In a revealing interview, Adewale-Smatt Oyerinde, Director-General of the Nigeria Employers’ Consultative Association (NECA), has raised a red flag over a “disturbing disconnect” in the Nigerian financial system. Despite a surge in national foreign reserves and cooling inflation, the “real economy”—comprising manufacturers and SMEs—is currently gasping for air due to a lack of affordable credit.
The “Liquidity Paradox” Explained Oyerinde highlighted a startling trend where commercial banks are “awash with cash” but refuse to lend to productive sectors.
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Over-Subscription: In a recent Treasury Bill auction, investors bid ₦4.4 trillion for securities worth only ₦800 billion—a 400% over-subscription.
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Government Over Private: Banks currently earn roughly 40% of their interest income from government securities (Treasury Bills and Bonds).
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The “Crowding Out” Effect: With the federal government planning to borrow ₦24 trillion in 2026 to fund its deficit, private businesses are being pushed out of the credit market, as banks prefer the “zero-risk” returns of sovereign debt.
Manufacturing in the Danger Zone While the Central Bank of Nigeria (CBN) recently cut the Monetary Policy Rate (MPR) to 26.5% in February 2026, the benefits aren’t reaching the factory floor:
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PMI Slump: The Manufacturing Purchasing Managers’ Index (PMI) dropped from 112 to 105.8 in January 2026.
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Borrowing Costs: SMEs are facing “devastating” monthly interest rates of up to 5% (80% annually) from microfinance lenders because commercial banks have shut their doors.
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Unsold Inventory: Weak consumer purchasing power, fueled by high energy costs (petrol above ₦1,300/litre), has led to piles of unsold goods in warehouses.
NECA’s Proposed “War Plan” for Recovery To prevent a total industrial shutdown, Oyerinde is calling for radical structural shifts:
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Mandatory Lending Quota: A requirement for banks to allocate at least 20% of their loan portfolios to manufacturing, agriculture, and SMEs.
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BoI Recapitalization: The Bank of Industry (BoI) must be funded and held to strict “disbursement metrics” to stop the trend of approving loans that never reach the borrower.
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Productivity-Linked Wages: Moving away from static minimum wage debates toward systems where wage increases are tied to technology and efficiency gains.
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Tax Harmonization: Implementing the January 1, 2026, tax reforms with a “compliance-as-a-service” model for small firms to prevent them from fleeing into the informal economy.
The Labor Market Paradox Oyerinde noted that Nigeria’s fastest-growing sectors employ only 1.5% of the workforce. To meet the target of creating 27 million jobs by 2030, he urged State Governors to stop “commissioning projects” and start building “production ecosystems” based on each state’s comparative advantage.
Without a deliberate policy to “channel liquidity to the real economy,” Oyerinde warns that Nigeria’s macroeconomic gains—including its $50.45 billion foreign reserves—will remain a “paper victory” that fails to reach the average household or business.
