FG, manufacturers seek lower lending costs for production

The Federal Government and manufacturers have collaborated to devise strategies aimed at reducing high lending costs and overcoming financing conditions that make local production less competitive than importing goods. This initiative is part of the Lagos Industrial Finance Compact, recently committed to by stakeholders including manufacturers, government agencies, development finance institutions, and commercial banks at the Ministerial Roundtable 2 organized by the Industrial Revolution Work Group in Lagos.

The roundtable, themed 'From Policy to Production: Financing Nigeria’s Industrial Take-off,' aimed to translate industrial policy into practical financing tools to provide manufacturers with affordable and long-term capital. During the event, the Minister of State for Industry, Sen. John Enoh, highlighted the challenges manufacturers face in accessing affordable financing.

He noted that borrowing capital at high rates, such as 30%, made it more profitable for businesses to import goods rather than produce locally, thereby hindering manufacturing growth. Enoh emphasized the need for the roundtable to produce concrete financing instruments with defined responsibilities and timelines, rather than merely discussing policies.

He stressed the ongoing discussions to create financing instruments that would boost Nigeria's industrial growth, noting that the lack of such instruments has not yet impacted manufacturing. The Special Adviser on Investments to the Minister of Finance, Marie Ukpere, reported that manufacturing grew by 3.29% in the first quarter of 2026, up from the previous quarter's 3.29%.

However, she pointed out that commercial bank credit to manufacturers fell by 22% in 2025, from N8.5 trillion to N6.61 trillion, making long-term investments in factories, production lines, and retooling difficult due to high borrowing rates averaging around 27%. Ukpere stressed the importance of aligning fiscal, monetary, and industrial policies to ensure that existing financing incentives and development funds effectively reach manufacturers.

The proposed industrial finance compact aims to identify underutilized financing instruments, assess any barriers to their use, and mobilize public and institutional capital alongside commercial lending. The success of this initiative will depend on manufacturers in industrial hubs like Aba, Kano, and Ogun gaining access to financing windows to expand production, create jobs, and increase exports.