The Manufacturers Association of Nigeria (MAN) have described what they described as severe financial constraint affecting their members and declining bank credit to the sector, which they said dropped from N8.53 trillion in December 2024 to N6.61 trillion at the close of 2025.

MAN’s Director-General, Segun Ajayi-Kadir, said the significant decline was particularly disturbing, given that manufacturing recorded one of the largest credit contractions among the top sectors, surpassed only by the general services sector at a 25 per cent shortfall.

Ajayi-Kadir noted that the steep 22.5 per cent contraction in commercial credit allocation to the sector has suppressed the capacity utilisation, stagnated the sector’s contribution to the country’s output, triggered job losses and increased price pressure.

Maintaining that the current funding framework should not be allowed to continue, the DG called for a further reduction of the benchmark interest rate by at least 200 basis points over the next two quarters to improve credit affordability to manufacturers

This comes as government borrowing accounted for the bulk of credit expansion in the past year, with new Central Bank of Nigeria (CBN) data showing that lending to the public sector grew nearly six times faster than credit to businesses.

The latest monetary statistics showed that government credit rose to N40.38 trillion in May 2026 from N22.99 trillion in the corresponding period of 2025, representing an increase of N17.39 trillion or 75.6 per cent.

By comparison, credit to the private sector increased by N3.07 trillion over the same period, rising from N77.97 trillion in May 2025 to N81.04 trillion in May 2026, a growth rate of 3.9 per cent.

The accelerated growth of credit to the government pushed the net domestic credit up by over 20 per cent year-on-year. In May 2025, the net domestic credit stood at N100.96 trillion, a figure that moved to N121.42 trillion last month.

The figures suggest that while lending activity remained positive across the economy, the strongest expansion in credit occurred in financing government obligations rather than businesses and households.

The data also showed that government credit increased by N779.7 billion between April and May this year, rising from N39.6 trillion to N40.38 trillion. Private-sector credit grew by N456.21 billion during the same period, increasing from N80.59 trillion to N81.04 trillion.

Although private-sector credit remained more than twice the size of government credit, its growth pace lagged behind that of public-sector borrowing.

In May, private-sector credit was about 2.01 times the level of government credit, but expanded by only 0.57 per cent month-on-month compared with the two per cent increase recorded for government lending.

The development comes despite the CBN’s continued efforts to maintain tight financial conditions to keep inflation under check.

Overall, the figures point to continued expansion in credit across the financial system, but with lending to government growing at a significantly faster pace than credit extended to the productive sectors of the economy.

The CBN has yet to provide a sectoral breakdown showing how the N81.04 trillion was distributed across the economy in May.

While the latest figures indicate that banks continued to extend credit to businesses despite elevated borrowing costs, they also show that public-sector borrowing remained a major driver of credit growth.

According to MAN DG, the steep decline leaves manufacturing lagging far behind the oil and gas industry’s N10.59 trillion credit stock and the finance sector (N9.24 trillion), demonstrating a systemic preference for speculative and rent-seeking activities over the real sector.

He noted that in comparison, India’s bank credit to industry grew by 9.6 per cent while Vietnam projected a 20 per cent credit growth target for the sector to intentionally fuel its processing and manufacturing engines.

He noted that the reduction in credit access would limit capacity utilisation, stall technological upgrades and hinder job creation.

“For the wider economy, reducing financial support to manufacturing could slow vital diversification efforts, leaving the country more vulnerable to external commodity shocks and supply-driven inflation,” he said.
Lamenting the high borrowing costs, he warned, manufacturers are being priced out of access to credit as lending rates have crossed 35 per cent.

“While the apex bank trimmed the monetary policy rate (MPR) to 26.5 per cent to signal disinflation, manufacturers’ costs of borrowing remained exploitatively high at an average of 27 per cent prime lending rates and 35.6 per cent maximum lending rates in major commercial banks. This creates an environment where borrowing for manufacturing is financially unviable,” he regretted.

He decried the continued non-implementation of the N1 trillion Manufacturing Stabilisation Fund under the Federal Government’s Accelerated Stabilisation and Advancement Plan (ASAP), saying the sector has waited for the funds to ameliorate the credit crunch in the sector and cushion the impact of currency devaluation and astronomical energy costs.

“The delay is worrisome. It has left us navigating over 30 per cent interest rates without the promised fiscal cushion. As factories continue to scale down operations or exit the business altogether, the gap between policy promises and the actual disbursement is symptomatic of an implementation deficit that continues to stifle Nigeria’s industrial potential,” he said.