Manufacturing Sector Faces Funding Crisis as Bank Credit Drops by 22.5%

The Manufacturers Association of Nigeria (MAN) has raised the alarm over a significant contraction in commercial bank lending to the manufacturing sector, warning that the trend threatens the nation’s industrial stability and economic growth.

According to data released by the association, commercial bank credit to the sector fell by N1.92 trillion, dropping from N8.53 trillion in December 2024 to N6.61 trillion by the end of 2025. This 22.5% year-on-year decline places manufacturing behind sectors like oil and gas and finance in terms of capital allocation, a shift the association describes as a preference for speculative activities over productive investment.

MAN Director-General, Segun Ajayi-Kadir, noted that the credit crunch is occurring alongside an interest-rate environment exceeding 30%, which he stated is stifling capacity utilization and technological advancement. He further criticized the delayed implementation of the N1 trillion Manufacturing Stabilisation Fund, a government initiative launched in 2024 to assist firms in absorbing rising energy costs and currency volatility.

The association warned that without urgent intervention, the lack of affordable financing could stall the objectives of the 2025 Nigeria Industrial Policy.

To mitigate these challenges, MAN has proposed a comprehensive recovery strategy, including:

* Reducing benchmark interest rates by 200 to 300 basis points.

* Incentivizing banks to increase lending to manufacturers at single-digit interest rates.

* Expanding the capital base and intervention capacity of the Bank of Industry.

* Implementing a 50% government-backed loan guarantee scheme for small and medium-scale manufacturers.

* Immediately releasing the promised N1 trillion Manufacturing Stabilisation Fund under an expedited processing timeline.

The association stressed that until the government aligns its policy promises with accessible credit, the goal of transforming Nigeria into a competitive industrial powerhouse will remain difficult to achieve.