…Demands urgent intervention
By Seun Ibiyemi
The Manufacturers Association of Nigeria (MAN) has expressed deep concern over the sharp decline in commercial bank lending to the manufacturing sector, warning that the development could worsen industrial stagnation, job losses, and inflationary pressures in the country.
In a position paper released on Tuesday, MAN disclosed that commercial bank credit to manufacturing dropped by ₦1.92 trillion, from ₦8.53 trillion in December 2024 to ₦6.61 trillion in December 2025, representing a year-on-year contraction of 22.5 per cent.
The association described the decline as one of the steepest among key sectors of the economy, noting that only the General Services sector recorded a larger contraction during the period.
According to MAN, the reduction in credit allocation highlights a growing preference within the financial system for sectors such as oil and gas and finance, which attracted significantly higher lending volumes than manufacturing.
The group noted that while countries such as India and Vietnam expanded credit support to their industrial sectors in 2025 to drive production and economic growth, Nigeria’s manufacturing industry is grappling with shrinking access to finance, a trend it said threatens the country’s industrialisation agenda.
MAN identified high borrowing costs as a major obstacle to credit access, revealing that average prime lending rates to manufacturers stood at about 27 per cent, while maximum lending rates reached 35.6 per cent as of May 2026.
The association also blamed stringent Cash Reserve Ratio (CRR) requirements imposed on commercial banks, risk aversion among lenders, the non-implementation of the proposed ₦1 trillion Manufacturing Stabilisation Fund, and the Central Bank of Nigeria’s decision to halt direct development finance interventions for the sector.
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It argued that the withdrawal of concessionary funding windows has forced manufacturers to rely on expensive commercial loans, making long-term investments increasingly difficult.
MAN warned that the credit squeeze could suppress manufacturing capacity utilisation, weaken the sector’s contribution to Gross Domestic Product (GDP), trigger further workforce downsizing, worsen supply-side inflation, and undermine the implementation of the 2025 Nigeria Industrial Policy.
“The success of Nigeria’s industrialisation drive depends on accessible and affordable financing,” the association said, stressing that a lack of credit support could derail efforts to diversify the economy and reduce dependence on imports.
To reverse the trend, MAN called for a reduction in benchmark interest rates, lower CRR requirements for banks that lend to manufacturers, increased capitalisation of the Bank of Industry, and the immediate operationalisation of the ₦1 trillion Manufacturing Stabilisation Fund.
The association also urged the government to establish dedicated financing channels capable of delivering single-digit interest rate loans directly to manufacturers and to conduct an urgent audit of the sector to assess the impact of ongoing economic reforms.
Director-General of MAN, Segun Ajayi-Kadir, said Nigeria’s ambition to become a competitive manufacturing powerhouse would remain unattainable unless policy promises are translated into accessible financing for industrial operators.
