Nigerian deposit money banks disbursed a total of N60.35tn in credit to the manufacturing sector in the first nine months of 2025, a 20.44 per cent decline from the N75.86tn recorded in the corresponding period of 2024, The PUNCH has found.
An analysis of the Central Bank of Nigeria’s Quarterly Statistical Bulletin for the third quarter of 2025 indicated that lending to manufacturers slowed significantly during the period, reflecting the tight credit conditions the sector faced amid elevated borrowing costs.
Manufacturers have long called for a deeper rate cut that “can meaningfully lower the cost of credit and stimulate real sector investment”, as the apex bank gradually eased the interest rate benchmark.
The data showed that banks extended N60.35tn to manufacturers between January and September 2025, down from N75.86tn in the same period of 2024.
Monthly disbursement in 2025 revealed that January (N8.31tn) and February (N8.03tn) recorded the highest credit allocations to the sector.
On the other hand, September (N7.09tn) and June (N7.09tn) posted the lowest disbursements during the period.
In 2024, however, credit flows were significantly stronger. The highest disbursements were recorded in February (N10.88 tn) and January (N10.02 tn), while the lowest allocations were in September (N8.67 tn) and March (N8.70 tn).
Further analysis showed that the average monthly credit to manufacturers dropped to approximately N6.71tn in 2025, compared to approximately N8.43tn in 2024, signifying the tightening financial conditions that constrained industrial financing.
The 20.44 per cent decline came despite recent monetary policy easing by the apex bank. After maintaining a tight stance for years, the CBN made its first interest rate reduction in five years in 2025, cutting the Monetary Policy Rate by 50 basis points to 27 per cent from a historic high of 27.5 per cent.
In February 2026, the Monetary Policy Committee again reduced the benchmark interest rate by 50 basis points to 26.5 per cent, signalling the start of a gradual easing cycle.
Private sector groups have welcomed the signal which the easing came with while staying cautiously optimistic for a real impact. In an interview with The PUNCH, the Director-General of the Manufacturers Association of Nigeria, Segun Ajayi-Kadir, said the interest rate reduction could stimulate the real sector if banks transmit the lower policy rate to borrowers.
“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 at the end of the committee’s 304th meeting, held on 23 and 24 February 2026. Although the 50 basis points cut looks inconsequential, the implication for the economy, especially in the manufacturing sector, is significant,” Ajayi-Kadir said.
He noted that the benefits of the policy shift would depend on the willingness of banks to pass the lower rates to businesses and the stability of key macroeconomic indicators.
Ajayi-Kadir stated, “Currently, the lending rates from the commercial banks hover around 32 per cent to 37 per cent. A reduction in the Monetary Policy Rate by the Central Bank of Nigeria will have positive impacts on the real sector through several key channels, including lower borrowing costs for businesses, increased investment and employment, expansion of SMEs, increased demand for locally produced goods and stimulation of economic growth.”
MAN had earlier urged the apex bank to adopt more aggressive easing to support industrial growth. “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,” the association stated in its Manufacturers CEO’s Confidence Index report for the third quarter of 2025.
MAN is not alone in holding the position that executing more actions to improve the flow of easing interest rates is necessary. The Centre for the Promotion of Private Enterprise has called for improved transmission of the MPR easing at the level of commercial banks.
The Chief Executive Officer of the CPPE, Dr Muda Yusuf, said in a policy document that the gradual interest rate easing cycle could improve investor sentiment and support credit expansion in the economy.
“This policy direction is appropriate and growth-supportive. It reflects improving macroeconomic fundamentals and reinforces confidence in the economy’s stabilisation trajectory,” Yusuf said.
He, however, warned that structural challenges within the financial system could limit the impact of the policy easing. “A major concern remains the weak transmission mechanism between monetary policy adjustments and actual lending rates in the real economy. Despite reductions in the MPR, lending rates to businesses remain elevated due to structural factors including high cash reserve ratio, elevated cost of deposits, risk premiums and crowding-out effects from government borrowing,” Yusuf added.
He stressed that unless these constraints are addressed, the benefits of lower policy rates may not translate into cheaper credit for manufacturers and other productive sectors.
Industry stakeholders have repeatedly argued that high interest rates, alongside rising energy costs, logistics bottlenecks and exchange rate volatility, have constrained production and investment across the country’s manufacturing sector.