By Dada Olusegun
President Bola Tinubu as part of his national industrial plan in his Renewed Hope manifesto promised to prioritise growing Nigeria’s industrial base to provide jobs to Nigeria’s expanding population. Just over 19 months in office, the President has been walking the talk thanks to the various strategic efforts currently being put in place by the administration towards increasing Nigeria’s industrial capacity at both the micro and macro levels.
The Tinubu administration has so far begun the implementation of certain initiatives that are geared towards expanding the production capacity of existing manufacturing firms and also providing a friendly environment and stimulus for new ones to set up shop in Nigeria. I will outline some of these steps and policy moves below:
- Bank Recapitalization: The CBN in March last year began a recapitalization programme in the banking sector where Nigerian banks are required to increase their minimum paid-in capital to a particular threshold depending on the type of banking licenses they hold. For commercial banks with international licenses, the minimum capital requirement is N500 billion.
This exercise, which is expected to be concluded in 2026 is geared towards creating a more robust financial framework that will contribute massively to the growth and development of the real sector by providing liquidity and credit needed for the desired development, especially in the industrial sector, which is a major driver of economic growth and job creation. The aim is that after recapitalization, many of the banks will increase the ability to take bigger risks and provide credit to new and existing manufacturers, including those operating at a small or medium scale level.
- Nigeria Credit Guarantee Company: Closely aligned with the bank recapitalization efforts of the Tinubu administration is the anticipated creation of the Nigeria Credit Guarantee Bank announced by the President in his New Year message. The company which is expected to begin operations before the end of the second quarter of 2025 aims to derisk the financial market and provide the needed buffer for lenders to perform the intended duty from the recapitalization process without any fear of loan default or loss of capital.
The Nigeria Credit Guarantee Company is designed to be in partnership with government institutions that play a role in the industrialisation drive, such as the Bank of Industry, the Nigerian Consumer Credit Corporation (CREDICORP), the Nigerian Sovereign Investment Agency (NSIA) and the Ministry of Finance Incorporated (MOFI) as well as the private sector and multilateral institutions. This initiative will remove one of the biggest barriers that makes banks reluctant to extend credit to the manufacturing sector.
- Multi-billion Naira Low Interest Credit for Manufacturers: President Bola Tinubu as part of efforts to provide immediate support to large enterprises including manufacturers to sustain and expand their operations announced a N75 billion Manufacturing Intervention Fund. The aim is to offer large manufacturing enterprises up to N1 billion credit at a 9% interest rate instead of the going rate in the lending market which is around 30%. The repayment period is spread over 10 years. According to the Bank of Industry, around 140 manufacturers have applied for the low-interest credit facility.
One of the significant aspects of the Intervention Fund is its revolving nature where repayments from previous beneficiaries are used to provide loans to new businesses, ensuring a continuous flow of funds and most importantly availability of cheaper financing to manufacturing companies. This is a huge incentive for industrialisation in Nigeria.
