Lending to producers plummeted by nearly a quarter in 2025, according to MAN

The Manufacturers Association of Nigeria has voiced its concern over the significant decline in commercial bank credit allocated to the manufacturing sector, warning that this trend could jeopardize industrial growth, job creation, and economic diversification.

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According to the Director-General of MAN, Mr Segun Ajayi-Kadir, this concern was raised in a statement issued on Tuesday in Lagos, in response to credit allocation data for 2025, which highlighted a notable decrease in credit extended to manufacturers.

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Mr Ajayi-Kadir stated that commercial bank credit to manufacturing fell by N1.92 trillion, from N8.53 trillion in December 2024 to N6.61 trillion in December 2025, representing a 22.5 per cent year-on-year contraction, a decline he described as disturbing.

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This contraction has resulted in the manufacturing sector receiving less credit than the oil and gas sector, which attracted N10.59 trillion, and the finance sector, which received N9.24 trillion, with manufacturing now trailing behind these sectors.

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Mr Ajayi-Kadir noted that the trend reflects a growing preference for speculative and rent-seeking activities over productive sectors capable of driving economic growth, a situation that is in contrast to developments in emerging economies such as India and Vietnam.

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In these countries, industrial credit expanded significantly in 2025 to support manufacturing growth, whereas in Nigeria, the manufacturing sector is struggling to access credit, with Mr Ajayi-Kadir emphasizing that the sector cannot thrive without sustainable and growing financial foundations.

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The reduction in credit access could further limit capacity utilisation, stall technological upgrades, and hinder job creation, according to Mr Ajayi-Kadir, who attributed the decline in credit allocation to a combination of high interest rates, bureaucratic bottlenecks, and policy inconsistencies.

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He also criticized the non-implementation of the N1 trillion Manufacturing Stabilisation Fund, which was included in the Federal Government’s Accelerated Stabilisation and Advancement Plan (ASAP) in 2024, a fund that manufacturers have been waiting for over two years.

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The delay in implementing this fund has left genuine manufacturers to operate in an interest-rate environment exceeding 30 per cent without the promised fiscal support, resulting in factories scaling down operations or exiting the market.

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Mr Ajayi-Kadir identified reduced manufacturing capacity utilisation, stagnation of the sector’s contribution to Gross Domestic Product (GDP), job losses, supply-side inflation, and foreign exchange pressures as some of the major consequences of the credit squeeze.

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He warned that inadequate access to affordable financing could undermine the successful implementation of the 2025 Nigeria Industrial Policy (NIP), emphasizing that a visionary industrial policy without a functioning credit transmission mechanism will amount to a well-drafted but comatose aspirational policy.

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To address the challenge, Mr Ajayi-Kadir called for a reduction in benchmark interest rates by 200 to 300 basis points over the next two quarters to improve credit affordability for manufacturers.

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He also urged the government to provide incentives for banks that channel a significant share of their lending portfolios to manufacturing at single-digit interest rates, and recommended increasing the capital base of the Bank of Industry (BOI) and expanding its intervention funds.

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Additionally, Mr Ajayi-Kadir suggested operationalising a 50 per cent government-backed loan guarantee scheme for small and medium-scale manufacturers and immediately releasing the N1 trillion Manufacturing Stabilisation Fund.

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He advocated transferring the management of the fund to the BOI, with a nine per cent interest rate cap and a seven-day processing timeline for qualified manufacturers, and urged the government to conduct an urgent audit of the manufacturing sector.

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According to Mr Ajayi-Kadir, until policy promises are translated into accessible capital through transparent and effective channels, Nigeria’s ambition of becoming a competitive manufacturing powerhouse will remain stalled.