The Manufacturers Association of Nigeria (MAN) has raised fresh concerns as bank credit to the sector declined by N1.92 trillion from N8.53 trillion in December 2024 to N6.61 trillion in December 2025.

MAN stated this in a statement signed by its Director-General, Segun Ajayi-Kadir, released on Tuesday.

The trade group also lamented the high cost of borrowing, warning that manufacturers are increasingly being priced out of access to credit as commercial lending rates climb above 35%.

According to the association, the 22.5% contraction in credit underscores the mounting financial pressure facing manufacturers at a time when businesses are already grappling with high energy costs, foreign exchange volatility, and rising production expenses.

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What they are saying

MAN described prevailing lending rates as a major obstacle to industrial expansion and economic diversification.

The association noted that despite the Central Bank of Nigeria’s recent reduction of the Monetary Policy Rate (MPR) to 26.5%, manufacturers continue to face average prime lending rates of 27%, while maximum lending rates at some commercial banks have reached 35.6%.

According to MAN, these rates make it nearly impossible for manufacturers to secure financing for long-term investments, capacity expansion, and technology upgrades.

  • “The primary barrier between manufacturers and financial bank liquidity is the exorbitant cost of borrowing,” the association stated.

The association noted that manufacturing recorded one of the steepest declines in credit allocation among key sectors of the economy during the period under review.

While lending to manufacturers fell to N6.61 trillion, the oil and gas sector attracted N10.59 trillion in bank credit, while the finance sector received N9.24 trillion.

MAN argued that the trend reflects a growing preference by lenders for sectors offering quicker returns, leaving productive industries struggling to access the capital required for growth.

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Beyond high interest rates, MAN blamed the situation on stringent monetary policies and the risk-averse posture of commercial banks.

  • According to the association, the Cash Reserve Ratio (CRR), which remains as high as 45% to 50% for some banks, has significantly reduced the amount of funds available for lending.
  • MAN added that banks are often reluctant to lend to manufacturers due to perceived risks, even under intervention programmes backed by the government and the Central Bank.
  • The association noted that many manufacturers are required to provide collateral and equity contributions that are difficult to meet, effectively shutting smaller firms out of available financing opportunities.

MAN also expressed concern over the continued delay in implementing the N1 trillion Manufacturing Stabilization Fund announced under the Federal Government’s Accelerated Stabilization and Advancement Plan (ASAP).

According to the association, the fund was expected to help manufacturers cope with the combined impact of naira devaluation, elevated energy costs, and rising interest rates.

However, nearly two years after the initiative was unveiled, manufacturers are yet to access the promised support.

  • “The persistent non-implementation of the N1 trillion Manufacturing Stabilization Fund remains an issue of promise not kept for the manufacturing sector,” MAN stated.

The association warned that limited access to affordable credit could further suppress manufacturing capacity utilisation, discourage investment, and lead to job losses across the sector.

It also cautioned that Nigeria’s industrialisation ambitions could be undermined if manufacturers continue to operate in an environment where financing costs exceed 30%.

According to MAN, the credit crunch could worsen supply-side inflation by reducing domestic production and increasing reliance on imported goods, thereby putting additional pressure on foreign exchange demand.

The association further warned that the implementation of the Nigeria Industrial Policy 2025 could be jeopardised if manufacturers remain unable to access affordable financing needed to modernise and expand their operations.

What you should know

Despite the decline in bank credit witnessed by the manufacturing sector, there has been an increase in credit to the private sector in recent months, according to data from the Central Bank of Nigeria (CBN).

Nairametrics earlier reported that credit to Nigeria’s private sector increased to N81.04 trillion in May 2026, reflecting a modest rise from N80.59 trillion recorded in April, despite CBN maintaining a tight monetary policy stance to curb inflation.

The CBN data also showed that net domestic credit rose to N121.42 trillion in May from N120.18 trillion in April, while net other assets increased to N12.63 trillion from N11.88 trillion during the same period.

The increase suggests that lending activity remained resilient even as borrowing costs stayed elevated across the economy.