Credit available to manufacturers dips by N810b

Operators in the real sector, particularly manufacturers, have cried out over Nigeria’s current average lending rate of 36.6 per cent, which they describe as “high and restrictive.”

They lamented that the asphyxiating lending rate of 36.6 per cent has forced a reduction in credit access to the manufacturing sector to N7.72 trillion as at March 2025, down from N8.53 trillion in December 2024, representing N810 billion dip.

Manufacturers, under their umbrella association, Manufacturers Association of Nigeria (MAN), said the high lending rate hinders production and reduces the sector’s competitiveness.

MAN, in its ‘Manufacturing State of Affairs’ which reviewed the sector’s last year’s performance and outlook for the current year, said the Central Bank of Nigeria (CBN’s) recent benchmark interest rate cut is “commendable and signals a welcome policy shift.”

The Association, however, insisted that the time has come for the apex bank to take a bolder step by introducing a deeper rate cut that can meaningfully lower the cost of credit and stimulate real sector investment.

“Growth cannot thrive where capital remains prohibitively expensive,” MAN Director General Segun Ajayi-Kadir, said, in the document which was made available to The Nation, during the week.

The CBN, citing progress in disinflation, made its first policy easing in five years, trimming the Monetary Policy rate (MPR) by 50 bps to 27 per cent.

Monetary policy remained tight for most of last year, with the CBN holding the Monetary Policy Rate (MPR) at 27 per cent to anchor inflation expectations and stabilise macroeconomic conditions.

Towards year-end, the CBN adopted a cautious easing stance, lowering the MPR to 27 per cent as inflation moderated, signalling a gradual shift towards disinflation while preserving macroeconomic stability.

Despite the rate easing, Ajayi-Kadir said high interest rates still restricted lending, with credit to the private sector falling to N75.83 trillion in August 2025 from N76.13 trillion in June 2025, for instance.

He, therefore, called for further reduction in the benchmark interest rate to reduce the cost of borrowing for manufacturers.

The MAN DG insisted that it is essential to reduce the cost of funds to encourage borrowing for expansion and investment.

He further stated that persistent high lending rates will further limit access to affordable credit for manufacturers, especially those within the Small and Medium Industries (SMI) cadre.

Advertisement

“The situation is complicated with prevailing structural challenges like poor infrastructure, high logistics costs, inadequate electricity supply, high energy cost and insecurity that cumulatively raise production costs and weaken competitiveness,” Ajaiyi-Kadir said.

He also sought a relief for manufacturers by way of launching a Manufacturing Refinancing and Rediscounting Facility (MRRF) that allows banks to refinance approved manufacturing loans at single-digit rates for up to seven years.

Ajaiyi-Kadir also called for the creation of a publicly accessible dashboard tracking lending flows, interest rate spreads, loan approvals and sectoral disbursement patterns in real time.

“CBN should consider additional policy instruments or incentives that facilitate credit flow to the real sector of the economy, especially the manufacturing sector,” the MAN chief added.

He also called on the federal Government to approve the N1 trillion stabilization fund for manufacturers and direct the CBN to increase the capital base of the Bank of Industry (BoI) to meet the credit demand of industries.

On its part, MAN, he said, will advocate for specialised financing mechanisms for manufacturing, including a Manufacturers Bank offering long-term concessionary credit.

Manufacturers’ outcry over lending rate come n the heels of projection by PwC Nigeria that credit conditions may remain tight in 2026, as both supply and demand-sides constraints may limit private-sector borrowing.