Nigeria’s organised private sector has intensified calls for urgent reforms in the country’s development finance architecture, warning that the failure to strengthen key institutions is constraining economic growth and limiting access to credit for businesses.
The Director-General of the Nigerian Employers’ Consultative Association, Adewale-Smatt Oyerinde, said the BoI recapitalisation drive must be prioritised alongside broader financial sector reforms to unlock funding for manufacturers, agriculture, and small businesses.
Speaking on the state of the economy, Oyerinde described the current financial system as suffering from a “liquidity paradox,” where funds are abundant within the banking system but fail to reach the productive sectors that need them most.
BoI recapitalisation key to fixing credit gap
According to him, the need for BoI recapitalisation has become more urgent as development finance institutions (DFIs) struggle to meet their mandates.
He noted that while institutions such as the Bank of Industry were established to provide long-term financing, their impact has been weakened by limited capital and inefficiencies in loan disbursement.
He raised concerns that some DFIs approve loans without actual disbursement, undermining their role in stimulating industrial growth. This, he said, has left manufacturers and SMEs increasingly dependent on commercial banks that prefer investing in government securities rather than lending to the real economy.
Oyerinde argued that enforcing lending quotas for banks—requiring a portion of their portfolios to be directed to productive sectors—would complement BoI recapitalisation efforts and ensure that liquidity flows into job-creating industries.
Government borrowing crowding out private investment
The NECA boss also warned that rising government borrowing is intensifying pressure on the financial system. With plans to raise trillions of naira in fresh debt, he said the public sector is competing directly with private businesses for available funds.
This trend, he explained, has contributed to declining credit access for enterprises, particularly in manufacturing, where firms require affordable financing to sustain operations.
Despite improvements in macroeconomic indicators such as foreign reserves and inflation, businesses continue to face prohibitively high borrowing costs.
He stressed that without deliberate policy action, including BoI recapitalisation, the disconnect between financial markets and the real economy would persist.
Manufacturing sector under strain
The manufacturing sector remains one of the hardest hit by the current economic environment.
Data indicates a contraction in private sector activity, with many firms grappling with weak consumer demand and rising input costs.
Small and medium-sized enterprises, in particular, are facing severe challenges, with some resorting to high-cost borrowing from microfinance institutions at unsustainable rates. Analysts warn that this trend could lead to business closures and job losses if not addressed.
Oyerinde maintained that improving access to single-digit interest loans through DFIs is critical to stabilising the sector, making BoI recapitalisation a central pillar of any recovery strategy.
Tax reforms and regulatory bottlenecks
Beyond financing, the NECA DG highlighted the burden of multiple taxation and regulatory inefficiencies as major obstacles to business growth.
While acknowledging recent tax reforms aimed at streamlining the system, he stressed the importance of effective implementation.
He noted that excessive taxation often pushes businesses into the informal sector, reducing government revenue in the long run. To address this, he advocated a compliance-friendly regulatory model that simplifies processes for small businesses while improving transparency.
In addition, he called for the adoption of a unified regulatory platform to reduce bureaucratic delays and improve the ease of doing business in Nigeria.
Labour market reforms and job creation
On employment, Oyerinde pointed to a structural imbalance in Nigeria’s labour market, where fast-growing sectors contribute significantly to GDP but employ only a small fraction of the workforce.
He emphasised the need for targeted investment in labour-intensive industries such as manufacturing, agriculture, and construction to address unemployment. States, he added, must play a more active role in developing local value chains and creating enabling environments for businesses.
He also highlighted the importance of bridging the skills gap through collaboration between employers and educational institutions, noting that many graduates lack the competencies required by industry.
Infrastructure and policy consistency critical
Infrastructure deficits, particularly in power and transportation, remain a major constraint for businesses. Oyerinde called for prioritising ongoing projects and supporting decentralised energy solutions such as mini-grids to improve electricity supply.
He further stressed that policy consistency is essential for attracting long-term investment. Frequent policy reversals, he warned, create uncertainty and discourage both local and foreign investors.
Outlook for Nigeria’s business environment
While acknowledging recent macroeconomic improvements, Oyerinde cautioned that these gains must translate into tangible benefits for businesses and households.
He reiterated that without structural reforms, including BoI recapitalisation, Nigeria risks missing opportunities for inclusive growth.
He concluded that strengthening development finance institutions, improving access to credit, and addressing structural bottlenecks are critical steps toward building a resilient and competitive economy.
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