Connect with us

Business

MAN Calls For Urgent Interest Rate Cut to Protect Nigeria’s Industrial Base

Published

on

Manufacturers Association of Nigeria MAN 2
644 Views

The Manufacturers Association of Nigeria (MAN), has called for an urgent interest rate cut to protect Nigeria’s Industrial Base.

In a press release signed by Segun Ajayi-Kadi, Director General Manufacturers Association of Nigeria, MAN said it is deeply concerned and worried about the continued decision of the Central Bank of Nigeria (CBN) to maintain the Monetary Policy Rate (MPR) at 27.5 percent since November 2024, despite a global wave of interest rate reductions.

The statement reads:

The Manufacturers Association of Nigeria (MAN) is deeply concerned and worried about the continued decision of the Central Bank of Nigeria (CBN) to maintain the Monetary Policy Rate (MPR) at 27.5 percent since November 2024, despite a global wave of interest rate reductions aimed at revitalizing economic productivity and combating stagflation.

We are perturbed that when most progressive economies are charting a course toward industrial recovery and macroeconomic stability, Nigeria’s monetary stance tends to lead us in a different direction.

Over the last quarter, countries such as members of the Euro Area, the United Kingdom, Denmark, Australia, China, India, Thailand and Egypt, have implemented interest rate cuts to bolster economic growth and support productive sectors.

Yet, our rigidity continues to create unintended consequences that may deepen the parlous performance of the productive sector.

A nation cannot industrialize on the back of prohibitively expensive credit. With the benchmark interest rate held at 27.5 percent, Nigeria has become the 6th most expensive country to source credit as local manufacturers grapple with an average lending rate of over 37 percent.

This policy posture is not only inflationary, but is suffocating the capacity of the manufacturing sector.

Compounded by other limiting factors, our members—small, medium and even large-scale—are finding it increasingly difficult to stay afloat, expand production lines, or even meet basic operational costs.

When credit is priced highly, production declines and the nation “imports poverty”.

Our concerns go beyond the debilitating impact on our numbers business. The “Nigeria First Policy”, which seeks to strengthen local industry and reduce import dependence, may be under severe threat.

At the heart of its successful implementation lies access to affordable financing to boost capacity utilization.

Unfortunately, the current interest rate regime constrains finance costs for our members, surging by over 44 percent from ₦1.43 trillion in 2023 to ₦2.06 trillion in 2024 and rising. This represents a sharp increase that has directly depressed productivity and led to underutilization of industrial capacity.

The high cost of credit has not only diminished the flow of investments into the manufacturing sector but has also dulled the return on existing investments, with Small and Medium Industries hit the hardest.

Confidence in the industrial outlook has waned, as evident in the dip in the Manufacturers CEO’s Confidence Index from 50.7 points to 48.3 points.

This mirrors the growing anxiety of our manufacturers. A nation that woos foreign portfolio investors at the expense of its real sector may unwittingly be aspiring to build prosperity on the back of volatility.

We are disturbed by the implicit prioritization of short-term foreign capital inflows over the long-term health of domestic industries.

While maintaining a high interest rate of 27.5 percent may temporarily attract speculative foreign portfolio investors, it is doing so at the expense of Nigeria’s manufacturing base, which is now choked by unsustainable borrowing costs.

What is evident now is the widening profitability of the banking sector, buoyed by elevated interest margins, while manufacturers contend with shrinking margins, rising debts and declining productivity.

This is an economic paradox that must be urgently addressed. The current monetary policy trajectory risks turning banks into vaults of idle wealth, while the real economy—where jobs are created and value is added—faces suffocation. A society that rewards intermediaries over producers invites long-term decline.

Access to affordable credit is the oxygen that sustains industrial growth and no economy has ever grown by starving its manufacturers of oxygen. The Manufacturers Association of Nigeria is ever committed to collaborating with the Government and all stakeholders to achieve macroeconomic stability.

We therefore earnestly beseech the CBN to urgently reconsider its monetary stance. Moreover, recent disinflationary trends provide justification for the CBN to cut rates. Real interest rates have improved, already giving financial investors higher inflation-adjusted returns.

Therefore, maintaining a high nominal interest rate under current inflation conditions is neither necessary nor justifiable, and will only prolong the pain for manufacturers and consumers alike.In light of the above, MAN calls on the CBN to:

➢ Cut the benchmark interest rate significantly to reflect current realities and ease the credit burden on manufacturers.

➢ Deploy moral suasion and policy incentives for commercial banks to facilitate single-digit, concessionary interest rates to the manufacturing sector.

➢ Facilitate the approval of the ₦1 trillion earmarked for manufacturers under the Stabilization Plan to support industries struggling under current financial pressures.

➢ Facilitate significant increase in the capital base of the Bank of Industry (BOI) to scale up its capacity to meet the sector’s growing credit demands.

➢ Settle the outstanding $2.4 billion Forex Forward Contracts to restore manufacturers’ confidence and end the unprecedented decapitation of the financial viability of the affected industries. This will also improve access to non-locally available raw materials.

➢ Facilitate a policy direction to peg the customs duty exchange rate for importing industrial inputs, especially raw materials and machinery, to prevent further inflationary pass-through effect.

Industrial confidence is a fragile currency and once broken, it takes time to rebuild. Nigeria cannot afford to lose its manufacturing momentum at a time when the world is repositioning for the next wave of industrial transformation.

The commendable reform measures of this administration may not be helped by the persistent high cost and constrained access to funds. The current monetary policy is not only undermining manufacturers’ confidence but also jeopardizing national economic resilience.

We urge the Central Bank to act decisively and in synergy with the fiscal authority to ensure that Nigeria’s manufacturing sector does not sink deeper into stagnation. The time to act is now.

Business

Naira Exchange Rates Today, Monday November 2,2026

Published

on

By

Naira to dollar
10 Views

PARALLEL MARKET RATES

₦1382 DOLLAR (USD)

₦1815POUND (GBP)

₦1515EURO (EUR)

₦970DOLLAR (CAD)

₦65RAND (ZAR)

₦350DIRHAM (AED)

₦190YUAN (CNY)

₦100G.CEDI (GHS)

₦2300CFA F.(XOF)

₦2200CFA F.(XAF)

₦850AUSSIE (AUD)

OFFICIAL CBN EXCHANGE RATES

DOLLAR (USD)₦1346.26

POUND (GBP)₦1803.58

EURO (EUR)₦1503.23

SWISS FRANC (CHF)₦1634.20

JAPANESE YEN (JPN)₦8.56

CFA FRANC (XOF)₦2.28

WEST AFRICAN UNIT OF ACCOUNT (WAUA)₦1821.09

CHINESE YUAN (CNY)₦202.35

SAUDI RIYAL (SAR)₦358.71

SOUTH AFRICAN RAND (ZAR)₦80.67

Continue Reading

Business

African Energy Bank Headquarters Operation in Nigeria

The $5bn financial institution is designed to fund oil, gas and other energy projects across Africa as traditional international lenders reduce financing for fossil fuel investments.

Published

on

By

AEB 1793547910
20 Views

Pic:L-R: Sen. Heineken Lokpobiri, Hon. Minister for State Petroleum Resources (Oil), Federal Government of Nigeria, Dr. George Elombi, President and Chairman of the Board of Directors at Afreximbank and Hon Mamadou Sangafowa-Coulibaly, Minister of Mines, Petroleum and Energy of Côte d’Ivoire during the first General Meeting of the Africa Energy Bank in Abuja, Nigeria.

African Export-Import Bank and the African Petroleum Producers’ Organisation have formally announced the establishment of the Africa Energy Bank (AEB).

The $5bn financial institution is designed to fund oil, gas and other energy projects across Africa as traditional international lenders reduce financing for fossil fuel investments.

The announcement was made during the AEB’s inaugural general meeting held in Abuja, Nigeria, on 31 October 2026.

The bank will provide financing for petroleum exploration, production, transportation, refining and distribution, while supporting Africa’s efforts to reduce dependence on imported petroleum products.

Afreximbank and APPO estimated the continent’s energy investment requirements at `$200bn, indicating a substantial funding gap that the new institution is expected to help address.

Continue Reading

Business

Why Cement Is Expensive in Nigeria – PAMA

Using Dangote Cement as a case study, Ajayi-Kadir disclosed that the company operates in about 11 African countries, with an installed production capacity of 55 million tonnes.

Published

on

By

bags of cement 1
25 Views

The Pan-African Manufacturers Association (PAMA) has attributed the rising prices of cement in Nigeria to a combination of production, energy, foreign exchange, financing and distribution challenges confronting manufacturers.

As of October 2026, the retail price of a standard 50kg bag of cement in Nigeria generally ranges between ₦11,000 and ₦15,000, depending on the brand, location and volume purchased.

While Dangote Cement sells between ₦12,000 and ₦15,000 per bag, BUA Cement goes for between ₦11,500 and ₦14,500. Lafarge Africa (HBM) sells between ₦10,500 and ₦13,500.

Co-Interim Secretary-General of PAMA, Segun Ajayi-Kadir, explained that cement manufacturers face numerous production and distribution challenges, which contribute significantly to the rising prices of the commodity across the country.

According to him, beyond tariffs, infrastructure deficits, exchange-rate volatility and high interest rates, cement manufacturing is inherently energy-intensive, capital-intensive and relatively expensive to transport.

“Raw materials are often locally available, but energy, maintenance, equipment, logistics and finance can materially affect the economics of production. Scale also matters because fixed costs must be spread across sufficient output,” he said.

Using Dangote Cement as a case study, Ajayi-Kadir disclosed that the company operates in about 11 African countries, with an installed production capacity of 55 million tonnes.

In 2025, the company produced 26.79 million tonnes and sold 27.47 million tonnes of cement and clinker.

Energy Costs Drive Manufacturing Expenses

An examination of the company’s financial statements provides an insight into the cost pressures confronting cement manufacturers.

Dangote Cement’s manufacturing costs stood at ₦1.634 trillion in 2025, with fuel and power accounting for ₦681.9 billion, representing approximately 42 per cent of total manufacturing expenses.

Materials accounted for about 24 per cent, plant maintenance 10 per cent, salaries and related expenses nine per cent, while depreciation and amortisation represented another nine per cent.

Using the 2025 average official exchange rate of approximately ₦1,555 to the dollar, the company’s total manufacturing costs amounted to roughly $1.05 billion, equivalent to about $39 per tonne produced.

Fuel and power alone accounted for approximately $439 million, or $16.4 per tonne.

The figures underscore the significant influence of energy costs on cement production.

For instance, a 20 per cent increase in fuel and power expenses, assuming other variables remain unchanged, would add approximately $88 million to the company’s manufacturing costs, equivalent to an additional $3.3 per tonne.

This would increase manufacturing costs per tonne by approximately eight per cent.

The implication is that addressing energy costs requires more than reducing electricity tariffs. Manufacturers must also explore energy efficiency, alternative fuels, captive power generation, improved production processes and a more diversified energy mix.

Ultimately, reliable and affordable energy remains essential to competitive industrial production.

Foreign Exchange and Local Sourcing

Foreign-exchange exposure is another major consideration.

Dangote Cement operates across several African countries with different currencies, while its consolidated financial statements are reported in naira.

Consequently, imported machinery, spare parts and other production inputs expose the company to exchange-rate fluctuations, which can increase operating costs.

However, the company’s procurement strategy offers an indication of how local sourcing can help reduce such exposure.

In 2024, more than 75 per cent of its procurement expenditure went to local vendors, reflecting efforts to reduce import dependence and foreign-exchange risks.

Nevertheless, local sourcing can only improve manufacturing competitiveness when domestic suppliers are capable of delivering quality materials at competitive prices and in sufficient quantities.

The priority, therefore, should be to develop competitive domestic supplier networks and strengthen local productive capacity rather than merely replacing imports without building the necessary industrial capabilities.

Transportation and Distribution Challenges

Logistics also play a significant role in determining the final price of cement.

Dangote Cement’s 2025 administration and selling expenses increased to ₦943.9 billion, with higher haulage costs identified as a major contributing factor.

Given the weight and bulk of cement, transportation costs are particularly significant. Factory locations, road infrastructure, access to ports, proximity to raw materials and distance to major consumer markets all influence the final delivered price.

The company’s expansion across African markets also illustrates the importance of production location in reducing distribution costs.

Its three-million-tonne-per-annum grinding plant in Côte d’Ivoire, commissioned in 2025, increased its group production capacity to 55 million tonnes.

The facility sold 60,400 tonnes during its initial production ramp-up period.

The investment demonstrates how establishing production facilities closer to regional markets can improve supply efficiency and reduce dependence on transporting products over long distances from a single production base.

The Policy Imperatives

The cost structure of cement manufacturing highlights the need for a more targeted industrial policy response.

Governments should prioritise reliable and affordable industrial energy, efficient road and port infrastructure, predictable foreign-exchange and trade policies, access to long-term industrial financing and the development of competitive domestic suppliers.

Regional economic integration also offers opportunities to improve manufacturing efficiency by enabling companies to access larger markets, increase production volumes and achieve economies of scale.

For Nigeria, the challenge goes beyond making cement available at affordable prices. It involves creating an industrial environment in which manufacturers can produce competitively, expand capacity, invest in technology and deliver products to consumers at reasonable costs.

Rather than relying excessively on incentives, policymakers must address the underlying structural constraints driving production and distribution expenses.

Reducing these costs is essential not only to making cement more affordable but also to supporting construction, infrastructure development, housing delivery and Nigeria’s broader industrialisation agenda.

Continue Reading

Trending