HIGH INTEREST RATES PUSH DOWN MANUFACTURING CREDIT

The cost of bank credit to Nigerian manufacturers rose sharply between 2020 and 2025, while lending to the sector declined, according to data from the Manufacturers Association of Nigeria.

Manufacturers paid an average interest rate of 32.2 per cent on bank loans in 2025, up from 21 per cent in 2020. Although the average lending rate fell from 35.6 per cent in 2024, borrowing costs remained significantly higher than five years earlier.

The high cost of credit has increased financial pressure on manufacturers that depend on bank loans to fund working capital, purchase raw materials, maintain inventories and finance expansion.

MAN data showed that commercial bank credit to the manufacturing sector fell by N1.92tn, from N8.53tn in December 2024 to N6.61tn in December 2025. This represented a 22.5 per cent decline.

MAN Director-General, Segun Ajayi-Kadir, said the reduction in credit access could affect manufacturers’ ability to increase production, upgrade technology and create jobs.

Financial analyst Ike Ibeabuchi also noted that borrowing rates above 30 per cent could influence decisions by companies considering factory expansion, new production lines or equipment purchases.

Manufacturers have continued to face other operating pressures, including energy costs, foreign exchange challenges and weaker consumer demand.

The decline in sectoral lending comes despite growth in overall private-sector credit, highlighting the reduced share of bank financing available to manufacturers.

MAN said stronger and more sustainable access to finance would be necessary to support manufacturing growth and broader economic diversification.