MAN Raises Alarm as Bank Lending to Manufacturers Drops by ₦1.92tn

The Manufacturers Association of Nigeria (MAN) has expressed concern over a significant decline in bank credit to the manufacturing sector, warning that the trend could hamper industrial growth, job creation, and Nigeria’s economic diversification efforts.

In a statement issued in Lagos recently, MAN Director-General, Segun Ajayi-Kadir, revealed that commercial bank lending to manufacturers fell by ₦1.92 trillion, declining from ₦8.53 trillion in December 2024 to ₦6.61 trillion in December 2025, representing a 22.5 per cent year-on-year contraction.

According to the association, the manufacturing sector now trails behind the oil and gas industry, which attracted ₦10.59 trillion in credit, and the financial sector, which received ₦9.24 trillion. MAN described the development as evidence of a growing preference for speculative investments over productive economic activities.

The association noted that while countries such as India and Vietnam expanded industrial credit in 2025 to stimulate manufacturing growth, Nigeria’s shrinking access to finance threatens capacity utilisation, technological advancement, and employment generation.

MAN attributed the decline in manufacturing credit to high lending rates, tight monetary policies, commercial banks’ risk-averse lending practices, and delays in implementing government-backed intervention programmes.

Despite the Central Bank of Nigeria’s decision to reduce the Monetary Policy Rate (MPR) to 26.5 per cent, the association said borrowing costs remain excessively high, with average prime lending rates at 27 per cent and maximum rates reaching 35.6 per cent across major banks.

The group also pointed to the high Cash Reserve Ratio (CRR), estimated at between 45 and 50 per cent, as a major constraint on banks’ ability to extend credit. It argued that stringent collateral and equity requirements have further limited manufacturers’ access to intervention funds.

MAN expressed disappointment over the delayed implementation of the proposed ₦1 trillion Manufacturing Stabilisation Fund announced under the Federal Government’s Accelerated Stabilisation and Advancement Plan (ASAP) in 2024.

The association said the failure to disburse the fund has left manufacturers struggling with rising energy costs, currency depreciation, and expensive borrowing conditions.

It further linked the contraction in manufacturing lending to the Central Bank’s suspension of direct development finance interventions, including support provided through the Real Sector Support Fund (RSSF). According to MAN, the move has compelled manufacturers to depend on commercial loans carrying interest rates above 35 per cent, reducing access to affordable capital.

The association warned that the ongoing credit squeeze could weaken manufacturing capacity utilisation, limit investments in technology and expansion, and reduce the sector’s contribution to Gross Domestic Product (GDP), currently estimated at 9.57 per cent.

It added that inadequate financing could trigger factory closures, job losses, greater reliance on imports, increased inflationary pressures, and additional strain on Nigeria’s foreign exchange reserves.

MAN also cautioned that the persistent shortage of affordable credit could undermine the successful implementation of the 2025 Nigeria Industrial Policy (NIP), which seeks to boost industrial productivity, competitiveness, and employment through targeted financing initiatives.

To reverse the trend, the association urged the government and monetary authorities to reduce benchmark interest rates by an additional 200 to 300 basis points, lower the CRR for banks that provide single-digit loans to manufacturers, and strengthen the capital base of the Bank of Industry (BOI).

It also called for an expansion of BOI intervention funds to enable manufacturers refinance existing high-interest loans at rates between seven and nine per cent over a minimum tenure of 10 years.

Other recommendations include the introduction of a 50 per cent government-backed guarantee scheme for loans granted to small and medium-scale manufacturers, the immediate release of the ₦1 trillion Manufacturing Stabilisation Fund, and the transfer of its management to the Bank of Industry with a nine per cent interest rate cap and a seven-day processing timeline.

Ajayi-Kadir maintained that the sector’s financing challenges stem not from a lack of capital but from ineffective policy implementation and funding structures that fail to channel affordable credit to productive industries.

He called for transparent and independent financing mechanisms capable of delivering single-digit loans directly to manufacturers and urged authorities to conduct an urgent assessment of the impact of recent economic reforms on the sector.

According to him, Nigeria’s aspiration to become a globally competitive manufacturing hub will remain difficult to achieve unless policy commitments are backed by accessible and affordable financing.