Manufacturers have sharply reduced their exposu re to bank loans in the past year, repaying an estimated N2.17tn as high interest rates and rising operating costs weigh on the sector.
Figures from the Central Bank of Nigeria’s latest quarterly statistical bulletin show that total credit by deposit money banks to the manufacturing sector fell from N9.26tn in June 2024 to N7.09tn in June 2025. This represents a year-on-year decline of about 23.5 per cent.
The fall came even though total private sector credit rose from N55.71tn to N58.16tn over the same period. This means manufacturers are taking a smaller share of the available credit pool.
The sector’s share of private lending dropped from 16.63 per cent in June 2024 to 12.19 per cent in June 2025, reflecting both reduced borrowing appetite and tighter lending conditions.
The data suggest manufacturers have spent most of the past year deleveraging in response to record borrowing costs, exchange rate pressures, and weaker consumer demand.
It was observed that throughout 2024, the Central Bank of Nigeria’s Monetary Policy Committee aggressively tightened policy, lifting the Monetary Policy Rate from 18.75 per cent at the start of the year to about 27.50 per cent by November, through multiple successive hikes to rein in inflation and stabilise the exchange rate.
In 2025, the MPC largely held rates steady at 27.50 per cent for much of the year, signalling a cautious pause after the earlier tightening cycle as inflation began to moderate. However, in September 2025, the committee delivered its first rate cut in five years, trimming the MPR to 27.00 per cent, reflecting slowing price pressures and a gradual shift toward supporting broader economic activity.
By November 2025, the CBN reaffirmed the 27.00 per cent benchmark, balancing the need to sustain disinflation with financial stability concerns as borrowing costs remained high but gradually more accommodative.
With lending rates elevated as a result of the Central Bank’s tight monetary policy stance, many firms are choosing to cut back on debt rather than commit to fresh loans that carry heavier repayment burdens.
The downward trend was clear throughout 2025. In January, total manufacturing credit stood at N8.31tn and accounted for 14.18 per cent of total private sector lending of N58.60tn. By February, lending to the sector had fallen to N8.03tn, and its share dropped to 13.86 per cent.
The decline continued in March when loans fell to N7.72tn, while total private credit rose to N59.10tn. That pushed the sector’s share to 13.06 per cent, compared with 16.34 per cent a year earlier.
A small improvement was recorded in April when manufacturing credit rose to N7.90tn against total lending of N60.31tn. The share remained subdued at 13.09 per cent. In May, credit fell again to N7.82tn while total lending increased to N60.63tn, leaving the manufacturing share at 12.90 per cent.
The steepest fall came in June when lending slumped to N7.09tn. Total private sector credit also dipped slightly to N58.16tn, but the share going to manufacturers still declined further to 12.19 per cent. This was the lowest recorded level in the period under review.
The contrast with 2024 is stark. In January 2024, manufacturers owed banks about N10.02tn. This represented 17.35 per cent of total private lending. The sector’s borrowing peaked at N10.88tn in February 2024 and stayed above N9.6tn through to May before moderating to N9.26tn in June. Throughout early 2024, the manufacturing share of total private sector lending generally ranged between 16 and 18 per cent. By early 2025, the share had fallen into the 12 to 14 per cent range.
Across the first half of 2025, lending to the sector consistently trended down. From N8.31tn in January, it fell to N8.03tn in February and N7.72tn in March. A slight rise in April did not alter the broader pattern, as credit slipped again to N7.82tn in May before tumbling to N7.09tn in June. The share of total private sector credit allocated to the sector followed the same trajectory, falling from 14.18 per cent in January to 12.19 per cent in June.
Manufacturers have repeatedly complained that double-digit lending rates make long-term industrial investment uncompetitive. Financial analysts have noted that sustained increases in the Monetary Policy Rate were adding to the financing cost burden on manufacturers, stressing that the funds used to repay loans could be increased, leading to more employment and economic growth.
The Manufacturers Association of Nigeria earlier urged the CBN to reduce interest rates further to ease the rising cost of borrowing, which continues to stifle production and erode competitiveness in the manufacturing sector.
In its reaction to the outcome of the Monetary Policy Committee meeting held on November 24 and 25, MAN stated that it acknowledged the MPC’s decision to retain the Monetary Policy Rate at 27 per cent but stressed that the current lending environment remains “punitive for manufacturers.”
In his statement, Director-General of MAN, Segun Ajayi-Kadir, said the association “appreciates the decision of the MPC to halt the increase in MPR” but insisted that manufacturers had expected “a further reduction in the rate to reduce the cost of borrowing.”
Ajayi-Kadir noted that despite the improvement recorded at the last meeting, manufacturers still contend with borrowing costs “ranging between 30 and 37 per cent,” describing the rates as “high, restrictive, and damaging to competitiveness.”
He said, “The rate hinders production and reduces the competitiveness of the sector. While the emphasis on exchange rate stability and improved forex liquidity is crucial, it is essential to reduce the cost of funds to encourage borrowing for expansion and investment.”
The Association warned that persistent high lending rates would continue to limit manufacturers’ access to affordable credit, particularly those in the small and medium industrial cadre.
MAN added that the challenge was compounded by structural bottlenecks such as poor infrastructure, high logistics costs, erratic electricity supply, soaring energy costs, and insecurity, which it said “cumulatively raise production costs and weaken competitiveness.”
MAN urged the CBN and policymakers to strengthen monetary–fiscal coordination and pursue reforms that unlock industrial potential to sustain stability and drive inclusive growth. MAN said the CBN should “strengthen handshake with the fiscal authority to promote reforms capable of unlocking the full potential of the manufacturing sector.”
MAN also highlighted a series of recommendations to position the sector for productive growth. It advised the CBN to “adopt a downward review of the rate in subsequent MPC meetings to lessen the burden of high borrowing costs and incentivise long-term investments,” particularly in capital-intensive sub-sectors.
MAN further recommended that the apex bank introduce additional policy instruments to facilitate credit flow to the real sector while the Federal Government strengthens fiscal discipline and scales up investments in roads, electricity, and logistics to boost supply capacity.
On exchange rate management, MAN urged the government to work closely with the Central Bank to stabilise the naira and manage potential risks linked to capital flight arising from the new MPC corridor adjustment “that will push banks to lend more.”
It also called for complementary fiscal measures that support industrial development, promote structural reforms in agriculture, manufacturing, and energy, and address inflationary pressures. The body added that insecurity in agricultural and industrial zones must be urgently resolved to stabilise raw material supplies and food output, stressing that “a secure environment is critical to sustained industrial growth.”
Meanwhile, the Director-General of the Nigerian Association of Small and Medium Enterprises, Eke Ubiji, argued that the MPC needed to reconsider the rate in light of the sustained decline in inflation. He insisted that borrowing conditions remained harsh for Micro, Small, and Medium-sized Enterprises despite the improvement in macroeconomic indices.
Ubiji said, “The CBN needs to still go around their decision on the MPR and see what could be done. It is still not encouraging borrowing from the private sector.”
