Manufacturing credit drops N1.92tn amid funding gaps

The Manufacturers Association of Nigeria has blamed the sharp decline in credit to the manufacturing sector on the Federal Government’s failure to implement the promised N1tn Manufacturing Stabilisation Fund, high lending rates, structural bureaucracy and policy misalignment.

The association raised the concern on Tuesday following data from the Central Bank of Nigeria showing that commercial bank credit to manufacturers fell by N1.92tn, from N8.53tn in December 2024 to N6.61tn in December 2025, representing a 22.5 per cent year-on-year contraction.

In a statement obtained by The PUNCH, the Director-General of MAN, Segun Ajayi-Kadir, described the development as disturbing, warning that the sector recorded one of the steepest credit contractions among major sectors of the economy.

According to him, the decline has left manufacturing trailing behind the oil and gas sector, which attracted N10.59tn in credit, and the finance sector, which received N9.24tn.

“According to the CBN data, commercial bank credit allocation to manufacturing contracted by N1.92tn from N8.53tn in December 2024 to N6.61tn in December 2025. This represents a significant year-on-year contraction of 22.5 per cent, which is particularly disturbing, given that manufacturing recorded one of the largest credit contractions among the top sectors,” Ajayi-Kadir said.

The MAN DG attributed the decline to a combination of prohibitive borrowing costs, risk-averse lending practices by banks, and the continued delay in implementing the N1tn Manufacturing Stabilisation Fund contained in the Federal Government’s Accelerated Stabilisation and Advancement Plan.

“The persistent non-implementation of the N1tn Manufacturing Stabilisation Fund, despite its prominent inclusion in the Accelerated Stabilisation and Advancement Plan since 2024, remains an issue of promise not kept for the manufacturing sector. For two years, we have awaited this fund to ameliorate the credit crunch in the sector and to cushion the impact of the twin shocks of currency devaluation and astronomical energy costs. There appears to be no visible effort at delivering on that score,” Ajayi-Kadir said.

He added that the delay had forced manufacturers to operate in a high-interest-rate environment without the promised support.

“This delay is worrisome. It has left genuine manufacturers to navigate an over 30 per cent interest rate environment without the promised fiscal cushion. As factories continue to scale down operations or exit the business altogether, the gap between policy promises and actual disbursement is symptomatic of an implementation deficit that continues to stifle Nigeria’s industrial potential,” he stated.

Ajayi-Kadir also criticised the prevailing lending environment, saying manufacturers still faced borrowing costs that made long-term investments unviable.

“The primary barrier between manufacturers and financial liquidity is the exorbitant cost of borrowing. As of May 2026, manufacturers’ costs of borrowing remain exploitatively high at an average of 27 per cent prime lending rates and 35.6 per cent maximum lending rates in major commercial banks, creating an environment where borrowing for long-term manufacturing capital expenditure is financially unviable,” he said.

The MAN DG further linked the contraction in manufacturing credit to the CBN’s decision to halt direct development finance interventions, including new applications under the Real Sector Support Fund.

“The steep 22.5 per cent contraction in manufacturing credit could also be linked to the Central Bank of Nigeria’s policy decision to halt its direct development finance interventions. By suspending new applications for real-sector support windows, the monetary authority has abruptly cut off manufacturers from vital single-digit concessionary capital,” Ajayi-Kadir said.

He warned that the continued squeeze in credit could suppress capacity utilisation, worsen unemployment, fuel inflation through supply shortages and undermine the implementation of the 2025 Nigeria Industrial Policy.

To address the situation, MAN urged the government to immediately release the N1tn Manufacturing Stabilisation Fund, increase the capital base of the Bank of Industry, reduce benchmark interest rates, lower cash reserve requirements for banks that lend to manufacturers and establish government-backed guarantees for industrial loans.

“The government should demonstrate its commitment to economic diversification by establishing independent, transparently managed transmission channels capable of delivering genuine, single-digit interest rates directly to domestic manufacturers. Until policy promises are translated into accessible capital, Nigeria’s ambition to transform into a competitive manufacturing powerhouse will remain permanently stalled,” Ajayi-Kadir said.