• Says manufacturers borrowing at between 27% and 35% in 2026
• Warns it will derail implementation of current industrial policy
Dike Onwuamaeze
Manufacturers Association of Nigeria (MAN) has decried the severe financial constraints besetting the manufacturing sector, which it said suffered credit contraction of N1.92 trillion in 2025.
MAN made the disclosure yesterday in a public statement by Director-General of MAN, Mr. Segun Ajayi-Kadir, titled, “MAN Position on the Sharp Decline in Credit to the Manufacturing Sector.”
It warned that persistent credit squeeze could directly sabotage the successful execution of Nigeria Industrial Policy, 2025.
The association lamented that “with commercial borrowing costs remaining actively hostile at an average of 24.4 per cent prime lending rates and 33.8 per cent maximum lending rates, long-term capital investments are unviable”.
MAN stated, “Starving factories of affordable credit blocks technology upgrades and prevents operators from maintaining optimal capacity utilization or expanding local manufacturing plants.
“It is practically impossible to build a 21st-century industrial economy when forcing factories to fund their capital footprint through 19th-century primitive capital constraints.”
The statement said, “According to the data, commercial bank credit allocation to manufacturing contracted by N1.92 trillion, from N.53 trillion in December 2024, to N6.61 trillion in December 2025.
“This represents a significant year-on-year contraction of 22.5 per cent, which is particularly disturbing, given that manufacturing recorded one of the largest credit contractions among the top sectors, surpassed only by the general services sector at -25 per cent.”
Ajayi-Kadir added, “This steep decline leaves manufacturing lagging far behind the extractive Oil & Gas Industry (N10.59 trillion) and a booming Finance sector (N9.24 trillion), demonstrating a systemic preference for speculative and rent-seeking activities over tangible productivity.”
He said the 22.5 per cent credit squeeze of N1.92 trillion from the manufacturing sector stood in unflattering contrast to contemporary global peers in 2025, as India’s bank credit to industry grew by a robust 9.6 per cent year-on-year by late 2025 as part of a deliberate 15 per cent industrial credit expansion.
He also said that Vietnam aggressively projected a 19 per cent to 20 per cent credit growth target for 2025 to intentionally fuel its processing and manufacturing engines.
Ajayi-Kadir declared, “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.
“For the wider economy, reducing financial support to manufacturing could slow down vital diversification efforts, leaving the nation more vulnerable to external commodity shocks and supply-driven inflation.”
MAN said its review of recent economic data, industry reports, and insights from key operators revealed that the contracted distribution of credit to manufacturing was rooted in a toxic combination of prohibitive interest rates, structural bureaucracy, and policy misalignment.
It stated, “The primary barrier between manufacturers and financial bank liquidity is the exorbitant cost of borrowing.
“While the Central Bank of Nigeria (CBN) has recently made slight policy adjustments by trimming the Monetary Policy Rate (MPR) to 26.5 per cent to signal disinflation, commercial lending rates remain actively hostile to manufacturing sector expansion.
“As of May 2026, manufacturers’ costs of borrowing remain exploitatively high at an average of 27 per cent prime lending rates and 35.6 per cent maximum lending rates in major commercial banks.”
According to MAN, this has created an environment where borrowing for long-term manufacturing capital expenditure is financially unviable.
It said that CBN’s retention of a stringent Cash Reserve Ratio of up to 45 per cent and 50 per cent for commercial banks effectively constrained a large portion of loanable banking liquidity.
MAN said, “Another factor is the systemic risk aversion of commercial banks. A critical flaw in the architecture of government interventions is the reliance on commercial banks to act as Participating Financial Institutions (PFIs).
“The CBN provides the liquidity at lower rates, but PFIs assume the credit risk.
“Consequently, commercial banks impose their standard, risk-averse commercial criteria on these developmental funds.
“Manufacturers are subsequently asked to provide collateral and meet equity contributions that they cannot afford.
“Therefore, while the funds exist to help struggling manufacturers, they can only be accessed by large companies that are already highly liquid and secure.”
Ajayi-Kadir also said the persistent non-implementation of the N1 trillion Manufacturing Stabilisation Fund, despite its prominent inclusion in the Accelerated Stabilisation and Advancement Plan (ASAP) since 2024, had remained an issue of promise not kept for the manufacturing sector.
He stated, “For two years, we have awaited this fund to ameliorate the credit crunch in the sector and to cushion the impact of the twin shocks of currency devaluation and astronomical energy costs.
“There appears to be no visible effort at delivering on that score.
“This delay is worrisome. It has left genuine manufacturers to navigate over 30 per cent interest rate environment without the promised fiscal cushion.”
He added that as factories continued to scale down operations or exit business altogether, the gap between policy promises and the actual disbursement was symptomatic of an implementation deficit that continued to stifle Nigeria’s industrial potential.
Ajayi-Kadir stated that the steep 22.5 per cent contraction in manufacturing credit could also be linked to CBN’s policy decision to halt its direct development finance interventions.
He said, “By suspending new applications for real-sector support windows like the Real Sector Support Fund (RSSF), the monetary authority has abruptly cut off manufacturers from vital single-digit concessionary capital.
“This forces industrialists into a hostile open market where commercial lending rates soar past 35 per cent.
“Also, in an attempt to tame inflation by mopping up excess liquidity, this strategy inadvertently starves the supply side of the economy, leaving the nation structurally incapable of producing its way out of inflationary pressures.”
Ajayi-Kadir added, “To compound the crisis, the CBN’s strategy of outsourcing development financing exclusively to specialised Development Finance Institutions (DFIs), such as the Bank of Industry (BOI), creates a severe institutional transmission deficit.
“As these undercapitalised DFIs lack the sovereign liquidity-generation capacity of the central bank, this structural mismatch guarantees that Nigeria’s manufacturing frontline remains permanently starved of operational capital.”
He stated that the persistent financial starvation of Nigerian manufacturing stemmed not from an absolute scarcity of national capital, but from a fundamental breakdown in policy alignment and distribution architecture.
According to him, deploying developmental funds through flawed commercial banking channels that prioritise short-term profitability and rigid collateral over long-term industrial viability inherently neutralises their economic intent.
Ajayi-Kadir stated, “Crucially, we earnestly implore the central bank to pivot away from measures that suffocate the manufacturing sector with affordable credit, while attempting to cure structural inflation.
“This will ensure that we do not inadvertently deepen the domestic supply-side deficits that drive prices upward in the first place.
“Government should demonstrate its commitment to economic diversification by establishing independent, transparently managed transmission channels capable of delivering genuine, single-digit interest rates directly to domestic manufacturers.”
MAN said government should conduct an urgent manufacturing sector audit to ascertain the impact of the major reforms under the administration on the sector.
It said, “Until policy promises are structurally insulated from hostile commercial loan criteria and translated into accessible capital,
“Nigeria’s ambition to transform into a competitive manufacturing powerhouse will remain permanently stalled.”
