The Centre for the Promotion of Private Enterprise (CPPE) has called for urgent reforms in Nigeria's development finance framework, warning that a funding gap of over ₦50 trillion is crippling the country's productive sectors.
The position was contained in a policy brief issued on Sunday by the Chief Executive Officer of CPPE, Dr. Muda Yusuf, who said the current financial system has failed to provide manufacturers, farmers, agribusinesses, Micro, Small and Medium Enterprises (MSMEs), and export-oriented businesses with the affordable, long-term funding required for sustainable growth.
According to Yusuf, Nigeria's real sector is constrained by high lending rates, short repayment periods, stringent collateral requirements and limited access to patient capital, describing the situation as a reflection of structural weaknesses in the financial system rather than a mere liquidity challenge.
He explained that the financing gap spans manufacturing, agriculture, agribusiness, supply chains, MSMEs and export-focused enterprises, with agriculture contributing more than one-fifth of the country's Gross Domestic Product despite historically receiving less than five per cent of banking sector credit.
The CPPE chief noted that manufacturers also require medium- and long-term financing to invest in machinery, factory expansion, technology, energy infrastructure, automation and export development, adding that such investments cannot be sustained through short-term commercial bank loans with high interest rates.
Yusuf argued that the prevailing monetary environment has worsened access to credit, 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 that have pushed commercial lending rates beyond the reach of many productive businesses.
While acknowledging the Central Bank of Nigeria's efforts to restore monetary policy credibility, stabilise the exchange rate and moderate inflation, he stressed that price stability should be balanced with policies that support investment, job creation and economic growth.
He maintained that development finance and monetary stability should complement each other, saying carefully targeted and transparent intervention mechanisms can address structural financing challenges without undermining monetary policy.
According to the policy brief, relying solely on commercial banks to finance industrialisation and agricultural transformation is unrealistic because banks largely depend on short-term deposits, while productive sectors require long-term capital extending from five to ten years or more.
The CPPE also identified information asymmetry, rigid collateral requirements and the preference of financial institutions for government securities as major factors limiting lending to productive enterprises.
Yusuf said these conditions amount to market failures because manufacturing and agriculture generate wider economic benefits, including employment, tax revenue, food security, export earnings, import substitution and technology transfer, which are not fully reflected in commercial lending decisions.
The organisation, however, acknowledged shortcomings in previous CBN intervention programmes, including governance issues, weak loan recovery, political interference and quasi-fiscal risks.
It argued that those challenges justify reforms rather than the abandonment of development finance, advocating a framework that is market-driven, transparent, rules-based and insulated from political influence.
CPPE recommended that the Federal Government and the CBN strengthen development finance institutions such as the Bank of Industry and the Bank of Agriculture, expand risk-sharing and credit guarantee schemes, establish long-term refinancing windows for manufacturing and agriculture, and encourage cash-flow and movable collateral-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 further argued that well-designed development finance can support the CBN's inflation control efforts by increasing agricultural output, manufacturing capacity, energy efficiency and logistics, thereby addressing structural supply constraints that contribute to rising prices.
CPPE concluded that Nigeria's real sector financing deficit is too significant to be left entirely to conventional commercial lending, urging policymakers to adopt a balanced approach in which the CBN acts as a catalyst through refinancing and risk-sharing while private financial institutions take responsibility for lending and loan recovery.
According to Yusuf, closing the financing gap is essential to accelerating industrialisation, transforming agriculture, improving food security, boosting exports, creating jobs and enhancing Nigeria's long-term economic competitiveness.
