BoI, other DFIs need recapitalisation — Oyerinde

The Director-General of the Nigerian Employers’ Consultative Association, Adewale-Smatt Oyerinde, discusses the challenges facing the economy, particularly the manufacturing sector, in this interview with ANOZIE EGOLE

Nigeria’s macroeconomic instability has posed significant challenges for businesses. Which key policy reforms does the Nigerian Employers’ Consultative Association consider most critical to rebuilding investor confidence?

The most urgent reforms must address what I term the “liquidity paradox”, where financial institutions are awash with cash, yet the real economy is starved of credit. The recent Treasury Bill auction laid bare this disconnect; investors bid N4.4tn for securities worth only N800bn, a staggering 400 per cent oversubscription, while manufacturers and small and medium-sized enterprises struggle for survival.

Specifically, NECA advocates for a mandatory lending quota that requires commercial banks to allocate a minimum percentage of their loan portfolios (20 per cent minimum) to manufacturing, agriculture, and SMEs. Currently, banks earn approximately 40 per cent of their interest income from government securities rather than productive sector lending.

Development finance institutions like the Bank of Industry must be recapitalised with strict performance metrics. Many currently approve loans they never disburse, a practice that must end. The government’s plan to borrow N24tn in 2026 intensifies competition for funds, crowding out private investment. Fiscal discipline must be prioritised to free up capital for productive use.

The recent improvements are noteworthy. Gross foreign reserves reached $50.45bn in February 2026, the highest level in 13 years, and inflation declined for 11 consecutive months to 15.06 per cent in February 2026. However, these macroeconomic gains must translate into improved access to credit at single-digit interest rates for businesses.

How do recent fiscal and monetary policies affect employers, particularly in the manufacturing sector and among SMEs?

The impact has been decidedly mixed. On the positive side, the 50-basis point reduction in the Monetary Policy Rate to 26.5 per cent in February 2026 signals the Central Bank of Nigeria’s confidence that inflationary pressures are moderating. The stabilisation of the naira and the build-up of external reserves have created a more predictable operating environment than we experienced in 2024 and early 2025. However, the manufacturing sector tells a troubling story. The Purchasing Managers’ Index dropped from 112 to 105.8 points in January 2026, and the broader private sector contracted for the first time in a year. SMEs face devastating borrowing costs, up to five per cent monthly (80 per cent annually) from microfinance lenders because banks refuse to extend credit. Credit to the private sector fell by three per cent last year, even as government borrowing jumped by 26 per cent.

This crowding-out effect is particularly acute for manufacturers who require single-digit interest rates to remain viable. Many are now operating on the brink, with unsold inventories piling up due to weak consumer purchasing power. The recently enacted tax reforms, which NECA supports, must now be complemented by deliberate monetary policy that channels liquidity to the real economy rather than allowing it to circulate within the financial sector.

What is the stance of the Nigerian Employers’ Consultative Association on the prevailing tax burden, and how can the government strike a balance between generating revenue and ensuring business sustainability?

NECA has been unequivocal: the new tax framework, effective 1 January 2026, must be judged by its impact on business survival, growth, and job creation. We support the reforms because they fundamentally address the central issue of multiple and overlapping tax burdens that have long stifled Nigerian businesses.

The proliferation of levies and conflicting regulations across ministries, departments, and agencies continues to undermine productivity. The tax reform must eliminate duplication and harmonise incentives across government institutions. The reforms must be implemented with sensitivity to the fragile state of small businesses. Over-taxation drives enterprises into the informal economy, ultimately reducing the tax base rather than expanding it. As I stated at NECA’s end-of-year media engagement, the Nigerian spirit is not a substitute for good policy. Doggedness alone cannot keep businesses alive in a hostile operating environment. The government can balance revenue generation with business sustainability by adopting a compliance-as-a-service model for smaller firms, similar to what the CBN is now proposing for fintechs. This reduces the regulatory burden while enhancing visibility for tax authorities.

With increasing unemployment and underemployment, what structural reforms are required in Nigeria’s labour market?

Nigeria faces a structural paradox: our fastest-growing sectors employ only 1.5 per cent of the workforce, even as they contribute significantly to the gross domestic product. The Nigeria Economic Summit Group estimates that we must create 27 million jobs by 2030, roughly 4.5 million jobs annually, to meet demographic pressures. States control land, permits, local infrastructure, and skills pipelines, yet many governors spend more time commissioning projects than building production ecosystems. Each state should identify its comparative advantage and develop value chains that employ people at scale. We must deliberately invest in sectors that create jobs at scale, such as manufacturing, construction, modern agriculture, logistics, and services. States should adopt short-term paid digital tasks for young people, digitising records, mapping communities, and collecting data for agriculture, which builds experience while injecting income into communities. The need for urgency is reinforced by the reality that even with strong oil revenues, the transmission to broad-based economic growth requires deliberate policy to ensure benefits reach households and businesses rather than being captured at the fiscal level.

How is the Nigerian Employers’ Consultative Association tackling the growing skills gap between graduates and the demands of industry?

NECA is taking direct action through our Workforce Job and Employability Fair, scheduled for May under the theme “Empowering talents, building skills and driving inclusive growth”. This initiative is designed to equip job seekers with interview-ready skills and prepare them for meaningful engagement with employers. The skills gap is real and consequential. Employers consistently report they cannot find workers with the technical competence required, while graduates report there are no jobs; both can be true simultaneously. Our education system is failing at the foundation level. Children who struggle to read, write, or count early enough will later struggle to compete in the modern labour market.

Beyond the job fair, NECA is partnering with employers to articulate industry-specific competency frameworks that educational institutions can adopt; advocating for outsourcing hubs at the state level where young people can be trained in customer support, software testing, cloud operations, cybersecurity, data labelling, animation, and content production; and supporting the development of corporate bond markets and other long-term financing mechanisms that enable firms to invest in training without sacrificing short-term profitability. The skills gap cannot be closed by the government alone. Employers must actively participate in curriculum development, apprenticeship programmes, and continuous learning initiatives.

What role should employers play in raising wages without fueling inflation or causing job losses?

This is a delicate balancing act, but one that Nigerian employers are prepared to navigate responsibly. The key is to move from minimum wage debates to productivity-linked wage systems. The current reality is sobering. The N70,000 national minimum wage has been substantially eroded by inflation following fuel subsidy removal and naira devaluation. Workers are operating under extreme stress, with little room for savings, asset accumulation, or long-term security.

Employers can improve wages without triggering inflation or job losses by tying wage increases to productivity gains. When workers produce more value, higher wages can be sustained without raising unit costs. Investing in technology and process improvement, automation and efficiency gains, creates room for wage increases without price hikes. Adopting profit-sharing arrangements, linking compensation to business performance, aligns interests and reduces fixed labour cost burdens. Leveraging the African Continental Free Trade Area, larger markets enable economies of scale that can support higher wages. However, wage policy cannot succeed in isolation. As labour leaders have noted, sustainable wage improvements require the government to tackle rising poverty through intentional social safety nets, mass housing schemes, and affordable transportation. The 90 compressed natural gas buses provided for labour, while welcome, are a drop in the ocean.

Industrial disputes continue to be a persistent challenge. What reforms are needed to strengthen relations between employers and unions?

Industrial harmony requires moving beyond confrontation to institutionalised social dialogue. The recent pledge by the Minister of Labour and Employment, Muhammad Dingyadi, to support NECA’s drive to strengthen industrial courts and arbitration panels is a welcome development.

Strengthening alternative dispute resolution, as I stated at the fourth NECA International Labour Adjudication and Arbitration Forum in February, access to labour justice must serve all stakeholders, employers, workers, and government, not just worker-centric approaches.

Some labour disputes are taken to regular courts despite the existence of specialised industrial courts. This must stop. Stakeholders must embrace proper adjudication channels that were specifically designed for labour matters.

The pre-election environment makes labour-government relations critical. 2026 could either foster a cooperative tripartite climate or degenerate into confrontation, depending on whether the government genuinely engages rather than dictates. The NECA-led initiative to strengthen industrial courts and arbitration panels will evolve into workshops and knowledge-sharing sessions to deepen understanding and build a more prosperous labour ecosystem.

Do you consider Nigeria’s labour laws to be outdated, and if so, which key amendments should be prioritised?

Yes, Nigeria’s labour laws are outdated and do not adequately reflect the realities of the modern workplace, the gig economy, or the complexities of a rapidly digitising economy. The current stalemate in labour reform negotiations, with the government, labour unions, and advocacy groups unable to reach a consensus, is delaying much-needed modernisation.

The current framework assumes a traditional employer-employee relationship that no longer reflects the diversity of work arrangements in the digital age. We need clear provisions for remote work, gig work, and platform-based employment. While specialised industrial courts exist, the labour law should explicitly mandate alternative dispute resolution as the first recourse for workplace disputes before litigation, reducing costs and preserving relationships. The process for registering trade unions and employers’ associations remains unnecessarily bureaucratic. Modernising this would encourage formalisation and expand coverage of social protections.

How can regulatory agencies minimise the compliance bottlenecks that businesses often raise concerns about?

The Central Bank of Nigeria’s recent admission on regulatory friction provides a useful template for all regulatory agencies. In its report “Shaping the Future of Fintech in Nigeria,” the CBN acknowledged that 87.5 per cent of fintech operators say compliance costs significantly limit their ability to innovate, and over 60 per cent report that regulatory timelines materially delay product launches. The solutions are clear and replicable: creating a harmonised platform where businesses can complete multi-agency compliance requirements without navigating fragmented oversight. The CBN’s proposal to operationalise a single regulatory window should be adopted across government.

Use technology to shorten approval cycles and improve oversight. Over one-third of fintechs reported that it takes over a year to bring new products to market due to licensing and approval bottlenecks. Adopt the compliance-as-a-service model to ease the regulatory burden on smaller firms. This reduces costs while enhancing visibility for supervisors. The perception that regulations are applied inconsistently across agencies must be addressed. Clear guidance and regular stakeholder engagement can resolve this. The NECA position has been consistent: abrupt policy reversals, new fees, and bans that wipe out investments worth hundreds of billions of naira send negative signals to investors. If investors cannot predict policy stability over a ten-year horizon, capital will simply go elsewhere.

Many Nigerian companies identify infrastructure deficits as a key constraint. What practical measures should the government prioritise without delay?

Infrastructure deficits, particularly in power and transportation, remain among the most binding constraints on Nigerian businesses. The Senate’s recent call for the total removal of electricity subsidies is a critical step, as it would free up funds for development. However, removal must be accompanied by tangible improvements in supply. States should provide land, security, and permits for mini-grid operators. This decentralised approach can deliver power faster than waiting for national grid improvements. The power sector has significant employment potential in metering, mini-grid deployment, maintenance, and solar installation. States should support local component production. The government should prioritise the completion of ongoing road and rail projects rather than initiating new ones. The current fuel price premium of approximately $55.5m per day (based on $102.83/bbl Brent vs $64.85/bbl benchmark) provides fiscal space for infrastructure investment. Building on the 90 CNG buses provided for labour, the government should accelerate the development of CNG refuelling stations and conversion centres to reduce transport costs.