR reduction translates directly into lower prime and maximum commercial lending rates for local manufacturers.

• Intensify efforts to address structural production constraints, particularly electricity costs, transport and logistics expenses, infrastructure deficits and insecurity, which continue to increase the cost of manufacturing.

• Strengthen interventions aimed at reducing industrial energy costs through improved electricity supply, greater domestic gas utilisation and incentives for alternative and renewable energy solutions for industrial users.

• Accelerate the implementation of the Nigeria First Policy to strengthen domestic value chains, promote local sourcing of raw materials, reduce import dependence and create stronger demand for locally manufactured goods.

• Ensure the full and effective implementation of the recent Memorandum of Understanding between the Ministry of Finance and the Central Bank of Nigeria. The agreement should translate into concrete, measurable improvements in policy coordination, investors’ confidence, predictability of the business environment, and support for long-term private-sector investment.

• Utilize the growing external reserves buffer to create a dedicated, transparent FX window for legitimate manufacturers importing capital equipment and necessary raw materials that are not locally available, and minimize dependency on parallel market premiums.

• Strengthen the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) and similar credit guarantee funds to cover industrial SME risks, giving banks confidence to lend without demanding exorbitant collateral requirements.

• Re-energize structured, low-interest intervention windows via the Bank of Industry (BOI) and Development Bank of Nigeria (DBN), providing single-digit or low double-digit long-term loans targeted strictly at raw material processing, machinery imports, and local equipment fabrication.

• Operationalise the N1 trillion Manufacturing Stabilisation Fund at a 9 per cent interest rate, through the Bank of Industry (BOI) with transparent eligibility criteria, efficient administration, and timely disbursement to qualified manufacturers.

• Facilitate access to development finance for manufacturing SMEs at a 5 per cent interest rate, supported by appropriate tenors and repayment structures that reflect the production and investment cycles of manufacturing enterprises.

• Ensure that future MPC meetings are heavily focused on the outcome of an impact assessment of the MPR on the manufacturing and productive sectors.

The critical issue should remain accelerating the pace of improving productivity. In conclusion, MAN appreciates the MPC’s latest move towards a less restrictive monetary policy environment and encourages continued policy calibration that balances macroeconomic stability with the urgent need to stimulate productive investment, industrialization, employment generation and sustainable economic growth.

Segun Ajayi-Kadir, mni

DIRECTOR GENERAL