CPPE Calls For Urgent Reform As Nigeria’s Productive Sectors Face ₦50tn Financing Gap

The Centre for the Promotion of Private Enterprise (CPPE) has urged the Federal Government and the Central Bank of Nigeria (CBN) to overhaul the country’s development finance architecture, warning that Nigeria’s productive sectors are facing a funding deficit estimated at more than ₦50 trillion.

According to a report by News Tellers, the recommendation was contained in a policy brief released on Sunday by the Chief Executive Officer of CPPE, Dr. Muda Yusuf, who said manufacturers, farmers, agribusinesses, micro, small and medium enterprises (MSMEs) and export-driven businesses continue to struggle to access affordable long-term financing needed to expand operations.

Yusuf said the financing challenge goes beyond a shortage of funds, describing it as a structural problem within Nigeria’s financial system. He noted that high lending rates, short loan tenures, strict collateral requirements and limited access to long-term capital have continued to restrict investments in key sectors of the economy.

According to him, the funding gap affects manufacturing, agriculture, agribusiness, supply chains, MSMEs and export-oriented businesses. He pointed out that although agriculture contributes more than 20 per cent of Nigeria’s Gross Domestic Product, it has historically received less than five per cent of total banking sector credit.

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He added that manufacturers require medium- and long-term financing to invest in machinery, technology, factory expansion, energy infrastructure, automation and export development, stressing that such investments cannot be supported through expensive short-term commercial bank loans.

The CPPE boss also linked the country’s monetary policy environment to the credit squeeze, citing the Monetary Policy Rate of 26.5 per cent and the Cash Reserve Requirement of 45 per cent for deposit money banks as factors driving commercial lending rates beyond the reach of many businesses.

While commending the CBN’s efforts to strengthen monetary policy, stabilise the exchange rate and contain inflation, Yusuf said the pursuit of price stability should be balanced with policies that encourage investment, employment and economic growth.

He argued that development finance should complement monetary policy, noting that properly designed intervention programmes can address structural financing challenges without undermining inflation control efforts.

According to the policy brief, commercial banks alone cannot finance Nigeria’s industrialisation and agricultural transformation because they rely mainly on short-term deposits, whereas productive sectors require financing that extends over five to 10 years or longer.

The CPPE further identified information gaps, stringent collateral requirements and the preference of financial institutions for investing in government securities as major obstacles preventing businesses from accessing credit.

Yusuf maintained that the current situation represents a market failure because sectors such as manufacturing and agriculture generate wider economic benefits, including job creation, tax revenue, food security, export earnings, import substitution and technology transfer, which are often not reflected in commercial lending decisions.

Although the organisation acknowledged shortcomings in previous CBN intervention programmes, including governance lapses, poor loan recovery, political interference and quasi-fiscal risks, it insisted that the solution lies in reform rather than abandoning development finance.

CPPE called for a transparent, market-driven and rules-based framework insulated from political influence. It also recommended strengthening development finance institutions such as the Bank of Industry and the Bank of Agriculture, expanding credit guarantee schemes, creating long-term refinancing windows for agriculture and manufacturing, and promoting cash flow and movable asset-based lending.

Other recommendations include improving credit information systems, mobilising pension and insurance funds for long-term investments, reducing government borrowing from the domestic market and strengthening governance and accountability in intervention programmes.

The policy brief added that effective development finance could also support the CBN’s inflation-fighting efforts by boosting agricultural production, manufacturing capacity, energy efficiency and logistics, thereby addressing supply-side constraints that contribute to rising prices.

CPPE concluded that Nigeria’s financing gap is too significant to be addressed solely through conventional commercial lending and urged policymakers to adopt a balanced model in which the CBN provides refinancing and risk-sharing support while private financial institutions focus on lending and loan recovery.

Yusuf said bridging the more than ₦50 trillion financing gap would be critical to accelerating industrialisation, transforming agriculture, improving food security, increasing exports, creating jobs and strengthening Nigeria’s long-term economic competitiveness.