MAN Warns FG: N1.92trn Credit Shortfall To Manufacturing Sector May Stifle Production Activities
The Manufacturers Association of Nigeria (MAN)MAN has painted a grim picture of severe financial constraints facing the country’s manufacturing sector, warning that a sharp decline in commercial bank credit could stifle production activities.
Data released by the association shows that commercial bank credit to the manufacturing sector contracted by ₦1.92 trillion, falling from ₦8.53 trillion in December 2024 to ₦6.61 trillion in December 2025.
In a press statement issued from the MAN Secretariat and signed by its Director-General, Segun Ajayi-Kadir, the association noted that this represents a significant year-on-year contraction of 22.5 per cent. It described the development as particularly disturbing, as manufacturing recorded one of the largest credit declines among key sectors, surpassed only by the general services sector at -25 per cent.
He noted that this steep decline leaves manufacturing far behind the extractive oil and gas industry (₦10.59 trillion) and the finance sector (₦9.24 trillion), indicating a systemic preference for speculative and rent-seeking activities over productive investment.
Ajayi-Kadir stated that the 22 per cent credit squeeze, amounting to ₦1.92 trillion, contrasts sharply with trends in comparable economies in 2025. For instance, India’s bank credit to industry grew by 9.6 per cent year-on-year, while Vietnam projected credit growth of 19–20 per cent to strengthen its manufacturing and processing sectors.
He said: “Clearly, the Nigerian manufacturing sector cannot thrive without sustainable and growing financial support. The reduction in credit access could further limit capacity utilisation, stall technological upgrades, and hinder job creation. For the wider economy, reduced financial support to manufacturing could slow diversification efforts, leaving the nation more vulnerable to external commodity shocks and supply-driven inflation.”
He further highlighted that recent economic data, industry reports, and insights from operators indicate that the contraction in credit to manufacturing is driven by a combination of prohibitive interest rates, structural bureaucracy, and policy misalignment.
According to him, prohibitive interest rates remain a major barrier between manufacturers and access to bank financing. Although the Central Bank of Nigeria (CBN) recently made slight policy adjustments by reducing the Monetary Policy Rate (MPR) to 26.5 per cent to signal disinflation, commercial lending rates remain largely unfavourable to manufacturing expansion.
As of May 2026, manufacturers face borrowing costs averaging 27 per cent at prime lending rates and up to 35.6 per cent at maximum lending rates across major commercial banks. This creates an environment in which long-term manufacturing investment becomes financially unviable.
He also pointed to elevated Cash Reserve Requirements (CRR) of 45–50 per cent imposed by the CBN, which significantly restricts loanable funds within the banking system.
Another factor, he said, is the risk-averse nature of commercial banks. He explained that a key flaw in government intervention frameworks is the reliance on commercial banks as Participating Financial Institutions (PFIs). While the CBN provides liquidity at lower rates, the PFIs bear the credit risk.
As a result, banks apply strict commercial lending criteria even to development-focused funds, demanding collateral and equity contributions that many manufacturers cannot meet. Consequently, only large and already well-capitalised firms are able to access such facilities.
