Nigerian Manufacturers Warn of N1.9 Trillion Credit Decline, Citing High Rates and Policy Gaps

The Manufacturers Association of Nigeria (MAN) has expressed grave concern over a significant contraction in bank credit to the manufacturing sector. Data compiled by Vanguard Newspaper from the Central Bank of Nigeria indicates that credit to manufacturers plummeted by N1.92 trillion in 2025, falling to N6.61 trillion from N8.53 trillion in the previous year. This represents a 22.5 percent decline.

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access to affordable financing remains critical to the survival and expansion of the manufacturing sector.

MAN Director-General Segun Ajayi-Kadir described the sharp decrease as a major setback for Nigeria's industrialization goals. He highlighted that access to affordable financing is crucial for the sector's survival and expansion. Ajayi-Kadir contrasted Nigeria's situation with other emerging economies, noting that countries like India saw industrial credit grow by 9.6 percent year-on-year in 2025, while Vietnam targeted 19-20 percent growth to support its manufacturing and processing activities.

The association identified several key drivers behind the credit crunch. High lending rates, particularly an average prime lending rate of about 27 percent and maximum rates reaching 35.6 percent as of May 2026, make long-term industrial investments unviable. MAN also pointed to restrictive banking regulations, including the Central Bank of Nigeria's stringent Cash Reserve Ratio (CRR) of 45-50 percent, which limits available funds for lending to productive sectors.

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the contraction stands in sharp contrast to developments in other emerging economies where governments and financial institutions are deliberately expanding industrial financing.

Furthermore, MAN cited the suspension of development finance interventions, such as the Real Sector Support Fund (RSSF), which previously offered concessionary single-digit loans. The non-implementation of the proposed N1 trillion Manufacturing Stabilisation Fund, despite its inclusion in the government's Accelerated Stabilisation and Advancement Plan (ASAP) in 2024, has also deprived manufacturers of critical affordable financing. MAN warns that this credit contraction could undermine industrial growth, worsen unemployment, and weaken the implementation of the Nigeria Industrial Policy 2025.

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The withdrawal of these interventions has forced manufacturers into the commercial lending market, where interest rates exceeding 35 per cent make productive borrowing almost impossible.