Banks’ credit to manufacturers falls 26.8% to N5.19trn
Manufacturing Sector Faces Challenges as Bank Loans Decline by Nearly 27%
By Yinka Kolawole
Nigerian banks have significantly reduced their lending to the manufacturing sector, with loans dropping by 26.8% year-on-year to N5.19 trillion in the first half of 2026, down from N7.09 trillion during the same period in 2025. This decline highlights ongoing financing constraints and rising operational costs faced by manufacturers.
Data from the Central Bank of Nigeria’s (CBN) second-quarter statistical bulletin revealed that outstanding bank credit to manufacturers decreased by approximately 21% from January to June 2026, falling from N6.57 trillion to N5.19 trillion. Monthly figures showed a gradual decline, with credit dipping from N6.57 trillion in January to a low of N5.02 trillion in May, before slightly recovering to N5.19 trillion in June. Despite the slight uptick in June, the figure remains considerably lower than last year’s levels.
Manufacturers are struggling with high production costs, expensive electricity, logistics challenges, and exchange-rate pressures. While the decrease in outstanding credit suggests a pressing issue for lending, it is unclear if this resulted primarily from reduced new lending, increased loan repayments, or shifts in banks’ credit portfolios.
In response to these challenges, the National Credit Guarantee Company (NCGC) announced it has facilitated N46.95 billion in loans for 67,512 borrowers, leveraging N21.59 billion in guarantees to manage lending risks. Dr. Bonaventure Okhaimo, the NCGC’s managing director, emphasized the need for expanded credit guarantees to enhance access to finance for manufacturers and small businesses.
The Bank of Industry (BoI) recently indicated that Nigeria requires over $35 billion annually to boost industrialization and elevate manufacturing’s share of Gross Domestic Product to 25%. Dr. Olasupo Olusi, managing director of BoI, noted that no single institution can fill this funding gap. The financing shortfall was highlighted by the bank’s 2025 application pipeline, which exceeded N1.7 trillion, while available funding stood at only N645 billion.
The Manufacturers Association of Nigeria (MAN) supported the NCGC’s credit guarantee initiative but noted that the total amount unlocked remains insufficient compared to the estimated $35 billion needed for annual industrial financing. MAN’s Director-General, Segun Ajayi-Kadir, described the guarantee model as a valuable risk-sharing mechanism, but emphasized that the N46.95 billion secured is a small fraction of what is needed.
In commentary on the situation, Dr. Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), called for strengthened credit guarantees to reduce perceived risks associated with lending to the manufacturing sector, agriculture, and small to medium enterprises (SMEs).
The finance minister, Taiwo Oyedele, also underscored the importance of a coordinated financing framework that engages government, regulators, and commercial capital providers. He suggested that Nigeria must explore innovative financing sources beyond traditional bank lending to create a robust support system for manufacturing.
Senator John Enoh, Minister of State for Industry, reflected on the inadequacy of Nigeria’s financing structures, positing that manufacturers need long-term financing solutions that align with their investment cycles.
The dialogue around financing remains critical as industry stakeholders push for robust measures to address the systemic challenges hindering growth and stability within the manufacturing sector.
