By Ibrahim Salaudeen, Lagos
Manufacturers in Nigeria have raised concerns over a sharp decline in commercial bank lending to the sector, warning that the development could weaken industrial growth, worsen unemployment and derail the country’s economic diversification agenda.
The Director-General of the Manufacturers Association of Nigeria, Mr. Segun Ajayi-Kadir, disclosed this in a statement issued in Lagos on Tuesday while reacting to commercial bank credit allocation figures for 2025.
According to him, credit extended by commercial banks to the manufacturing sector fell by N1.92 trillion, dropping from N8.53 trillion in December 2024 to N6.61 trillion in December 2025. The decline represents a 22.5 per cent year-on-year contraction.
Ajayi-Kadir described the development as alarming, noting that manufacturing recorded one of the steepest contractions in credit allocation among major sectors of the economy.
He explained that the sector now trails behind the oil and gas industry, which attracted N10.59 trillion in bank credit, and the finance sector, which received N9.24 trillion.
The MAN chief said the trend signals a growing preference for speculative and rent-seeking activities rather than productive sectors capable of driving sustainable economic growth, employment generation and value creation.
He contrasted Nigeria’s experience with that of emerging economies such as India and Vietnam, where industrial credit expanded significantly in 2025 to support manufacturing development and economic transformation.
“Clearly, the Nigerian manufacturing sector cannot thrive without sustainable and growing financial foundations. The reduction in credit access could further limit capacity utilisation, stall technological upgrades and hinder job creation,” he said.
Ajayi-Kadir attributed the shrinking credit allocation to high lending rates, bureaucratic bottlenecks and policy inconsistencies that continue to discourage investment in productive enterprises.
He also criticised the Federal Government’s failure to operationalise the N1 trillion Manufacturing Stabilisation Fund, which was included in the Accelerated Stabilisation and Advancement Plan (ASAP) unveiled in 2024.
According to him, manufacturers have waited for nearly two years for the intervention fund, which was designed to cushion the effects of naira depreciation, rising energy costs and other economic pressures confronting the sector.
“The delay has left genuine manufacturers operating in an interest-rate environment exceeding 30 per cent without the promised fiscal support.
“As factories continue to scale down operations or exit the market, the gap between policy promises and actual disbursement highlights an implementation deficit that continues to constrain industrial development,” he stated.
The MAN director-general warned that the credit squeeze could result in lower manufacturing capacity utilisation, job losses, stagnant contribution of the sector to Gross Domestic Product (GDP), increased supply-side inflation and heightened pressure on foreign exchange demand.
He further cautioned that inadequate access to affordable financing could undermine the successful implementation of Nigeria’s 2025 Industrial Policy, which seeks to boost local production and reduce dependence on imports.
“A visionary industrial policy without a functioning credit transmission mechanism will amount to a well-drafted but comatose aspirational policy. It is practically impossible to kick-start a manufacturing revolution without actively financing the factories tasked with building it,” he said.
To reverse the trend, Ajayi-Kadir urged monetary authorities to reduce benchmark interest rates by between 200 and 300 basis points over the next two quarters to make credit more affordable for manufacturers.
He also called for incentives to encourage banks to channel a greater proportion of their lending portfolios to the manufacturing sector at single-digit interest rates.
Other recommendations include increasing the capital base of the Bank of Industry, expanding its intervention programmes, introducing a 50 per cent government-backed loan guarantee scheme for small and medium-scale manufacturers and immediately releasing the N1 trillion Manufacturing Stabilisation Fund.
Ajayi-Kadir further proposed that the fund be managed by the Bank of Industry, with a maximum interest rate of nine per cent and a seven-day processing timeline for eligible manufacturers.
He also urged the government to undertake an urgent audit of the manufacturing sector to assess the impact of recent economic reforms and demonstrate its commitment to industrialisation through accessible and affordable financing.
“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,” he said.
