The Manufacturers Association of Nigeria (MAN) has raised fresh concerns over the declining level of commercial bank lending to the manufacturing sector, warning that the trend could slow industrial growth, worsen unemployment and undermine the country’s efforts to diversify the economy.
MAN said commercial bank credit to manufacturers dropped sharply by N1.92 trillion in 2025, a development it described as one of the biggest threats facing the productive sector of the economy.
The association expressed concern at a time when the Federal Government is seeking to strengthen local production, reduce dependence on imports and expand the contribution of manufacturing to economic growth.
Speaking in a statement issued on Tuesday in Lagos, the Director-General of MAN, Mr. Segun Ajayi-Kadir, said the latest banking sector figures showed that credit to manufacturing declined from N8.53 trillion in December 2024 to N6.61 trillion in December 2025.
According to him, the reduction represents a 22.5 per cent year-on-year contraction and places manufacturing among the sectors most affected by the tightening credit environment.
Ajayi-Kadir described the development as disturbing, especially considering the critical role manufacturing plays in creating jobs, boosting exports and supporting economic stability.
He noted that the manufacturing sector received significantly less credit than other major sectors of the economy.
According to the data cited by MAN, the oil and gas sector attracted N10.59 trillion in bank credit, while the finance sector received N9.24 trillion during the same period.
The MAN director-general said the figures suggest that financial institutions are increasingly directing funds to sectors that offer quicker returns rather than productive industries that create long-term economic value.
He warned that such a trend could weaken Nigeria’s industrial base and reduce the country’s ability to compete with other developing economies.
Ajayi-Kadir pointed out that countries such as India and Vietnam recorded strong growth in industrial lending in 2025 as part of deliberate efforts to expand manufacturing and increase economic output.
He said those countries continue to support manufacturers with affordable financing because they recognise that industrialisation remains one of the most effective ways to create jobs and reduce poverty.
“Clearly, the Nigerian manufacturing sector cannot thrive without sustainable and growing financial foundations,” he said.
“The reduction in credit access could further limit capacity utilisation, stall technological upgrades, and hinder job creation.”
Manufacturers have faced growing challenges over the past two years, including high production costs, foreign exchange volatility, rising energy prices, inflation and weak consumer purchasing power.
Many factories have been forced to reduce production, cut operating hours or suspend expansion plans because of the harsh business environment.
Industry stakeholders have repeatedly warned that the rising cost of borrowing has become one of the biggest obstacles to business growth.
Ajayi-Kadir attributed the decline in credit allocation to a combination of factors, including high interest rates, policy inconsistencies and bureaucratic delays.
He said manufacturers are currently operating in an environment where lending rates often exceed 30 per cent, making it extremely difficult for businesses to obtain affordable financing.
According to him, the situation has been made worse by the delay in implementing the N1 trillion Manufacturing Stabilisation Fund announced by the Federal Government in 2024.
The fund was included in the government’s Accelerated Stabilisation and Advancement Plan (ASAP) and was designed to help manufacturers cope with the impact of currency depreciation, rising energy costs and other economic pressures.
However, MAN said the fund has yet to be released almost two years after it was announced.
“The delay has left genuine manufacturers to operate in an interest-rate environment exceeding 30 per cent without the promised fiscal support,” Ajayi-Kadir said.
“As factories continue to scale down operations or exit the market, the gap between policy promises and actual disbursement highlights an implementation deficit that continues to constrain industrial development.”
The association warned that continued reduction in credit to manufacturing could have far-reaching consequences for the economy.
Among the likely effects, according to MAN, are lower factory capacity utilisation, slower growth in manufacturing output, reduced contribution of the sector to Gross Domestic Product (GDP), job losses and increased inflationary pressures.
The group also noted that weaker domestic production could increase demand for imported goods, thereby putting additional pressure on Nigeria’s foreign exchange reserves.
Ajayi-Kadir further expressed concern that inadequate financing could affect the implementation of the Nigeria Industrial Policy (NIP) 2025, which is expected to serve as a roadmap for industrial growth and economic transformation.
He argued that no industrial policy can succeed without adequate financial support for the businesses expected to drive its implementation.
“A visionary industrial policy without a functioning credit transmission mechanism will amount to a well-drafted but comatose aspirational policy,” he said.
“It is practically impossible to kick-start a manufacturing revolution without actively financing the factories tasked with building it.”
To reverse the trend, MAN called on monetary and fiscal authorities to introduce measures aimed at improving access to affordable credit.
The association urged policymakers to reduce benchmark interest rates by between 200 and 300 basis points over the next two quarters in order to make borrowing less expensive for manufacturers.
Ajayi-Kadir also recommended the introduction of incentives for commercial banks that allocate a significant portion of their lending portfolios to the manufacturing sector at single-digit interest rates.
He said such incentives could encourage financial institutions to increase support for productive activities that generate employment and contribute to economic growth.
In addition, MAN called for an increase in the capital base of the Bank of Industry (BOI), expansion of intervention financing programmes and the establishment of a government-backed loan guarantee scheme covering up to 50 per cent of loans granted to small and medium-scale manufacturers.
The association also urged the immediate release of the N1 trillion Manufacturing Stabilisation Fund and suggested that its management be transferred to the Bank of Industry.
According to MAN, the fund should carry a maximum interest rate of nine per cent and applications should be processed within seven days for qualified manufacturers.
Ajayi-Kadir further called for an urgent assessment of the manufacturing sector to determine how recent economic reforms have affected businesses.
He said such an audit would help policymakers understand the challenges facing manufacturers and demonstrate the government’s commitment to economic diversification.
The MAN director-general stressed that Nigeria’s ambition to become a major industrial economy would remain difficult to achieve unless manufacturers have access to affordable and reliable financing.
“Until policy promises are translated into accessible capital through transparent and effective channels, Nigeria’s ambition of becoming a competitive manufacturing powerhouse will remain stalled,” he said.