Nigerian Factories Lose 22.5% Credit as Banks Chase Quick Money
Nigerian manufacturers just lost N1.92 trillion in commercial bank credit, marking a massive 22.5% drop that threatens our industrial sovereignty. Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria (MAN), revealed the hard truth on Tuesday in Lagos. The banks are abandoning the factories that build nations to chase quick cash in oil and finance.
Why are banks abandoning Nigerian factories?
The numbers tell a grim story. Commercial bank credit to manufacturing fell from N8.53 trillion in December 2024 to N6.61 trillion in December 2025. That is a 22.5% year-on-year contraction. While our factories bleed, the oil and gas sector swallowed N10.59 trillion, and the finance sector grabbed N9.24 trillion. Ajayi-Kadir called this out for what it is: a dangerous preference for speculative rent-seeking over productive sectors that actually drive real economic growth.
How does this compare to other emerging economies?
While Nigeria starves its production base, countries like India and Vietnam are expanding their industrial credit to boost manufacturing. They understand that true independence comes from building things at home. Here, the credit squeeze is doing massive damage. Ajayi-Kadir warned that reduced credit access limits capacity utilisation, stalls technological upgrades, and kills job creation for our youth.
Where is the promised N1 trillion Manufacturing Stabilisation Fund?
Back in 2024, the Federal Government included a N1 trillion Manufacturing Stabilisation Fund in its Accelerated Stabilisation and Advancement Plan (ASAP). Two years later, manufacturers are still waiting for the cash. Ajayi-Kadir did not hold back.
The delay has left genuine manufacturers to operate in an interest-rate environment exceeding 30 per cent without the promised fiscal support. As factories continue to scale down operations or exit the market, the gap between policy promises and actual disbursement highlights an implementation deficit that continues to constrain industrial development.
Factories are shutting down. The sector's GDP contribution is stagnating. We are losing jobs and facing supply-side inflation, all because policy promises are not turning into accessible capital. Ajayi-Kadir made it clear that a visionary industrial policy without a functioning credit transmission mechanism is just a comatose aspirational policy.
What solutions did MAN propose to save the sector?
MAN is not just pointing fingers. They brought solid, actionable solutions to the table. Ajayi-Kadir demanded the following steps to save Nigerian manufacturing:
- Cut benchmark interest rates by 200 to 300 basis points over the next two quarters.
- Provide incentives for banks that lend to manufacturers at single-digit interest rates.
- Increase the capital base of the Bank of Industry (BOI) and expand its intervention funds.
- Launch a 50% government-backed loan guarantee scheme for small and medium-scale manufacturers.
- Immediately release the N1 trillion Manufacturing Stabilisation Fund and transfer its management to the BOI with a 9% interest rate cap and a seven-day processing timeline.
Ajayi-Kadir also urged the government to conduct an urgent audit of the manufacturing sector to assess the impact of recent economic reforms. Until policy promises become accessible capital through transparent channels, Nigeria's ambition of becoming a competitive manufacturing powerhouse will remain stalled.
Why did manufacturing credit drop in Nigeria?
Manufacturing credit dropped by 22.5% due to high interest rates, bureaucratic bottlenecks, and policy inconsistencies. Banks also prefer to lend to speculative sectors like oil and gas rather than productive manufacturing.
What is the N1 trillion Manufacturing Stabilisation Fund?
It is a fund promised by the Federal Government in 2024 under the Accelerated Stabilisation and Advancement Plan (ASAP) to cushion manufacturers from currency depreciation and rising energy costs. It has not been disbursed two years later.
How can Nigeria fix the manufacturing credit squeeze?
Nigeria can fix the squeeze by cutting benchmark interest rates, incentivizing single-digit bank loans to factories, boosting the Bank of Industry's capital, and immediately releasing the delayed N1 trillion stabilisation fund.