Centre for the Promotion of Private Enterprise (CPPE) has said that Nigeria’s real sector has a financing gap of over N50 trillion and called for a reform of the country’s development-finance architecture.

CPPE in a policy brief signed by its Chief Executive Officer, Dr Muda Yusuf, and made available to the media yesterday, said the reform would address the severe financing constraints facing manufacturing, agriculture, agribusiness, MSMEs and export-oriented enterprises.

Over the years, Nigeria’s real sector has faced a structural financing deficit characterised by prohibitive interest rates, short loan tenors, stringent collateral requirements, limited risk appetite, and inadequate patient capital, resulting in suboptimal performance.

The centre said the problems were not merely liquidity problems but reflected deep-seated market failures in the financial system, including maturity mismatches, information asymmetry, sovereign crowding out, and the inability of private lenders to capture the wider economic benefits of real-sector investments.

According to CPPE, the financing mismatch is particularly evident in agriculture.

It said: “The sector contributes more than one-fifth of GDP, yet historically receives less than five per cent of banking-sector credit”, adding that manufacturing similarly requires substantial medium- and long-term funding for machinery, factory expansion, technology, energy infrastructure, automation, backward integration and export development.”

It said with the Monetary Policy Rate at 26.5 per cent, and the Cash Reserve Requirement for deposit money banks at 45 per cent, commercial lending rates were generally incompatible with the expected returns on many productive investments.

The centre also warned that excessive fixation on conventional monetary orthodoxy risked underestimating the structural financing constraints confronting Nigeria’s productive sectors. It noted that price stability and development finance should not be treated as mutually exclusive objectives, insisting that 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.

It said: “Nigeria faces an important policy challenge: monetary conditions may need to remain sufficiently restrictive to contain inflation, while the productive economy simultaneously requires affordable, long-tenor capital to expand investment, output and employment.

“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.”