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The Centre for the Promotion of Private Enterprise (CPPE) has called for a comprehensive overhaul of Nigeria’s development finance framework, warning that the country’s productive sectors are being held back by a financing shortfall estimated at more than N50 trillion.
The private sector advocacy group said the current financial system is failing to provide the affordable, long-term capital required to drive industrialisation, agricultural transformation and sustainable economic growth.
In a policy brief, CPPE argued that manufacturing, agriculture, agribusiness, micro, small and medium enterprises (MSMEs), supply chains and export-oriented businesses continue to struggle with prohibitively high interest rates, short loan tenors, stringent collateral requirements and limited access to patient capital. According to the organisation, these challenges reflect deep structural weaknesses in Nigeria’s financial system rather than temporary liquidity shortages.
The Chief Executive Officer of CPPE, Dr. Muda Yusuf, said the financing constraints stem from persistent market failures, including maturity mismatches between bank deposits and long-term investment needs, information asymmetry, sovereign crowding-out and the inability of commercial lenders to capture the broader economic benefits generated by investments in productive sectors.
CPPE estimated that the financing gap across Nigeria’s real sector exceeds N50 trillion, noting that agriculture, despite contributing more than one-fifth of the country’s Gross Domestic Product, has historically received less than five per cent of banking sector credit. Manufacturing, it added, equally requires substantial medium- and long-term financing for machinery, factory expansion, automation, energy infrastructure, technology upgrades, backward integration and export development.
The organisation argued that such investments cannot be sustainably financed with expensive short-term commercial bank loans, stressing that their long gestation periods require affordable, long-tenor funding. It therefore maintained that development finance institutions and properly structured intervention funds remain indispensable to unlocking investment in productive sectors.
CPPE also observed that the current monetary policy environment has widened the financing gap. With the Monetary Policy Rate at 26.5 per cent and the Cash Reserve Requirement for deposit money banks at 45 per cent, it said prevailing lending rates are largely incompatible with the returns expected from productive investments in manufacturing and agriculture.
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While acknowledging the Central Bank of Nigeria’s efforts to restore monetary policy credibility, strengthen exchange-rate stability and moderate inflationary pressures, the organisation argued that price stability should not come at the expense of investment, productivity, employment and long-term economic growth. It urged policymakers to strike a better balance between inflation control and financing the productive economy.
According to CPPE, monetary stability and development finance should not be viewed as competing objectives. Instead, it advocated a carefully designed development finance framework that addresses identifiable market failures through transparent, targeted and non-inflationary interventions capable of supporting key productive sectors without undermining monetary policy credibility.
The policy brief further argued that conventional commercial banks alone cannot finance Nigeria’s industrial and agricultural transformation because they primarily mobilise short-term deposits while businesses in the productive sector require financing extending between five and 10 years or more. It also pointed to excessive reliance on landed property as collateral, which excludes many otherwise viable enterprises with strong cash flows and productive assets.
CPPE acknowledged the shortcomings of previous intervention programmes implemented by the Central Bank of Nigeria, including governance concerns, weak loan recovery, political interference and quasi-fiscal risks. However, it insisted that these implementation failures should not justify abandoning development finance altogether, but rather should drive reforms that make such interventions more transparent, market-oriented and commercially disciplined.
Among its recommendations, the organisation urged the Federal Government and the Central Bank to recapitalise and strengthen development finance institutions such as the Bank of Industry and the Bank of Agriculture, expand partial credit guarantees and risk-sharing mechanisms, establish specialised long-term refinancing windows, deepen supply-chain and cash-flow-based lending, mobilise pension and insurance funds for productive investments, reduce sovereign crowding-out through stronger fiscal discipline and institutionalise robust governance and accountability measures.
CPPE stressed that Nigeria’s real-sector financing deficit is too significant to be left solely to conventional commercial finance. It maintained that the country requires a transparent, rules-based development finance architecture in which the Central Bank serves as a catalyst by refinancing and sharing risks rather than directly lending. According to the organisation, closing the financing gap is essential for accelerating industrialisation, boosting agricultural productivity, strengthening food security, diversifying exports, creating jobs and enhancing Nigeria’s long-term economic competitiveness.
