Industry leaders say expensive bank loans, multiple taxes, unreliable electricity and policies they believe favour imported goods are weakening Nigerian factories, despite a recent reduction in the Central Bank’s benchmark interest rate.
Nigerian manufacturers have raised fresh concerns over high commercial lending rates, import policies and rising production costs, warning that the combination is undermining domestic industries and threatening efforts to expand manufacturing employment. Speaking in separate industry assessments reported on Wednesday, October 14, 2026, international trade expert Dr. John Isemede and former Manufacturers Association of Nigeria president Francis Meshioye criticised economic policies they believe make importing finished goods more attractive than producing them locally. Their concerns come weeks after the Central Bank of Nigeria reduced its benchmark interest rate to 23 percent, a decision manufacturers welcomed but said had yet to deliver sufficient relief to businesses. Industry representatives are calling for affordable long-term financing, reliable electricity, fairer taxation and stronger implementation of the Nigeria Industrial Policy 2025 to protect domestic production and improve the country’s industrial competitiveness.
Nigerian factory workers operating industrial machinery. Manufacturers say financing costs and infrastructure challenges are limiting local production.
The concerns reflect longstanding difficulties facing factories that depend on bank loans to purchase equipment, maintain production lines, import essential raw materials and expand their operations. Isemede, a former director-general of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, argued that commercial banks are more willing to finance short-term import transactions than investments requiring several years before generating returns. He cited agricultural processing and plantation development as examples of projects that struggle to attract patient capital, even though such investments could create domestic supply chains for manufacturers. He also criticised Nigeria’s reliance on imported products, arguing that repeated industrial policy announcements have not sufficiently addressed the barriers confronting local businesses. Meshioye similarly identified expensive energy, weak infrastructure, limited access to long-term finance and inconsistent government policies as major obstacles to industrial expansion.
Isemede questioned why financial institutions continue reporting substantial profits while many production businesses struggle to obtain affordable credit. He argued that the financial system should do more to support enterprises that manufacture goods, process agricultural materials and create employment rather than concentrate on transactions involving imported products. Meshioye called for manufacturing to become a strategic national priority, stressing that achieving Nigeria’s industrial ambitions requires measurable improvements in productivity, technology adoption, infrastructure and financing. He also supported the creation of a Nigeria First Industrial Fund that would offer long-term loans on favourable terms and help businesses modernise their equipment. Meanwhile, Manufacturers Association Director-General Segun Ajayi-Kadir has urged banks to reduce their lending rates following the Central Bank’s September decision, saying cheaper borrowing is essential for businesses seeking to expand production.
Segun Ajayi-Kadir, director-general of the Manufacturers Association of Nigeria, has called for cheaper financing and improved access to industrial credit.
Official figures illustrate the financial pressures confronting manufacturers. At its September 21 and 22 monetary policy meeting, the Central Bank reduced its Monetary Policy Rate from 26.5 percent to 23 percent, a decrease of 3.5 percentage points. However, the bank retained the Cash Reserve Requirement at 45 percent for commercial banks and 16 percent for merchant banks, limiting the share of deposits available for lending. Manufacturers have argued that the combination of high reserve requirements and commercial borrowing costs prevents cheaper central bank funding conditions from reaching factories. In June, the Manufacturers Association reported that bank credit to the manufacturing sector had fallen by 1.92 trillion naira, from 8.53 trillion naira in December 2024 to 6.61 trillion naira in December 2025. The association also reported commercial lending rates reaching 35.6 percent at some banks, making long-term investments in machinery, technology and factory expansion particularly expensive.
For factory workers, small business owners and consumers, the implications extend beyond corporate balance sheets. When manufacturers face high borrowing costs and unreliable electricity, production expenses can increase, forcing businesses to raise prices, reduce operating hours or postpone expansion. Workers may consequently face fewer employment opportunities, while distributors and market traders must contend with higher wholesale prices for locally manufactured goods. Smaller enterprises are particularly exposed because they generally lack the financial reserves available to larger industrial groups. Recent concerns raised by manufacturers in Kano and Jigawa also highlight the effects of multiple taxes and levies imposed by different levels of government. Alhaji Nura Madugu, chairman of the Manufacturers Association’s Sharada/Challawa branch, criticised overlapping taxation, arguing that it places domestic producers at a disadvantage against imported goods. Although no independently verified interviews with individual factory workers responding to the October 14 concerns were available, industry statements demonstrate how financial and regulatory pressures can affect employment, production and consumer prices.
Workers inside a Nigerian garment factory. The manufacturing sector provides employment opportunities and supports businesses throughout domestic supply chains.
Nigeria’s struggle to establish a competitive manufacturing economy has deep historical roots. Following independence in 1960, successive governments pursued import substitution policies intended to reduce dependence on foreign manufactured products by encouraging domestic production. The strategy gained momentum during the oil boom of the 1970s, when government investment supported industrial projects, including steel production, petrochemicals and other manufacturing activities. However, falling oil revenue, foreign exchange shortages and broader economic difficulties weakened industrial development during the following decade. In 1986, the administration of General Ibrahim Babangida introduced the Structural Adjustment Programme, which included exchange rate reforms, trade liberalisation and changes to government economic intervention. While the programme sought to improve efficiency and diversify the economy, exchange rate depreciation and higher costs for imported industrial inputs created difficulties for manufacturers. The historical experience helps explain why today’s industry leaders continue demanding policies that support domestic production while ensuring access to essential machinery and raw materials.
The current difficulties also have implications for Nigeria’s ambition to expand exports and participate more competitively in the African Continental Free Trade Area. Manufacturers argue that domestic businesses cannot fully benefit from regional trade opportunities if production costs remain substantially higher than those faced by foreign competitors. Electricity is a particularly serious concern because factories frequently rely on generators and alternative power systems when public supply is inadequate. Transport expenses, port delays, foreign exchange volatility and imported raw material costs create additional financial pressures. Meshioye has called for investment in dedicated industrial electricity feeders, improved grid infrastructure, roads, railways and more efficient logistics corridors. Manufacturers also want stronger protection against dumping, substandard imports and unfair trade practices. However, restrictions designed to protect domestic factories must be balanced against the needs of consumers and businesses that depend on imported goods, including manufacturers that cannot obtain essential inputs locally.
Shipping containers at a Nigerian port. Industry leaders want trade policies that support local production while maintaining access to essential imported equipment and raw materials.
The disagreement over industrial financing also reflects competing economic priorities. The Central Bank uses interest rates and reserve requirements to influence inflation, money supply and financial stability, while manufacturers favour cheaper credit to encourage investment and production. Lower borrowing costs can help businesses, but rapid credit expansion may also complicate efforts to control inflation if it increases demand faster than domestic supply. Ajayi-Kadir has acknowledged the importance of monetary stability while warning that the September rate reduction may not provide meaningful relief unless banks expand affordable lending. Industry representatives have therefore proposed targeted financing through institutions such as the Bank of Industry and the Development Bank of Nigeria. They have also called for credit guarantees, longer repayment periods and dedicated foreign exchange arrangements for manufacturers importing machinery or raw materials unavailable domestically. These proposals seek to direct financial support towards productive investments without relying exclusively on broad interest rate reductions.
The Nigeria Industrial Policy 2025 has become central to the debate about how the government intends to address these structural problems. The policy seeks to strengthen domestic value chains, improve industrial productivity, encourage technological development and promote Nigeria as a competitive manufacturing destination. Meshioye has urged the Federal Government to establish clear implementation timelines, measurable performance indicators and stronger institutional accountability. He also called for adequate support for the Industrial Revolution Working Group, which is expected to help coordinate reforms and monitor progress. Isemede separately advocated a comprehensive export development programme with clearly identified products, markets and foreign exchange targets. The manufacturers want closer coordination between monetary, fiscal, industrial and trade authorities, arguing that inconsistent decisions can discourage long-term investment. As of October 14, no new government announcement had established a comprehensive financing package addressing all the concerns raised by the industry representatives.
The latest warnings highlight a fundamental challenge facing Nigeria’s economic diversification agenda: creating conditions in which domestic manufacturers can invest, expand and compete profitably without depending indefinitely on government protection. The reduction in the Central Bank’s benchmark interest rate offers some prospect of financial relief, but manufacturers maintain that its benefits will remain limited unless commercial lending costs decline and longstanding infrastructure problems are addressed. Their demands also place renewed attention on the implementation of industrial policies, the treatment of imported products and the availability of patient capital for businesses requiring several years to recover their investments. The outcome will matter for employment, consumer prices, export earnings and Nigeria’s ability to produce more of the goods it currently purchases from abroad. For manufacturers, the immediate test is whether recent monetary policy changes and government industrial commitments will translate into affordable financing, more reliable production conditions and measurable growth in domestic output.
