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.

On Tuesday, AI infrastructure company Runware announced the launch of its own modular data center called Sonic Inference Pod. Designed as a single transportable unit, the Pod represents a more flexible kind of compute that can sit alongside hyperscalers’ massive data center projects.

Runware says the Pod can offer inference at a higher quality but lower cost than other serverless inference platforms and GPU clouds. The modular design means it’s easy add capacity quickly by creating new pods rather than having to expand a fixed data center. In some ways, this is the future, Flaviu Radulescu, co-founder and CEO of Runware, told TechCrunch. 

“We believe distributed compute, positioned closer to end users for faster inference, is what will win in the long term,” he said, noting his company as an example. Aside from a lower price, Radulescu noted that the runware system can scale and add capacity fast, deploy anywhere there is power, and adapt quickly to new hardware releases. The Runware pods also do not use water, but rather a closed-loop cooling system that can be built in days, compared to the months or even years it takes to build traditional data centers.

“Demand for inference is growing faster than facilities can be built,” Radulescu said. “What we want is to power the world’s intelligence, to be the backbone every AI model runs on with capacity that keeps up with demand instead of throttling it.” 

Runware currently has 10 pods in deployment across the U.S., Europe, and Asia-Pacific, Radulescu said. The company already provides inference to a few companies, including Higgsfield AI and Wix, and has 160 sites available to power its pods right now. Runware announced a $50 million Series A in December to provide the infrastructure needed for companies to generate images. They see the expansion into pods as part of the company’s core mission: providing inference to companies, rather than a single product.

AI labs like OpenAI and SpaceX are still racing to build data centers throughout the U.S. OpenAI, for example, is close to striking a $500 billion deal that would see it build a data center in Ohio, according to reports. But Radulescu doesn’t see those projects as a threat to the Sonic Inference Pods, describing the flexibility of the pods as a key differentiator.

“Every pod runs as part of a single network, so requests go wherever there’s capacity, closer to the users, and if one pod goes offline, traffic moves to another,” he said, adding that a system failure means one pod is down rather than a whole fixed facility. “Customers who want dedicated hardware get whole pods to themselves.” 

He’s also not too worried about other companies building this for themselves, saying simply that hardware is slow and finding the talent pool to build and fix this technology is small. 

“A mistake in a circuit board design costs months between redesign, simulation, fabrication, testing and delivery,” he said. “Every one of those calls needs someone who understands exactly what each component does and what breaks if it’s gone.” 

Building AI data centers is a controversial topic, however, especially because of how many resources it uses. Already, communities where data centers are located have reported seeing a rise in utility costs. One day, Runware sees a world where it can run on renewable power and doesn’t draw on the resources communities need, but that day is not necessarily today. 

Radulescu said that AI power use is going to increase regardless, “driven by demand for inference, not by who supplies it.” What Runware is focused on right now is how that demand gets met, he said. “No transmission losses, no water in cooling, and we’re using power that already exists instead of asking for new grid capacity to be built. More inference built this way means less new grid, less water, for the same amount of compute.”