The Manufacturers Association of Nigeria (MAN) yesterday lamented that commercial bank credit allocation to the sector 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 per cent.

MAN described the situation as “particularly disturbing” given that manufacturing recorded one of the largest credit contractions among the top sectors, surpassed only by the General Services sector at -25 per cent.

MAN Director General Segun Ajayi-Kadir, in a statement released on Monday, said, for instance, 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).

Ajayi-Kadir, while pointing out that this demonstrates a systemic preference for speculative and rent-seeking activities over tangible productivity, insisted that the 22.5 per cent credit squeeze of N1.92 trillion from the manufacturing sector stands in unflattering contrast to contemporary global peers in 2025.

He said, for instance, that India’s bank credit to industry grew by a robust 9.6 per cent year-on-year by late 2025 as part of a deliberate 15 per cent industrial credit expansion, while Vietnam aggressively projected a 19 per cent to 20 per cent credit growth target for 2025 to intentionally fuel its processing and manufacturing engines.

“Clearly, the Nigerian manufacturing sector cannot thrive without sustainable and growing financial foundations. The reduction in credit access could further limit capacity utilization, stall technological upgrades and hinder job creation.

“For the wider economy, reducing financial support to manufacturing could slow down vital diversification efforts, leaving the nation more vulnerable to external commodity shocks and supply-driven inflation,” Ajayi-Kadir said.

He blamed the sharp decline in credit to the manufacturing sector on a number of factors, including Nigeria’s prohibitive interest rates, elevated cash reserve requirements & risk aversion of commercial banks, non-implementation of the N1 Trillion Manufacturing Stabilization Plan, and the Central Bank of Nigeria (CBN’s) policy shift to halt direct development financing among others.

According to the MAN DG, a review of recent economic data, industry reports and insights from key operators reveals that the contracted distribution of credit to manufacturing is rooted in a toxic combination of prohibitive interest rates, structural bureaucracy and policy misalignment.

He said, for instance, that the primary barrier between manufacturers and financial bank liquidity is the exorbitant cost of borrowing.

While the CBN has recently made slight policy adjustments by trimming the Monetary Policy Rate (MPR) to 26.5 per cent to signal disinflation, Ajayi-Kadir lamented that commercial lending rates remain actively hostile to manufacturing sector expansion.

“As of May 2026, manufacturers’ costs of borrowing remain exploitatively high at an average of 27 per cent prime lending rates and 35.6 per cent maximum lending rates in major commercial banks. Creating an environment where borrowing for long-term manufacturing capital expenditure is financially unviable,” he said.

MAN also kicked that the persistent non-implementation of the N1 trillion Manufacturing Stabilization Fund, despite its prominent inclusion in the Accelerated Stabilization and Advancement Plan (ASAP) since 2024, remains an issue of promise not kept for the manufacturing sector.

“For two years, we have awaited this fund to ameliorate the credit crunch in the sector and to cushion the impact of the twin shocks of currency devaluation and astronomical energy costs. There appears to be no visible effort at delivering on that score,” Ajayi-Kadir lamented

Describing this delay as “worrisome,” he said it has left genuine manufacturers to navigate over 30 per cent interest rate environment 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,” the MAN boss said.

He further said the steep 22.5 per cent contraction in manufacturing credit could also be linked to the CBN’s policy decision to halt its direct development finance interventions.

By suspending new applications for real-sector support windows like the Real Sector Support Fund (RSSF), he said the monetary authority has abruptly cut off manufacturers from vital single-digit concessionary capital.

Also, the CBN, he said, maintained a stringent Cash Reserve Ratio of up to 45 per cent–50 per cent for commercial banks, a policy which, according to him, effectively constrained a large portion of loanable banking liquidity.

Another factor is the systemic risk aversion of commercial banks. “A critical flaw in the architecture of government interventions is the reliance on commercial banks to act as Participating Financial Institutions (PFIs). The CBN provides the liquidity at lower rates, but PFIs assume the credit risk.

“Consequently, commercial banks impose their standard, risk-averse commercial criteria on these developmental funds. Manufacturers are subsequently asked to provide collateral and meet equity contributions that they cannot afford.

“Therefore, while the funds exist to help struggling manufacturers, they can only be accessed by large companies that are already highly liquid and secure.” Ajayi-Kadir complained.

MAN insisted that the current funding framework is unfit for purpose, pointing out that without a dedicated, shielded financial mechanism, the sector cannot operate competitively.

To rectify what it termed as funding failure, the Association pushed for a further reduction of the benchmark interest rate by at least 200–300 basis points over the next two quarters to improve credit affordability for manufacturers.

It also sought a reduction of the Cash Reserve Ratio (CRR) for commercial banks that allocate at least 40 per cent of their lending portfolio to manufacturers at single-digit interest rates, as well as an increase in the capital base of the Bank of Industry (BOI) to meet direct credit demands, bypassing the stringent commercial bank PFIs where possible.

Other reliefs sought by MAN include the need to expand the BoI’s intervention fund to allow manufacturers to refinance high-interest commercial bank loans at a fixed seven–nine per cent rate for a minimum of 10 years; operationalize a 50 per cent government-backed guarantee for commercial bank loans extended to Small and Medium Industries (SMIs) involved in value-added processing.

MAN also called for the enforcement of the release of the N1 Trillion Manufacturing Stabilization Fund, as well as the transfer of the management of the Manufacturing Stabilization Fund to the BOI with a mandate for a nine per cent interest rate cap and a strict 7-day processing timeline for verified manufacturers.

The Association emphasised that the persistent financial starvation of Nigerian manufacturing stems not from an absolute scarcity of national capital, but from a fundamental breakdown in policy alignment and distribution architecture.

It stated that deploying developmental funds through flawed commercial banking channels that prioritize short-term profitability and rigid collateral over long-term industrial viability inherently neutralizes their economic intent.

“In an environment destabilized by a high rate of foreign exchange and volatility (though less severe) and commercial lending rates soaring past 30 per cent, these interventions do not catalyse real-sector growth. They have shown that allocating liquidity through a flawed mechanism does not help industrialization,” Ajayi-Kadir said.

To reverse this structural stagnation and unlock the sector’s potential, He said Nigeria must radically decouple developmental credit from the risk-averse restrictions of standard commercial banking frameworks.