MAN Warns 23% MPR May Have Limited Impact as Lending Rates Stay Near 30%
MAN raises concerns over high lending rates
The Manufacturers Association of Nigeria (MAN) has warned that the Central Bank of Nigeria’s reduction of the Monetary Policy Rate (MPR) to 23% may have limited impact on businesses if commercial lending rates remain as high as 30%.
The CBN reduced the MPR by 350 basis points from 26.5% to 23% following its September 21–22, 2026 Monetary Policy Committee meeting. MAN welcomed the reduction but said the key measure of its effectiveness would be whether lower policy rates translate into cheaper credit for manufacturers and other businesses.
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MAN calls for lower commercial lending rates
MAN Director-General, Segun Ajayi-Kadir, said the policy reduction represents a positive step but argued that manufacturers are more directly affected by the interest rates they pay when borrowing from commercial banks.
According to MAN, prime lending rates could remain between 27% and 30% even after the MPR reduction to 23%. Ajayi-Kadir said this would continue to place Nigerian manufacturers at a disadvantage compared with competitors in Egypt, Morocco and South Africa, where MAN says businesses can access loans at rates of about 8% to 12%.
The association therefore wants the reduction in the benchmark rate to translate into a corresponding decline in the cost of commercial credit.
CBN cuts MPR by 350 basis points
The CBN's September decision reduced the MPR from 26.5% to 23%, marking a 350-basis-point reduction.
The apex bank also recalibrated the Standing Facilities Corridor to +50/-300 basis points around the MPR. It retained the Cash Reserve Ratio at 45% for deposit money banks and 16% for merchant banks, while the liquidity ratio remained at 30%.
The CBN described the adjustment as an operational reset designed to strengthen monetary policy transmission and reinforce the MPR as the central signal of monetary policy.
Transmission to businesses remains the key issue
The difference between the MPR and the rates businesses actually pay for loans is central to MAN's concerns.
A reduction in the policy rate does not automatically mean that banks will reduce the rates charged to borrowers by the same margin. Banks consider several factors when pricing loans, including their cost of funds, risk assessments, liquidity conditions and operating costs.
MAN's position is that the policy easing will have a stronger effect on manufacturing if banks transmit the reduction through lower lending rates.
The Lagos Chamber of Commerce and Industry has similarly urged commercial banks to reduce lending rates and expand credit following the CBN's decision, arguing that the impact of the rate cut will remain limited if cheaper policy funding does not translate into cheaper and more accessible credit.
Lower borrowing costs could support production
MAN said the rate reduction could support manufacturers' ability to finance inventory, raw materials, production cycles, equipment acquisition and business expansion.
Lower financing costs could reduce the amount businesses spend servicing debt and potentially free up capital for productive activities.
However, the association maintains that the scale of the benefit will depend on how quickly commercial lending rates respond to the CBN's decision.
The issue is particularly relevant for manufacturers that depend heavily on working-capital financing and bank credit to maintain production.
High interest rates affect investment decisions
The cost of credit also influences whether businesses proceed with new investments.
When borrowing costs remain high, businesses may delay equipment purchases, factory expansion and other capital-intensive projects because the expected returns may not sufficiently compensate for financing costs.
This has implications beyond manufacturing. Developers and investors in sectors such as construction, infrastructure and real estate also rely on financing to acquire land, fund construction and complete projects.
For the property sector, high interest rates can increase development costs and make mortgage financing more expensive for prospective homebuyers.
Housing and real estate financing implications
The relationship between monetary policy and housing is particularly important because property development requires significant upfront capital.
When commercial lending rates remain elevated, developers may face higher costs for construction finance, while households seeking mortgages can face reduced borrowing capacity.
A sustained reduction in lending rates could therefore improve financing conditions for both developers and prospective homeowners if banks pass on lower funding costs.
However, the current lending-rate levels highlighted by MAN suggest that the transmission from monetary policy to actual borrowing costs remains an important factor for the housing and real estate market.
Manufacturers seek stronger policy transmission
MAN's position reflects a broader concern over the effectiveness of monetary policy when changes in the benchmark rate do not translate quickly into changes in market borrowing costs.
The association has called for further reductions in lending rates to improve the competitiveness of Nigerian manufacturers.
MAN also said Nigerian businesses continue to face a significant financing disadvantage compared with manufacturers in other major African economies, based on the borrowing-rate comparison cited by the association.
Outlook
The CBN's decision to reduce the MPR to 23% creates room for lower borrowing costs, but the extent of the impact will depend on how commercial banks price loans following the policy change.
For manufacturers, developers and other businesses that depend on credit, the difference between the benchmark policy rate and actual lending rates remains critical.
The coming months will therefore provide a clearer indication of whether the CBN's monetary easing translates into cheaper credit, stronger private-sector investment and improved financing conditions across the economy.
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