N1trn FG Stimulus Delay Leaves Manufacturers Stranded

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LAGOS – Two years after the Federal Government announced a N1 trillion Manufacturing Stabilisation Fund to cushion the im­pact of currency devaluation and rising energy costs, manufacturers say the continued delay in implementing the intervention has deepened the sector’s financing crisis, stalled expansion plans and pushed many businesses, particular­ly small and medium-sized enterprises (SMEs), closer to collapse.

The N1 trillion Manufacturing Stabi­lisation Fund is a proposed intervention initially included in the Federal Govern­ment’s Accelerated Stabilisation and Ad­vancement Plan to provide affordable credit to manufacturers.

However, despite being announced, the fund has faced significant delays and remains largely unimplemented. The Manufacturers Association of Ni­geria (MAN) has continuously lobbied the government and the Central Bank of Nigeria (CBN) to urgently operationalise this intervention.

Industry leaders in separate inter­views with Daily Independent argue that the fund, introduced in 2024 under the Accelerated Sta­bilisation and Advancement Plan (ASAP), was expected to provide affordable financing at a time when commercial lending rates had become prohibitively expen­sive. Instead, manufacturers say they have been left to compete for costly credit while grappling with worsening operating conditions.

Dr. Chinyere Almona, Direc­tor-General of the Lagos Cham­ber of Commerce and Industry (LCCI), described the delayed in­tervention as a “two-year broken promise” whose consequences are becoming increasingly evi­dent across the manufacturing sector.

According to her, commer­cial bank credit to manufactur­ing declined by N1.92 trillion, falling from N8.53 trillion in December 2024 to N6.61 trillion by December 2025, representing a 22.5 percent contraction, one of the sharpest declines recorded among economic sectors.

She noted that manufactur­ers are also contending with lending rates ranging between 27 and 36 percent, making access to affordable finance increasing­ly difficult.

Without the promised sta­bilisation fund, Almona said, capacity utilisation continues to decline, investment plans are being suspended, while SMEs, which often lack sufficient collat­eral and strong balance sheets, are the first to reduce operations or shut down completely.

Muda Yusuf, an economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), iden­tified access to credit as one of the biggest constraints confront­ing manufacturers.

According to him, manufac­turers struggle to compete for available credit alongside sectors perceived to be more profitable and government borrowing, which he said has crowded out private sector access to finance.

He explained that govern­ment borrowing at rates ap­proaching 20 percent makes it difficult for manufacturers to obtain affordable financing, warning that such borrowing costs are unsustainable for pro­ductive businesses.

Beyond the high cost of credit, Yusuf pointed to the mismatch between available financing and manufacturers’ investment needs.

He explained that while most funds available in the financial market are short-term facilities lasting between one and three years, manufacturing invest­ments require much longer repayment periods because projects such as factory con­struction, machinery acquisi­tion and site development take years before yielding returns.

According to him, the delayed stabilisation fund was designed to bridge these financing gaps.

With the intervention was yet to materialise, Yusuf urged the Federal Government to strength­en alternative development finance channels, particularly through the Bank of Industry (BoI).

He called for the recapital­isation of the bank to enable it to provide long-term financing at single-digit interest rates, de­scribing such funding as essen­tial for making Nigerian manu­facturing competitive.

He expressed concern that even the Bank of Industry had reportedly increased its lend­ing rates to around or above 15 percent, saying such rates were too high for an institution estab­lished to provide development finance.

For trade and investment expert, Dr. John Isemede, and former Director-General of Ni­geria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), however, the funding challenge goes beyond the absence of the N1 trillion intervention.

He argued that manufactur­ers are operating in an envi­ronment where fundamental production conditions remain weak, citing poor electricity supply, inadequate infrastruc­ture and limited market com­petitiveness.

According to him, discus­sions about financing cannot be separated from broader struc­tural issues affecting production across the value chain.

Isemede questioned the vi­ability of manufacturing in an environment where, according to him, importing goods remains easier than producing locally.

He also faulted the non-es­tablishment of commodity boards promised by the current administration, arguing that they would have helped stabi­lise agricultural production and provide raw materials needed by industries.

He noted that agriculture remains central to industriali­sation because it supplies food, employment opportunities and industrial inputs.

Isemede also pointed to the large number of inactive indus­trial clusters across the country, saying attention should first be given to reviving existing indus­tries before introducing fresh fi­nancing schemes.

According to him, the effec­tiveness of any intervention fund would depend on the interest rates attached to it, re­payment terms, grace periods and whether manufacturers were involved in designing the framework.

He warned that providing funding without addressing taxation, production incentives, foreign exchange access and the country’s trade environment could produce limited results.

Similarly, Segun Ajayi-Kadir, Director-General of the Manu­facturers Association of Nige­ria (MAN), said the persistent non-implementation of the N1 trillion Manufacturing Stabilisa­tion Fund remains an unfulfilled commitment to manufacturers.

According to him, despite the fund’s inclusion in the Acceler­ated Stabilisation and Advance­ment Plan since 2024, there has been no visible effort towards its implementation.

Ajayi-Kadir said manufactur­ers have continued to operate in an environment where interest rates exceed 30 percent without the promised fiscal support that was expected to cushion the ef­fects of currency devaluation and escalating energy costs.

He warned that as more factories either scale down production or cease operations altogether, the widening gap be­tween policy announcements and actual implementation con­tinues to undermine Nigeria’s industrial development.