The Centre for the Promotion of Private Enterprise (CPPE) has called on the Nigerian government to undertake major reforms in the country’s development finance system, warning that a financing deficit of more than N50 trillion is restricting growth in key sectors of the economy.
The organisation said the funding gap was affecting manufacturing, agriculture, agribusiness, micro, small and medium enterprises (MSMEs), as well as export-driven businesses.
CPPE Chief Executive Officer, Dr Muda Yusuf, made the appeal in a policy document released on Sunday in Lagos.
Yusuf said businesses in Nigeria’s productive sectors were struggling with persistent financing challenges caused by expensive interest rates, limited loan periods and strict collateral demands.
He explained that inadequate access to long-term funding had made it difficult for companies to expand, invest in modern technology and increase productivity.
According to him, the challenge goes beyond a lack of available funds, describing it as a major market failure within the financial system.
The CPPE boss estimated that Nigeria’s real sector requires more than N50 trillion in additional financing to meet the needs of critical industries.
He noted that despite agriculture contributing over 20 per cent to the nation’s Gross Domestic Product (GDP), the sector has historically received less than five per cent of total bank lending.
Yusuf said manufacturers needed affordable long-term capital to purchase equipment, expand production facilities, adopt new technologies, improve energy infrastructure, automate operations and boost exports.
He argued that such investments could not depend solely on costly short-term loans from commercial banks.
The CPPE chief executive also blamed current monetary conditions for worsening the financing difficulties faced by businesses, noting that high policy rates and reserve requirements had increased borrowing costs.
He, however, recognised the efforts of the Central Bank of Nigeria (CBN) to strengthen monetary stability, manage inflation and improve exchange rate conditions.
Yusuf stressed that monetary policy goals should work alongside measures that encourage investment, job creation and sustainable economic growth.
“Price stability and development finance should not be viewed as competing objectives,” he said, adding that properly managed interventions could support economic expansion without triggering inflation.
He maintained that commercial banks alone lacked the capacity to fund Nigeria’s industrial development because their lending capacity is largely tied to short-term deposits.
The CPPE CEO identified poor credit information, strict collateral conditions and government borrowing pressures as some of the major barriers limiting private sector access to finance.
He said industries such as manufacturing and agriculture provide broader economic benefits through employment generation, improved food security, foreign exchange earnings and technological advancement.
Yusuf argued that these contributions justify targeted development finance programmes designed to address gaps in the market.
While acknowledging past weaknesses in government intervention schemes, he said the solution was to improve their management rather than abandon them.
He called for a modern development finance structure that is transparent, guided by clear rules and protected from political influence.
Among his recommendations, Yusuf urged the recapitalisation of the Bank of Industry (BOI) and the Bank of Agriculture (BOA) to improve access to long-term financing.
He also advocated the expansion of credit guarantee programmes, longer refinancing arrangements, supply-chain financing and lending models based on business cash flow rather than only collateral.
The CPPE boss further called for stronger credit information systems and greater use of pension and insurance funds to finance productive investments.
He advised the government to reduce domestic borrowing in order to create more lending space for private enterprises.
Yusuf emphasised that effective governance, transparency and accountability were necessary for development finance programmes to achieve their objectives.
He said a well-structured financing framework would increase production, improve food availability and help reduce inflationary pressures in the long run.
He urged policymakers to adopt a balanced strategy that combines monetary stability with affordable financing for businesses.
According to him, closing Nigeria’s development finance gap is crucial for industrial growth, agricultural transformation, employment creation, export expansion and improved economic competitiveness.
CPPE Urges Overhaul of Development Finance System to Close N50tr Funding Shortfall
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