The recent decision by the Central Bank of Nigeria to reduce the benchmark interest rate by 50 basis points signals gradual relief for manufacturers, according to the Managing Director and Chief Executive Officer of Coleman Technical Industries Limited, George Onafowokan.
In a statement, Onafowokan noted that the decision marks a shift from aggressive monetary tightening towards policies that stimulate economic growth.
He said the market had widely anticipated the move as inflationary pressures began to ease.
“From my own viewpoint, the market expected it because inflation is coming down and the economy is stabilising. Now we need to start stimulating growth in the economy, which means stimulating spending and borrowing,” Onafowokan said.
He explained that for manufacturers, the rate cut represents an important signal that borrowing conditions may gradually improve after a prolonged period of high interest rates.
“From the manufacturer’s point of view, the 50 basis point cut is a good sign that we are moving out of the woods of high interest rates and slowly transitioning into a lower interest rate environment,” Onafowokan remarked.
The Coleman CEO added that although the reduction is modest, the shift in policy direction is more significant than the size of the cut.
“It is not the size that matters most; it is the signal that the CBN has begun reversing the earlier push to raise rates in order to stabilise the macroeconomic environment,” Onafowokan said.
He noted that early signs of the policy adjustment are already emerging, with commercial banks beginning to slightly adjust their lending rates.
Meanwhile, Onafowokan, who is also the Chairman of the Manufacturers Association of Nigeria, Ogun State Branch, cautioned that major reductions in borrowing costs are unlikely in the near term because of prevailing domestic and global economic uncertainties.
“I do not foresee a massive reduction. Between now and the end of the year, a gradual cut of about two to three per cent from the current position would probably be the highest possible reduction,” he said, adding that single-digit interest rates may not be achievable until between 2027 and 2028.
The industrialist also warned that global geopolitical tensions could influence inflation and monetary policy decisions.
“The price of crude oil and petrol has already increased due to the conflict, and inflation may rise again. If that happens, the CBN may need to respond either through interest rates or other policy tools,” Onafowokan said.
He further advised manufacturers to adopt stronger risk management strategies, as rising fuel prices could significantly increase production costs.
“For businesses relying on diesel, operating costs may rise sharply. Diesel prices have already climbed significantly compared to previous levels,” Onafowokan said.
Despite the challenges, Onafowokan expressed optimism about Nigeria’s economic outlook, noting that reforms implemented since 2023 have contributed to improving macroeconomic stability.
“The stability of the naira and reforms undertaken since 2023 have begun to restore investor confidence and stimulate expansion within existing businesses,” Onafowokan said.
He noted that the manufacturing sector is already witnessing increased activity, particularly in construction and infrastructure development, which drives demand for electrical cables.
“The cable industry is a good indicator of infrastructure development. When construction and industrial expansion increase, we see it immediately through demand for cables,” Onafowokan stated.
He disclosed that the company recorded a noticeable rise in demand in the first quarter of 2026, driven by factory expansions and construction projects nationwide.
Looking ahead, Onafowokan projected stronger economic growth if current trends continue, noting, “I believe achieving 4.5 per cent GDP growth this year is realistic, but if Nigeria aims to reach a $1tn economy, growth rates will need to move closer to eight or nine per cent.”
He added that achieving such growth would require increased foreign direct investment, stronger domestic investment, and sustained infrastructure spending.
“Manufacturers are beginning to see expansion opportunities again because there is growing confidence that the economy is stabilising and that investments will yield returns,” Onafowokan concluded.
