Manufacturers Association of Nigeria says shrinking bank lending threatens industrial growth, jobs and economic diversification as sector loses N1.92 trillion in credit

The Director-General of the Manufacturers Association of Nigeria (MAN), Mr Segun Ajayi-Kadir, on Tuesday in Lagos raised fresh concerns over a sharp decline in bank lending to the manufacturing sector, warning that the development could weaken industrial expansion, threaten jobs and slow Nigeria’s economic diversification agenda.

Ajayi-Kadir disclosed that commercial bank credit to manufacturers fell by N1.92 trillion between December 2024 and December 2025, describing the trend as a significant setback for a sector widely regarded as critical to sustainable economic growth.

According to the MAN Director-General, commercial bank credit to manufacturing declined from N8.53 trillion in December 2024 to N6.61 trillion in December 2025, representing a 22.5 per cent year-on-year contraction.

The latest figures place manufacturing behind both the oil and gas sector, which attracted N10.59 trillion in credit, and the finance sector, which received N9.24 trillion during the same period.

Ajayi-Kadir said the contraction reflected a worrying shift in financial sector priorities, with productive industries increasingly struggling to access capital while funds continue to flow into sectors perceived as less risky or more immediately profitable.

“The reduction in credit access could further limit capacity utilisation, stall technological upgrades, and hinder job creation,” Ajayi-Kadir said.

The warning comes at a time when manufacturers are already grappling with elevated production costs, foreign exchange volatility, high energy prices and weak consumer purchasing power.

Industry operators have repeatedly argued that access to affordable financing remains one of the most powerful tools needed to boost local production and improve competitiveness.

Drawing comparisons with other developing economies, Ajayi-Kadir noted that countries such as India and Vietnam recorded substantial growth in industrial credit during 2025 as part of deliberate efforts to strengthen their manufacturing bases.

“Clearly, the Nigerian manufacturing sector cannot thrive without sustainable and growing financial foundations,” he said.

The MAN Credit Drop to Manufacturers has also renewed debate about the implementation of government support programmes designed to cushion the effects of recent economic reforms.

Ajayi-Kadir criticised the continued delay in operationalising the N1 trillion Manufacturing Stabilisation Fund, which was announced under the Federal Government’s Accelerated Stabilisation and Advancement Plan in 2024.

The fund was introduced to help manufacturers cope with the impact of currency depreciation, rising energy costs and broader macroeconomic pressures. However, manufacturers say the facility has remained inaccessible nearly two years after it was unveiled.

“The delay has left genuine manufacturers to operate in an interest-rate environment exceeding 30 per cent without the promised fiscal support,” Ajayi-Kadir stated.

He added that the gap between policy announcements and implementation was creating uncertainty across the sector, with some firms scaling down operations while others struggle to maintain production levels.

The association warned that the consequences of the credit squeeze could extend beyond factory floors. Reduced manufacturing output may contribute to slower GDP growth, increased unemployment, supply-side inflation and additional pressure on foreign exchange demand through higher import dependence.

Ajayi-Kadir further cautioned that the success of the 2025 Nigeria Industrial Policy could be undermined if manufacturers continue to face barriers to affordable financing.

“A visionary industrial policy without a functioning credit transmission mechanism will amount to a well-drafted but comatose aspirational policy,” he said.

To reverse the trend, MAN called on monetary authorities to reduce benchmark interest rates by between 200 and 300 basis points over the next two quarters.

The association also urged the government to introduce incentives for banks that provide manufacturing loans at single-digit interest rates.

Other recommendations include expanding the capital base of the Bank of Industry, increasing intervention funding, introducing a 50 per cent government-backed loan guarantee scheme for small and medium-sized manufacturers, and immediately releasing the N1 trillion Manufacturing Stabilisation Fund.

Ajayi-Kadir proposed that the fund should be managed by the Bank of Industry with a maximum interest rate of nine per cent and a processing timeline of seven days for eligible applicants.

The association also called for an urgent assessment of the manufacturing sector to evaluate the impact of recent economic reforms and identify areas requiring policy intervention.

As Nigeria seeks to strengthen domestic production and reduce dependence on imports, industry stakeholders argue that affordable and accessible financing will remain central to achieving those ambitions.

“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,” Ajayi-Kadir said.