Business
By Anthony Isibor
THE Nigerian manufacturing sector suffered a major decline in access to bank credit in 2025, with commercial lending to manufacturers dropping by nearly ₦2 trillion within a year.
The Manufacturers Association of Nigeria, MAN, said in a document signed by its Director General, Segun Ajayi-Kadir, that the development could worsen factory closures, job losses and inflation, while undermining government’s efforts to diversify the economy through industrial growth.
The data released by MAN showed that the credit extended by commercial banks to manufacturers fell from ₦8.53 trillion in December 2024 to ₦6.61 trillion in December 2025, representing a decline of ₦1.92 trillion or 22.5 per cent.
The association described the contraction as one of the sharpest among major sectors of the economy, noting that only the General Services sector recorded a larger decline during the period.
MAN said that the figures highlighted what it called a growing imbalance in Nigeria’s credit allocation system, where lending appears to favour sectors such as oil and gas and financial services over productive industries that generate employment and add value to the economy.
According to the association, the manufacturing sector received significantly less credit than the oil and gas industry, which attracted ₦10.59 trillion and the financial sector, which accounted for ₦9.24 trillion in bank lending.
The group contrasted Nigeria’s experience with countries such as India and Vietnam, where governments have continued to expand industrial credit to support manufacturing growth and exports.
At the centre of the problem, manufacturers say, is the high cost of borrowing.
MAN noted that despite recent monetary policy adjustments by the Central Bank of Nigeria (CBN), lending rates remain too high for most manufacturers to undertake long-term investments.
The association said that prime lending rates averaged about 27 per cent in May 2026, while maximum lending rates exceeded 35 per cent at some commercial banks.
Such rates, it argued, make it difficult for manufacturers to finance equipment purchases, expand production lines or modernise operations.
Beyond interest rates, MAN also pointed to the CBN’s high Cash Reserve Ratio, CRR, which requires banks to keep a substantial portion of deposits with the apex bank, reducing funds available for lending.
The association further accused commercial banks of becoming increasingly risk-averse, making it difficult for many manufacturers to access intervention funds despite government efforts to support the sector.
Manufacturers also expressed frustration over the continued delay in implementing the proposed ₦1 trillion Manufacturing Stabilisation Fund announced under the Federal Government’s Accelerated Stabilisation and Advancement Plan.
The fund was designed to cushion the impact of currency devaluation, rising energy costs and financing challenges facing industrial operators.
Two years after the proposal was unveiled, MAN said there has been little visible progress toward disbursement.
The association argued that the delay has left manufacturers struggling to survive in a high-interest-rate environment without the support initially promised by the government.
Another concern raised by the group is the CBN’s decision to discontinue some of its direct development finance interventions, including concessionary funding windows previously available to manufacturers.
According to MAN, the withdrawal of such facilities has forced companies to rely more on commercial loans, which are often significantly more expensive.
The association warned that the credit squeeze could have far-reaching consequences for the wider economy.
Among the risks identified are lower factory capacity utilisation, reduced industrial output, slower GDP growth, increased unemployment and greater dependence on imported goods. End
MAN said insufficient financing limits manufacturers’ ability to expand production, upgrade technology and remain competitive.
The group also cautioned that weakening local production could worsen supply shortages, fuel inflation and increase pressure on Nigeria’s foreign exchange reserves through higher imports.
It added that the country’s recently launched Nigeria Industrial Policy could struggle to achieve its objectives if manufacturers continue to face difficulties accessing affordable credit.
“The success of any industrial policy depends largely on whether businesses can obtain the financing needed to invest and expand,” the association said.
To reverse the trend, MAN urged the government and monetary authorities to introduce measures aimed at improving manufacturers’ access to affordable funding.
Among its recommendations are further reductions in benchmark interest rates, lower reserve requirements for banks that lend to manufacturers, expansion of the Bank of Industry’s capital base and faster implementation of the ₦1 trillion Manufacturing Stabilisation Fund.
The association also called for government-backed loan guarantees for small and medium-scale manufacturers and the refinancing of existing high-interest loans through intervention funds with single-digit interest rates.
MAN Director-General, Segun Ajayi-Kadir, said Nigeria’s manufacturing challenges stem less from a shortage of capital and more from weaknesses in how financing is distributed across the economy.
He argued that unless development financing is delivered through mechanisms that prioritise industrial growth rather than short-term profitability, manufacturers will continue to struggle despite government policy initiatives.
Ajayi-Kadir urged authorities to conduct a comprehensive assessment of how recent economic reforms have affected manufacturers and to establish financing channels capable of delivering affordable credit directly to productive businesses.
Without such measures, he warned, Nigeria’s ambition of becoming a competitive manufacturing hub could remain out of reach.
A.I
June 24, 2026
Tags: Manufacturers Association of Nigeria