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CPPE urges CBN to rethink development finance, says real sector faces N50tn funding gap

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The Centre for the Promotion of Private Enterprise (CPPE) has urged the federal government and the Central Bank of Nigeria (CBN) to overhaul the country’s development finance framework, warning that Nigeria’s productive sectors face a financing shortfall of more than N50 trillion.

In a policy brief released on Sunday and signed by CPPE’s CEO, Muda Yusuf, the advocacy group argued that the country’s current financial system cannot provide the affordable, long-term funding needed by manufacturers, farmers, agribusinesses, exporters, and micro, small, and medium-sized enterprises (MSMEs).

CBN had earlier curtailed its development finance interventions to concentrate on its primary mandate of ensuring price and monetary stability.

The organisation, CPPE, said the financing constraints stem from structural market failures rather than a shortage of liquidity, citing high lending rates, short loan tenors, stringent collateral requirements, limited risk appetite among lenders and inadequate patient capital.

“CPPE estimates a conservative current real-sector financing gap of over N50 trillion when account is taken of unmet financing needs across manufacturing, agriculture, agribusiness, MSMEs, supply chains and export-oriented enterprises,” CPPE stated.

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According to the group, agriculture contributes more than one-fifth of Nigeria’s Gross Domestic Product (GDP) but has historically received less than five per cent of total banking sector credit, while manufacturers require medium- and long-term financing to invest in machinery, technology, factory expansion, energy infrastructure and export development.

It argued that such investments cannot be financed sustainably through short-term commercial bank loans offered at prevailing interest rates.

Financing constraints

CPPE said the current monetary policy stance has further widened the financing gap, noting that the CBN’s benchmark Monetary Policy Rate (MPR) of 26.5 per cent and the Cash Reserve Requirement (CRR) of 45 per cent for deposit money banks have pushed commercial lending rates beyond levels that many productive investments can support.

While acknowledging that the CBN’s monetary tightening has improved policy credibility, exchange-rate stability and inflation management, the organisation said monetary stability should ultimately support economic growth rather than constrain productive investment.

“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,” CPPE said.

It added that Nigeria faces the difficult task of maintaining restrictive monetary conditions to contain inflation while ensuring businesses have access to affordable, long-term capital needed to expand production and create jobs.

“The answer is not indiscriminate monetary expansion. It is a carefully designed development-finance framework targeted at identifiable market failures and structured to preserve monetary-policy credibility,” CPPE said.

Drive industrialisation

The organisation argued that expecting conventional commercial banks to finance Nigeria’s industrialisation and agricultural transformation is unrealistic because banks largely mobilise short-term deposits, whereas productive sectors require financing extending over five to ten years or longer.

It also identified information asymmetry, heavy dependence on landed property as collateral, and sovereign borrowing as key factors discouraging lending to productive businesses.

“Commercial credit decisions, driven primarily by risk-adjusted private returns, tend to underfund productive sectors relative to their broader economic and social value.

This represents a classic market failure and provides a compelling economic justification for well-targeted development finance interventions,” it stated.

Reform

Although CPPE acknowledged governance shortcomings associated with previous CBN intervention programmes, including weak loan recovery, political interference, beneficiary selection challenges, and quasi-fiscal risks, it said those weaknesses justify reforms rather than abandoning development finance altogether.

“These shortcomings provide a compelling case for reform, not retreat. Implementation failures should not be confused with the absence of genuine market failures in Nigeria’s financial system,” the organisation said.

It proposed replacing direct intervention lending with a modern framework that is market-driven, transparent and anchored on risk-sharing.

Under the proposed model, the CBN would serve mainly as a catalyst, refinancer and risk-sharing institution, while development finance institutions and commercial lenders would retain responsibility for loan appraisal, disbursement and recovery.

READ ALSO: US 12.5% tariff unlikely to hurt Nigeria – CPPE

Recommendations

CPPE called on the government and the apex bank to strengthen the country’s development finance architecture by reconsidering the retreat from development finance and refraining from returning to discretionary intervention lending.

It also advised the apex bank to recapitalise and strengthen the Bank of Industry and the Bank of Agriculture to serve as the main channels for long-term financing.

CPPE urged the regulator to expand partial credit guarantees and risk-sharing schemes for manufacturing, agriculture, exports and MSMEs, while also creating specialised long-term refinancing windows for manufacturing and agricultural value chains.

It also asked the government to expand supply-chain financing, warehouse receipt systems, receivables financing, and movable collateral frameworks, and to improve credit information systems and technology-driven risk assessment.

The advocacy group urged the government to mobilise pension, insurance and capital market funds for productive, long-term investments and to reduce government borrowing that crowds out private-sector credit.

It added that the government should strengthen governance, transparency, loan recovery and independent performance evaluation.

Inflation control

CPPE also argued that properly designed development finance is compatible with the CBN’s price stability objective because much of Nigeria’s inflation is driven by structural supply constraints rather than excess demand.

“The critical distinction is between financing consumption, which principally expands demand, and financing productive capacity, which expands supply,” it stated.

The organisation said financing investments in agriculture, manufacturing, energy, storage and logistics would increase productive capacity and help moderate inflation over time.


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Police Arrest 24-Year-Old Suspected of Conveying Illegal Firearms in Lagos

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As part of its sustained efforts to combat illegal possession and trafficking of firearms, and other criminal activities across the State, operatives of the Command have arrested one Lukman Sanni, ‘m’, 24 years, suspected of conveying illegal firearms, during a stop-and-search operation at Iyana Isashi, Lagos State.

A search conducted on him led to the recovery of a locally made pistol, two (2) live cartridges and a suspected charm. Preliminary investigations are ongoing to establish the circumstances surrounding the possession and intended delivery of the recovered firearm and ammunition. The suspect is currently in custody and is providing useful information to aid the investigation.

The Commissioner of Police, Lagos State Command, CP Tijani Fatai, psc, mnips, reiterated the Command’s commitment to combating illegal firearms possession, arms trafficking, cultism and other criminal activities across the State. He urged residents to remain vigilant and promptly report suspicious activities to the Police, noting that credible information from the public remains vital to maintaining peace and security.

The post Police Arrest 24-Year-Old Suspected of Conveying Illegal Firearms in Lagos appeared first on Business Today NG.

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Oyedele seeks lasting rules to safeguard Nigeria’s economic reforms

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The federal government is considering legislation to prevent successive administrations from reversing key economic reforms, as it seeks to establish a national policy framework to guide decisions on taxation, subsidies, trade and industrial development.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the proposed framework would establish economic principles to guide successive governments, regardless of changes in political leadership.

He spoke on Monday at the 32nd Nigerian Economic Summit in Abuja, where he presented the draft of Nigeria Economic Policy Framework for public consultation.

“We now need to lock it in, in institutions, in law, as well as policy framework, so that it can be enduring,” he said during a panel session.

The proposal comes as President Bola Tinubu’s administration continues to defend its economic reforms, including the removal of petrol subsidies and changes to the foreign exchange system.

The government says the reforms are necessary to address economic distortions and improve long-term stability. However, their effects on household purchasing power and business costs have remained a subject of public debate.

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Mr Oyedele said inconsistent economic policies had discouraged investment and undermined previous reforms, arguing that Nigeria needed a lasting approach to economic decision-making.

“Policy uncertainty is an invisible tax on enterprise. And unlike most taxes, it generates no revenue for government; it only destroys value and discourages investment,” he said.

He said the government was considering whether key provisions of the proposed framework should be backed by law, stressing that the document remained a draft and had not been approved as government policy.

Public consultation

According to Mr Oyedele, the consultation process will run until 27 November, after which the framework is expected to proceed to the Federal Executive Council for approval and the National Economic Council for endorsement.

The draft is built around stability, productivity, enterprise, capital, people, markets and institutions. It proposes common principles to guide economic decisions across government.

One of its key proposals is to require Policy Impact Assessments before major economic interventions. These assessments would set out the problem a proposed measure seeks to address, the evidence supporting it, its likely costs and beneficiaries, and the conditions under which it should end.

The assessments would cover interventions such as tax changes, tariff adjustments, regulatory restrictions and incentives.

The framework also proposes an annual National Economic Scorecard to measure whether economic growth is improving living conditions. Suggested indicators include real wages, productive employment and poverty levels.

The government says these measures would make economic decisions more transparent and allow Nigerians to assess policies by their outcomes rather than announcements alone.

The Ministry of Finance has published the consultation document on its website and invited businesses, professional groups, researchers and other stakeholders to submit recommendations.

No return to fuel subsidy

Mr Oyedele defended the removal of petrol subsidies, saying the artificial suppression of prices had distorted the economy and created costs that became increasingly difficult to manage.

He argued that government policy should focus on raising household incomes rather than keeping prices below levels that could be sustained by the market.

“Let’s not suppress prices. Let’s focus on raising income,” he said.

The minister also questioned Nigeria’s industrial protection policies, citing locally assembled vehicles that he said contained only about five per cent local content despite benefiting from tariffs and levies of up to 60 per cent.

He argued that protection for domestic industries should be temporary and tied to measurable performance, rather than shielding businesses indefinitely from competition. He also called for improvements in electricity supply, logistics and other infrastructure to lower production costs.

Mr Oyedele said the government was targeting inflation in the low single digits before the end of 2027, with the aim of creating conditions for single-digit interest rates. He did not provide a specific timeline for achieving lower borrowing costs.

He also cited student loans, pension payments, wage adjustments and subsidised credit for small businesses as interventions under the government’s broader economic programme.

He urged wealthy Nigerians to meet their tax obligations, warning that inadequate government revenue could worsen inflation, borrowing costs and pressure on the naira.

Tinubu administration defends reforms

The Minister of Budget and Economic Planning, Abubakar Bagudu, backed the call for policy consistency, saying President Tinubu had directed government officials to sustain the reforms despite concerns about their immediate effects on households.

“There will be no return to subsidy. There will be no return to those distortions,” Mr Bagudu said.

He said the Federal Government had reached agreements with state governments on better coordination of fiscal and monetary policies, infrastructure development, security and domestic production.

Mr Bagudu also said more than $6 billion had been mobilised from the World Bank and other development partners to support household resilience and economic opportunities.

Anambra State Governor, Charles Soludo, cautioned against abandoning macroeconomic stability, saying sustained policy discipline was necessary to achieve meaningful growth.

“The macroeconomic framework, the stability that is back, must never be taken for granted,” he said.

However, Mr Soludo argued that economic growth of about four per cent remained insufficient to deliver rapid poverty reduction and create enough jobs, calling for higher investment and faster expansion.

Calls for stronger productivity

Oxford University Professor of Economic Policy, Stefan Dercon, stressed the importance of controlling inflation and improving electricity supply, logistics and port operations to support economic growth.

He cautioned against indefinite protection for domestic industries.

“You can’t keep on protecting in the same way,” he said.

Chema Triki, co-founder and managing director of Growth Teams, said Nigeria needed to develop new productive capabilities and diversify exports rather than depend excessively on its domestic market.

She pointed to the country’s limited export diversification as a reason for strengthening industrial competitiveness.

READ ALSO: What African countries, others can learn from Nigeria’s economic reforms – Minister

Omoboyede Olusanya, group managing director of Flour Mills of Nigeria, called for lower interest rates, reliable infrastructure and improved agricultural productivity to reduce manufacturing costs.

He said expensive financing discouraged long-term investment, while poor logistics and unstable supplies of agricultural commodities weakened domestic industries.

Lagos State Governor, Babajide Sanwo-Olu, highlighted investments in ports, transport corridors, rail infrastructure and food logistics as measures to improve productivity and reduce the cost of doing business.

The Chairman of the Nigerian Economic Summit Group, Olaniyi Yusuf, urged the government to ensure that economic reforms translated into affordable living costs, productive employment and measurable improvements in household welfare.

The Minister of State for Budget and Economic Planning, Doris Uzoka-Anite, said the National Development Plan 2026–2030 would prioritise industrialisation, infrastructure, investment mobilisation, human capital development and stronger institutions.

She said the plan aimed to accelerate economic growth, create jobs and reduce poverty through better coordination of government policies, budgets and investment programmes.

The proposed Nigeria Economic Policy Framework is expected to undergo further consultation before formal consideration by the relevant government institutions.


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