•Lists key drivers, blame high rates, policy gaps

By Yinka Kolawole

THE Manufacturers Association of Nigeria, MAN, has raised concern over the data generated by Vanguard Newspaper showing that banks’ credit to manufacturers contracted by 22.5 per cent, a development the association warned could undermine industrial growth, worsen unemployment and weaken the implementation of the Nigeria Industrial Policy (NIP) 2025.

A Vanguard Newspaper data generated from the Central Bank of Nigeria, CBN, had indicated that banks’ credit to the sector declined by N1.92 trillion to N6.61 trillion in 2025 from N8.53 trillion in 2024.

The association, in a statement using the data, also identified high lending rates, restrictive banking regulations, the suspension of development finance interventions and policy implementation delays as key factors behind the decline in credit to the manufacturing sector.

In the statement, MAN Director-General, Segun Ajayi-Kadir, described the sharp decline in credit as a major setback to Nigeria’s industrialisation ambitions, noting that access to affordable financing remains critical to the survival and expansion of the manufacturing sector.

According to him, the contraction stands in sharp contrast to developments in other emerging economies where governments and financial institutions are deliberately expanding industrial financing. He noted that bank credit to industry in India grew by 9.6 per cent year-on-year in 2025, while Vietnam targeted credit growth of between 19 and 20 per cent to support manufacturing and processing activities.

Ajayi-Kadir identified the high cost of borrowing as the most significant obstacle preventing manufacturers from accessing available bank liquidity. He noted that average prime lending rates stood at about 27 per cent as of May 2026, while maximum lending rates had risen to 35.6 per cent, making long-term industrial investments increasingly unviable.

MAN also blamed the Central Bank of Nigeria’s stringent Cash Reserve Ratio (CRR), estimated at between 45 and 50 per cent for commercial banks, for limiting the volume of funds available for lending to productive sectors.

The association further expressed concern over the non-implementation of the proposed N1 trillion Manufacturing Stabilisation Fund, despite its inclusion in the Federal Government’s Accelerated Stabilisation and Advancement Plan (ASAP) in 2024. It argued that the delay has deprived manufacturers of a critical source of affordable financing needed to support production and expansion.

Another major factor, according to MAN, is the suspension of new applications under the CBN’s development finance programmes, including the Real Sector Support Fund (RSSF), which previously provided manufacturers with access to concessionary single-digit loans.

“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,” Ajayi-Kadir said.

MAN warned that the continued credit squeeze could depress capacity utilisation, delay technological upgrades, reduce manufacturing output and trigger job losses. It added that weaker domestic production could increase reliance on imports, place further pressure on foreign exchange reserves and undermine efforts to diversify the economy.

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