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The Alliance for Economic Research and Ethics (AERE) has said the Bank of Industry’s (BOI) N644.9 billion intervention for businesses in Nigeria, while commendable, is insufficient to revive the manufacturing industry heavily weighed down by structural challenges.
In a policy brief titled “From N644.9bn to a Trillion-Dollar Dream: Why Nigeria’s Manufacturers Need More Than Applause,” AERE’s Chairman, Kelvin Oye, described the intervention as “a drop of water in a desert of industrial thirst.”
Oye argued that although the funding appears significant, it is modest when viewed against the size of Nigeria’s roughly $400 billion economy and the scale of the country’s industrial needs.
According to him, the 1.68 million jobs supported through the BOI intervention are encouraging, but Nigeria requires the creation of at least four million jobs annually to absorb its growing youthful population.
“We are not treading water; we are sinking more slowly,” he said, warning that the manufacturing sector, which should serve as the engine of economic transformation, is struggling.
He pointed to the decline in manufacturing tax revenue in the first quarter of 2026 as evidence of weakening industrial activity, noting that lower tax payments reflect reduced production and sales rather than improved tax planning.
Oye said the sector is currently operating at less than 50 per cent of its installed capacity, underscoring the urgent need for broader reforms.
He praised the BOI’s maiden Development Impact Report, describing it as a milestone because it focuses on development outcomes rather than the volume of loans disbursed.
According to the report, the BOI disbursed N644.9 billion in 2025, supported 1.68 million jobs and financed projects across 14 strategic sectors. More than 30 per cent of the funding went to micro, small and medium enterprises (MSMEs), while over 20 per cent supported women- and youth-led businesses. The bank also committed N35 billion to broadband infrastructure, N30.6 billion to power projects and N20 billion to aviation.
Oye commended BOI Managing Director, Olasupo Olusi, for prioritising measurable development impact. He also applauded Yemi Cardoso for directing monetary policy towards productive sectors and President Bola Ahmed Tinubu for placing manufacturing at the centre of his economic agenda.
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He said the report demonstrates a shift in focus from measuring lending volumes to evaluating the actual impact of development finance on the economy.
While noting that BOI’s lending rates of 13 per cent for SMEs and 15 per cent for large enterprises are considerably lower than commercial bank rates, which he said often exceed 35 per cent, Oye maintained that the intervention alone cannot solve the sector’s financing challenges.
He identified unreliable electricity supply, expensive commercial loans, the unresolved $2.4 billion foreign exchange forward contract backlog, persistent deficit financing and the absence of single-digit lending rates as major obstacles preventing manufacturers from expanding production.
According to him, manufacturers still generate about 60 per cent of their electricity, making production costs uncompetitive compared with countries such as Vietnam, Bangladesh and Ethiopia.
On financing, he criticised commercial lending rates of around 35 per cent, describing them as unsustainable for businesses seeking to invest and expand.
He also expressed concern over the unresolved $2.4 billion foreign exchange forward contracts, arguing that manufacturers who paid for dollar hedging arrangements suffered significant losses after receiving naira refunds following the sharp depreciation of the currency.
Oye further blamed heavy government domestic borrowing for crowding out private sector access to capital, saying deficit financing continues to keep borrowing costs elevated.
To strengthen the manufacturing sector, he urged the government to accelerate implementation of the 2026 Nigeria Industrial Policy, resolve the foreign exchange forward contract backlog, review tax penalties affecting Free Trade Zones, strengthen national credit guarantee schemes, reduce deficit financing, cap public borrowing, promote single-digit lending for productive sectors, invest in dedicated power for industrial clusters and deepen the capital market to improve manufacturers’ access to long-term financing.
He stressed that sustainable economic growth depends on expanding production rather than increasing taxation.
“No nation has ever taxed itself into prosperity,” he said. “Nigeria’s revenue challenge is fundamentally a production problem. When manufacturers thrive, they create jobs, incomes rise, consumer spending increases and government revenue grows naturally through stronger economic activity.”
