N1.92trn credit crunch threatens Nigeria’s industrialisation drive – MAN

By Yinka Kolawole

The Manufacturers Association of Nigeria (MAN) has voiced its worries regarding the significant drop in bank loans directed towards the manufacturing industry, cautioning that this situation could hinder industrial progress, increase joblessness, and threaten the success of the Nigeria Industrial Policy (NIP) 2025.

In a statement released yesterday, MAN’s Director-General, Segun Ajayi-Kadir, pointed out that the sector experienced a 22.5 percent decrease in credit, which amounts to roughly N1.92 trillion, characterizing this pattern as a serious obstacle to Nigeria’s goals for industrialization.

Ajayi-Kadir emphasized that for sustainable industrial advancement, access to reasonably priced financing is essential, noting that a decrease in available credit could further restrict the utilization of capacity, postpone technological improvements, and diminish job creation within the industry.

“The Nigerian manufacturing sector cannot succeed without a stable and expanding financial base. Limited access to credit hampers growth, creativity, and competitiveness,” he articulated.

MAN identified high borrowing costs as the primary barrier that hinders manufacturers from tapping into available bank funds. The association highlighted that by May 2026, the average prime lending rate was around 27 percent, while the highest lending rates had surged to 35.6 percent, rendering long-term investments in industry financially unfeasible.

The association also mentioned that the Central Bank of Nigeria’s strict Cash Reserve Ratio (CRR), projected to be between 45 and 50 percent for commercial banks, is a policy that considerably limits the funds available for loans in the banking sector.

Additionally, it expressed concern over the ongoing failure to implement the proposed ₦1 trillion Manufacturing Stabilisation Fund, even though it was included in the Federal Government’s Accelerated Stabilisation and Advancement Plan (ASAP) since 2024.

MAN stated that the situation has been aggravated by the CBN’s halt on new applications for its development finance programs, including the Real Sector Support Fund (RSSF), which had previously offered manufacturers access to concessional financing at single-digit rates.

“The withdrawal of these initiatives has compelled manufacturers to enter the commercial lending market, where interest rates above 35 percent make productive borrowing nearly impossible,” Ajayi-Kadir noted.

The association cautioned that the ongoing decrease in manufacturing credit could hinder capacity utilization, restrict the sector’s GDP contributions, prompt workforce reductions, and intensify inflationary pressures by limiting domestic output.

It also warned that a decline in manufacturing performance could heighten the demand for imports, thereby putting additional strain on foreign exchange reserves and undermining wider economic diversification efforts.

MAN contended that the issue is not a deficiency of available capital in the economy but a structural inefficiency in how development finance is directed to productive industries. The association asserted that using industrial intervention funds through traditional commercial banking paths, which favor short-term gains and rigid collateral demands, has largely neutralized their developmental effectiveness.

To address this issue, MAN called for a comprehensive overhaul of Nigeria’s framework for industrial financing, urging policymakers to separate developmental credit from traditional commercial bank limitations and to create financing methods specifically intended to foster long-term industrial expansion.

The association stressed that without prompt reforms to facilitate access to affordable credit, Nigeria risks stagnating its industrialization efforts and limiting the transformative potential of the Nigeria Industrial Policy 2025.
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