The Centre for the Promotion of Private Enterprise (CPPE) has called for a major overhaul of Nigeria’s development finance framework, warning that the country’s manufacturing, agriculture, agribusiness, micro, small and medium-sized enterprises (MSMEs) and export-oriented businesses are facing a financing gap of more than ₦50 trillion.
In a policy brief issued on Sunday, August 2, 2026, the Chief Executive Officer of CPPE, Dr Muda Yusuf, said the current financing deficit is driven by high interest rates, short loan tenors, strict collateral requirements, weak risk appetite among lenders and a shortage of long-term capital.
According to the CPPE, the financing challenge reflects deep structural weaknesses in Nigeria’s financial system rather than a temporary shortage of liquidity.
It estimated that the real sector currently faces a conservative financing gap of over ₦50 trillion after accounting for the unmet funding needs of manufacturers, agriculture, agribusinesses, MSMEs, supply chains and export-oriented enterprises.
The organisation noted that the financing mismatch is particularly severe in agriculture, which contributes more than one-fifth of Nigeria’s Gross Domestic Product (GDP) but has historically received less than five per cent of banking sector credit.
It added that manufacturers also require long-term financing for machinery, factory expansion, technology, energy infrastructure, automation, backward integration and export development.
According to the CPPE, such investments cannot be financed sustainably with short-term commercial bank loans at prevailing interest rates because of their capital-intensive nature and long gestation periods.
The policy brief also argued that the CBN’s tight monetary policy 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 commercial lending rates are too high for many productive investments.
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While acknowledging that the CBN’s monetary tightening has helped strengthen policy credibility, support exchange rate stability and moderate inflationary pressures, the CPPE said price stability should not come at the expense of investment and economic growth.
“The challenge, therefore, is to achieve an appropriate balance between price stability and the financing needs of the productive sectors of the economy,” Yusuf said.
He warned that treating monetary stability and development finance as opposing objectives would worsen the financing challenges confronting productive sectors.
“Price stability and development finance should not be treated as mutually exclusive objectives. In an economy characterised by deep financing gaps, market failures and severe supply-side constraints, monetary stability must be complemented by carefully targeted, transparently governed and non-inflationary development finance interventions to support manufacturing, agriculture, agribusiness and other strategic productive sectors,” he said.
The CPPE argued that conventional commercial banks alone cannot finance Nigeria’s industrialisation because they largely depend on short-term deposits, while manufacturers and agribusinesses require funding that runs for five to 10 years or longer.
It also identified information asymmetry, stringent collateral requirements and the crowding-out effect of government borrowing as major barriers to lending to productive sectors.
According to Yusuf, manufacturing and agribusiness generate wider economic benefits, including employment, tax revenue, technology transfer, food security, export earnings, import substitution and foreign exchange conservation, making them deserving of targeted development finance.
Although the CPPE acknowledged governance concerns and weak loan recovery associated with previous CBN intervention programmes, it argued that these shortcomings justify reforms rather than a complete withdrawal from development finance.
“Implementation failures should not be confused with the absence of genuine market failures in Nigeria’s financial system,” Yusuf said.
The organisation called on the Federal Government and the CBN to redesign rather than abandon development finance by strengthening institutions such as the Bank of Industry and the Bank of Agriculture, expanding credit guarantee schemes and risk-sharing mechanisms, establishing long-term refinancing windows for manufacturers and agricultural value chains, promoting cash-flow and movable collateral lending, improving credit information systems, mobilising pension and insurance funds for productive investments and reducing the crowding-out effect of government borrowing.
The CPPE said the CBN should focus on acting as a catalyst, refinancing institution and risk-sharing partner, while development finance institutions and commercial banks take responsibility for credit appraisal, lending and loan recovery.
The organisation also argued that properly designed development finance would support rather than undermine the CBN’s inflation objective because a significant share of Nigeria’s inflation is structural and driven by supply-side constraints.
“Financing that expands agricultural production, manufacturing capacity, energy efficiency, storage and logistics strengthens aggregate supply and can moderate structural inflation over time,” Yusuf said.
The CPPE concluded that Nigeria’s financing deficit is too large to be addressed by conventional commercial banking alone and called for a transparent, rules-based and commercially disciplined development finance framework that attracts private capital while preserving monetary policy credibility.
“Closing the financing gap is critical to Nigeria’s industrialisation, agricultural transformation, food security, export diversification, employment creation and long-term economic competitiveness,” Yusuf said.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X