Nigerian manufacturers are facing a worsening credit squeeze after bank lending to the sector fell by approximately $1.25 billion within a year, raising concerns about the future of industrial growth, job creation and the country’s broader economic diversification agenda.
The Manufacturers Association of Nigeria (MAN) said credit to the sector declined from about $5.56 billion in December 2024 to $4.31 billion by the end of 2025, representing a contraction of 22.5%.
The association warned that the decline comes at a particularly difficult period for manufacturers, who are already contending with high energy costs, exchange rate volatility and rising production expenses. According to MAN, access to affordable financing has become one of the most significant challenges confronting businesses in the sector.
The group attributed much of the problem to soaring borrowing costs. Despite recent monetary policy adjustments by the Central Bank of Nigeria, manufacturers continue to face average lending rates of about 27%, while some commercial banks charge as much as 35.6% on loans. MAN argued that such rates make it extremely difficult for businesses to finance expansion, modernise operations or invest in new technologies.
The association noted that manufacturing recorded one of the sharpest declines in bank credit among major sectors of the economy. During the same period, lending to the oil and gas sector reached approximately $6.91 billion, while the financial sector attracted about $6.03 billion. MAN said the figures suggest that banks are increasingly directing capital toward sectors perceived as less risky and capable of generating quicker returns.
Beyond high interest rates, manufacturers pointed to tight monetary conditions and stringent banking requirements as barriers to financing. According to the association, elevated cash reserve requirements have reduced funds available for lending, while strict collateral demands continue to exclude many businesses, particularly smaller manufacturers, from accessing available credit facilities.
MAN also expressed frustration over the delayed implementation of the $653 million Manufacturing Stabilisation Fund announced under the Federal Government’s Accelerated Stabilisation and Advancement Plan. The fund was designed to help manufacturers absorb the impact of currency depreciation, rising energy costs and higher financing expenses. Nearly two years after its announcement, however, manufacturers say they are yet to benefit from the initiative.
The warning comes despite signs of growth in overall private-sector lending. Central Bank data show that credit to the private sector increased to approximately $52.97 billion in May 2026 from about $52.68 billion in April, suggesting that while lending is expanding across the economy, manufacturers are receiving a shrinking share of available financing.
MAN cautioned that continued difficulty in accessing affordable credit could reduce capacity utilisation, discourage investment and threaten employment across the sector. The association further warned that Nigeria’s industrialisation ambitions and implementation of the Nigeria Industrial Policy 2025 could be undermined if manufacturers remain unable to secure the financing needed to expand production and improve competitiveness.
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Emmanuel Abara Benson is a business journalist and editor covering artificial intelligence, global markets, and emerging technology.
He has previously worked with Business Insider Africa and Nairametrics, reporting on finance, startups, and innovation.
His work focuses on AI, digital economy, and global tech trends.
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