By Yinka Kolawole
The Centre for the Promotion of Private Enterprise (CPPE) has called for a comprehensive overhaul of Nigeria’s development finance architecture to address an estimated N50 trillion financing gap constraining the country’s productive sectors.
In a policy brief issued on Sunday, the Chief Executive Officer of CPPE, Dr. Muda Yusuf, said inadequate access to affordable, long-term finance remains one of the biggest obstacles to growth in manufacturing, agriculture, agribusiness, micro, small and medium-sized enterprises (MSMEs), and export-oriented businesses.
According to him, the financing gap reflects deep structural market failures rather than a shortage of liquidity in the financial system.
He noted that businesses continue to grapple with high lending rates, short loan tenors and stringent collateral requirements, making it difficult to expand operations, improve productivity and invest in new technologies.
Yusuf estimated the real sector financing gap at more than N50 trillion, stressing that agriculture, despite contributing over one-fifth of Nigeria’s Gross Domestic Product (GDP), has historically attracted less than five per cent of bank credit.
He added that manufacturers require affordable, long-term funding for machinery acquisition, factory expansion, technology upgrades, energy infrastructure, automation and export development—investments that cannot be sustainably financed through expensive short-term commercial bank loans.
According to him, prevailing monetary conditions, including the Monetary Policy Rate (MPR) of 26.5 per cent and the Cash Reserve Ratio (CRR) of 45 per cent, have further increased borrowing costs, pushing commercial lending rates beyond levels many productive businesses can sustain.
While acknowledging the efforts of the Central Bank of Nigeria (CBN) to restore monetary policy credibility, stabilise the exchange rate and curb inflation, Yusuf argued that price stability should be complemented by policies that promote investment, job creation and economic growth.
“Price stability and development finance should not be treated as mutually exclusive objectives,” he said, adding that transparent and well-targeted development finance interventions can complement monetary policy without fuelling inflation.
Yusuf maintained that commercial banks alone cannot finance Nigeria’s industrialisation because they depend largely on short-term deposits.
He identified information asymmetry, rigid collateral requirements and government crowding out private-sector borrowers as major constraints to lending.
To bridge the financing gap, he called for the recapitalisation of the Bank of Industry and the Bank of Agriculture, expansion of credit guarantee schemes, establishment of longer-tenor refinancing windows, promotion of supply chain financing and cash flow-based lending, strengthening of credit information systems, mobilisation of pension and insurance funds for productive investments, and a reduction in domestic government borrowing.
He also stressed the need for stronger governance, transparency and accountability in the implementation of all development finance programmes.
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