Nigerian deposit money banks disbursed a total of N60.35 trillion in credit to the manufacturing sector during the first nine months of 2025, marking a 20.44 per cent decline from N75.86 trillion recorded in the same period of 2024.
An analysis of the Central Bank of Nigeria’s (CBN) Quarterly Statistical Bulletin for Q3 2025 indicated that lending to manufacturers slowed significantly amid tight credit conditions and elevated borrowing costs.
Manufacturers have long advocated for a deeper monetary easing to reduce the cost of credit and stimulate investment in the real sector.
The data showed that banks extended N60.35 trillion to manufacturers between January and September 2025, compared with N75.86 trillion in the same period of 2024. January (N8.31tn) and February (N8.03tn) recorded the highest monthly disbursements in 2025, while June and September posted the lowest at N7.09 trillion each.
By comparison, 2024’s highest disbursements were in February (N10.88tn) and January (N10.02tn), and the lowest were in September (N8.67tn) and March (N8.70tn). The average monthly credit to manufacturers fell to approximately N6.71tn in 2025, down from about N8.43tn in 2024.
The decline occurred despite the CBN cutting its Monetary Policy Rate (MPR) by 50 basis points to 27 per cent in 2025, the first reduction in five years. In February 2026, the CBN further reduced the MPR by 50 basis points to 26.5 per cent, signaling the start of a gradual easing cycle.
Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, said the policy shift could stimulate the real sector if commercial banks pass the lower rates on to businesses.
“The Monetary Policy Committee of CBN announced the reduction of the benchmark interest rate by 50 basis points from 27 per cent to 26.5 per cent. Although the cut looks small, the implication for the economy, especially the manufacturing sector, is significant,” Ajayi-Kadir said.
He noted that current lending rates from banks hover around 32–37 per cent and that a reduction in the MPR could lower borrowing costs, increase investment, expand SMEs, stimulate demand for locally produced goods, and drive economic growth.
MAN has urged the apex bank to introduce deeper rate cuts to meaningfully lower the cost of credit. Similarly, the Centre for the Promotion of Private Enterprise (CPPE) welcomed the easing but warned that structural challenges, including high cash reserve ratios, elevated deposit costs, risk premiums, and government borrowing, could limit its impact.
Dr Muda Yusuf, CEO of CPPE, said, “A major concern remains the weak transmission mechanism between monetary policy adjustments and actual lending rates. Despite reductions in the MPR, lending rates to businesses remain elevated due to structural factors.”
Industry stakeholders have also cited rising energy costs, logistics bottlenecks, and exchange rate volatility as additional constraints on production and investment.
MAN projects that if the disinflation trend continues, the benchmark interest rate could fall to approximately 23 per cent in 2026, a move expected to expand credit and stimulate industrial output.
