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CPPE urges CBN to rethink development finance, says real sector faces N50tn funding gap
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.
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.
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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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A new report by Enhancing Financial Inclusion and Advancement (EFInA) has found that Nigeria’s financial exclusion rate has fallen to 21 per cent. However, the remaining gap is increasingly concentrated among people with fewer economic resources.
The finding is contained in the 2026 Access to Financial Services in Nigeria (A2F) Survey launched by EFInA in Abuja on Wednesday.
According to the report, 53 per cent of adults in the poorest wealth quintile remained financially excluded, compared with just 1 per cent in the richest quintile.
It said almost half of financially excluded Nigerians were in the poorest 20 per cent of the population, highlighting the growing link between poverty and exclusion from formal financial services.
EFInA said the findings showed that although more Nigerians were entering and using the formal financial system, greater participation was not translating into improved financial outcomes at the same pace.
The 2026 survey examined financial inclusion beyond access, focusing on financial health, resilience, consumer experience, economic activity and Nigerians’ ability to manage financial shocks.
The A2F Survey has been conducted biennially since 2008 and is one of Nigeria’s major sources of demand-side data on financial inclusion. It tracks how Nigerians use formal and informal financial services to meet daily needs, plan for emergencies, protect their futures and cope with financial pressures.
According to EFInA, the 2026 edition follows previous rounds conducted in 2008, 2010, 2012, 2014, 2016, 2018, 2020 and 2023, providing more than 17 years of longitudinal data.
The organisation said the survey captures financial and non-financial data that have served as a source of information for financial service providers, development organisations, policymakers, and regulators, including the Central Bank of Nigeria (CBN), the National Insurance Commission (NAICOM), and the National Pension Commission.
Methodology
During her presentation of the report findings on Wednesday, Foyinsolami Akinjayeju, Chief Executive Officer of EFInA, said that for the 2026 survey, they had the support of the National Bureau of Statistics in designing it.
She explained that, for the most part, the sampling of respondents was based on equal representation across states.
“Most states have the same sample size, for the most part. In some cases, we adjusted it slightly to account for design effects. This allows for headline indicators to be available at the state, regional and national levels,” she said
Mrs Akinjayeju said they surveyed adults aged 18 years and above and achieved a 98 per cent response rate.
“Our target was 18,950 respondents, and we were able to interview 18,679. So, that’s about a 98 per cent response rate,” she noted, explaining that the results show what is currently obtainable because the listing and data collection were done between April and June, with supervision from the National Bureau of Statistics.
She said the questionnaire was in English but had been translated into the major languages in Nigeria and into Pidgin English.
Digital finance expands
The survey found a significant increase in the use of digital financial services, with digital finance usage rising from about 47 per cent in 2023 to 64 per cent in 2026.
Mobile money use also more than tripled, rising from 12 per cent in 2023 to 38 per cent in 2026.
EFInA said Nigerians were increasingly using mobile money for everyday transactions, including bill payments, purchases and receiving money, in addition to transfers.
However, cash and financial agents remained important, while access to smartphones, connectivity and digital skills continued to vary across population groups.
For instance, 92 per cent of agricultural workers reported that they still received their payments in cash.
EFInA said the findings suggested that a completely digital-only approach to financial inclusion would be premature.
Savings rise, but credit and insurance lag
The survey also showed that formal savings increased from 38 per cent in 2023 to 53 per cent in 2026.
However, formal credit remained at 10 per cent, while insurance penetration stood at five per cent and pension participation at about nine per cent.
EFInA said the figures pointed to a financial system that was helping Nigerians move and store money more effectively than it was helping them finance livelihoods or transfer risks.
“This matters because financial inclusion is increasingly about what people can achieve with financial services, not simply whether they have access to them,” EFInA said.
The survey also highlighted persistent weaknesses in financial resilience. According to the findings, 61 per cent of Nigerian adults remained in severe liquidity distress, while debt stress increased.
Among adults who experienced financial shocks, 71.6 per cent relied on fragile or erosive coping mechanisms, compared with only 13.8 per cent who used protective or adaptive coping mechanisms.
EFInA said fragile coping mechanisms could include responses that help households survive immediate emergencies but weaken their ability to withstand future shocks.
The findings, therefore, raise questions about whether financial services are helping Nigerians recover from shocks without leaving them more vulnerable.
Farmers face financial vulnerability
The survey found that 51.2 per cent of farmers experienced a financial or economic shock.
Among farmers who experienced shocks, 52.2 per cent relied on erosive coping mechanisms, while 76 per cent experienced residual distress.
EFInA said the findings connected agricultural finance more directly with savings, credit, insurance, climate adaptation and the protection of livelihoods.
The survey also examined financial inclusion among women, business owners and young Nigerians.
Formal financial inclusion among women business owners increased from 67.5 per cent to 76.3 per cent, while inclusion among women farmers rose from 42.7 per cent to 53.6 per cent.
However, exclusion among dependent women increased to 52.2 per cent.
EFInA said the findings demonstrated why women should not be treated as a single homogeneous group when designing financial inclusion policies and products.
Consumer experience remains a concern
The survey also examined the quality of consumers’ experiences with financial service providers, including communication, customer support, service timeliness and fraud education.
According to EFInA, the findings showed that greater financial participation did not automatically guarantee an equitable customer experience.
EFInA’s boss said demand-side evidence was critical to understanding how Nigerians interact with the financial system.
“Demand-side evidence at this scale is national economic infrastructure. Nine rounds have given Nigeria a continuous record of how households behave through reform, shock and recovery,” Ms Akinjayeju said.
She said the latest survey went further by examining what financial inclusion was delivering in economic terms.
“I expect regulators, providers and partners to hold their own targets against what it shows,” she said.
EFInA said the A2F 2026 Survey was intended to shift the financial inclusion conversation from simply measuring access to examining what access enables Nigerians to achieve.
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