Credit allocation drops by N1.92trn in 2025, despite banks’ N26.3trn revenue record

MAN laments, says development may hinder job creation

THE impressive showing being posted in the financial sector is yet to rub off positively on the country’s manufacturing sector, as bank credit allocation to the sector has continued to decline.

For instance, while the nation’s banks generated a combined N26.3 trillion in gross revenue in 2025, commercial bank credit allocation to manufacturing contracted by N1.92 trillion during the period under review.

According to data released by the Manufacturers Association of Nigeria (MAN), commercial bank credit allocation to manufacturing contracted by N1.92 trillion from N8.53 trillion in December 2024 to N6.61 trillion in December 2025, representing a significant year-on-year contraction of 22.5 percent.

The association described the development as particularly disturbing, since this represents one of the largest credit contractions among the top sectors, surpassed only by the General Services sector at 25 percent.

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It noted that the steep decline leaves manufacturing lagging far behind the extractive Oil & Gas Industry (N10.59 trillion) and a booming Finance sector (N9.24 trillion), thereby demonstrating a systemic preference for speculative and rent-seeking activities over tangible productivity.

“The 22.5 percent credit squeeze of N1.92 trillion from the manufacturing sector stands in unflattering contrast to contemporary global peers in 2025.

“For instance, India’s bank credit to industry grew by a robust 9.6 percent year-on-year by late 2025 as part of a deliberate 15 percent industrial credit expansion, while Vietnam aggressively projected a 19 percent to 20 percent credit growth target for 2025 to intentionally fuel its processing and manufacturing engines,” the association added.

MAN argued that the reduction in credit access could further limit capacity utilization, stall technological upgrades and hinder job creation.

It added that reducing financial support to manufacturing could also slow down vital diversification efforts, leaving the nation more vulnerable to external commodity shocks and supply-driven inflation.

Citing recent economic data, MAN attributed the contracted distribution of credit to a toxic combination of prohibitive interest rates, structural bureaucracy and policy misalignment.

According to the association, the primary barrier between manufacturers and financial bank liquidity remains the exorbitant cost of borrowing, arguing that despite the recent decision of the Central Bank of Nigeria (CBN) to trim the Monetary Policy Rate (MPR) to 26.5 percent, as a way of signaling disinflation, commercial lending rates still remain actively hostile to manufacturing sector expansion.

The association, therefore, described manufacturers’ cost of borrowing at an average of 27 percent prime lending rates and 36.5 percent maximum lending rates in major commercial banks, as of May 2026, as exploitatively high for the sector.

It described such rates as creating an environment that makes borrowing for long-term expenditure financially unviable.