June 16, (THEWILL) – Manufacturers are nursing their injuries from the hurting devaluation of the naira which happened on June 14, 2023. It was when the Nigerian government abolished the multiple exchange market system following the floating of the local currency.
The development which was part of the reform agenda of the Bola Tinubu-led government to transform the ailing economy, saw the naira tumble from the official rate of N472/US$1 on June 13, to N665/US$1 the next day the unified forex market regime was announced.
By this, the naira lost N193 in one swoop, sparking inflation that climbed from 22.79 percent in June 2024, to 34.19 percent in June 2024, before moderating to 23.71 in April 2025 percent after the CPI rebasing in January 2025 by the National Bureau of Statistics.
As of Friday, June 13 2025, the naira exchanged N1,550/US$1 which means a loss of N885 from the N665/US$1 it traded on the first day of the devaluation — June 14, 2023.
To rein in inflation, the Central Bank has raised the monetary policy rate beyond what had been seen in recent times creating challenges for the economy, especially the manufacturing, who have to borrow at a high cost to fund their operations.
Recently, the Manufacturers Association of Nigeria (MAN), the Lagos Chamber of Commerce and Industry (LCCI) and the Nigeria Employers’ Consultative Association (NECA) amented over the continued decision of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to maintain the Monetary Policy Rate (MPR) at 27.5 per cent since November 2024, despite a global wave of interest rate reductions aimed at revitalising economic productivity and combating stagflation.
Specifically, the LCCI stressed that the current MPR level was prohibitively high for private sector development. Also, NECA expressed concern over the CBN’s continued reliance on monetary policy tightening.
The manufacturers’ association expressed its view in a statement entitled, “MAN Calls for Urgent Interest Rate Cut to Protect Nigeria’s Industrial Base,” signed by the Director General of MAN, Mr. Segun Ajayi-Kadir.
Ajayi-Kadir said the CBN was given to seeking to attract speculative foreign portfolio investors at the expense of Nigeria’s manufacturing base, which is now choked by unsustainable borrowing costs.
MAN stated that the rigid stance of the MPC has continued to create unintended consequences that might deepen the parlous performance of the productive sector and earnestly, “beseech the CBN to urgently reconsider its monetary stance.”
He said: “A nation cannot industrialise on the back of prohibitively expensive credit. With the benchmark interest rate held at 27.5 per cent, 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.”
The MAN president stressed that domestic production would fall with highly-priced credit, which he said could constrain the country to “imports poverty” by relying on extensive importation of manufactured goods.
He added: “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 utilisation. 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 under-utilisation of industrial capacity.”
The director general of MAN noted that 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.
He added that 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, which mirrored the growing anxiety of 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 prioritisation 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,” he said.
Ajayi-Kadir pointed out that what was evident now in the Nigerian economy was the contrast between the widening profitability of the banking sector buoyed by elevated interest margins and manufacturers’ shrinking margins, rising debts, and declining productivity.
He declared that this was 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,” said Ajayi-Kadir, who warned that “a society that rewards intermediaries over producers invites long-term decline.”
He described access to affordable credit as “the oxygen that sustains industrial growth,” adding that no economy has ever grown by starving its manufacturers of oxygen.
The trend affected the small businesses which play an important role in the manufacturing value chain under backward integration.
THEWILL reports that many thriving MSMEs involved in the value chain of major manufacturing companies’ operations under the backward integration policy have either scaled down their operations or stopped doing business.
Backward integration is a practice where companies are encouraged to cultivate their own raw materials by purchasing from their suppliers or establishing their own farms, for instance, to grow produce for their factories.
The consumer goods firms, in particular, keyed into the scheme and have since taken giant strides in its implementation.
This is to the benefit of the MSMEs, especially those engaged in the agriculture and transport value chain. But the receding fortune of the consumer goods firms suggest a strong negative impact on the SME operators.
These are among the large firms that patronize agribusiness operators for the supply of raw materials and other services to promote backward integration.
The Chairman of the Lagos State Chapter of the Nigerian Association of Small Scale Industrialists, Mrs Gertrude Akhimien, has disclosed that 30 per cent out of the over 24 million registered small and medium enterprises in Nigeria folded up last year.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
