Banks have significantly slashed credit to Nigeria’s manufacturing sector, with total loans falling by 26 per cent year-on-year to N8 trillion in February 2025, compared to N10.9 trillion recorded in the same period of 2024.
The latest economic report released by the Central Bank of Nigeria (CBN) indicates that funding to manufacturers has now contracted for two consecutive months, underlining growing challenges in the sector.
On a month-on-month basis, bank loans to manufacturers dropped by 2.6 per cent to ₦8.309 trillion in January 2025, down from ₦8.529 trillion in December 2024. The decline continued in February, with lending falling a further 3.4 per cent to ₦8.029 trillion.
As a result of the sustained drop, the manufacturing sector’s share of total private sector credit has continued to shrink. In February 2025, manufacturing accounted for just 13.9 per cent of total lending, a sharp drop from 17.7 per cent in February 2024. The figure also slipped slightly from 14.2 per cent in January 2025, indicating a steady downward trend in credit allocation.
The CBN report further showed that total credit extended by Other Depository Corporations (ODCs) to key sectors of the economy fell by 1.12 per cent to ₦57.94 trillion at the end of February, compared to ₦58.60 trillion recorded in January 2025.
The services sector, which remains the largest recipient of bank credit, also recorded a significant 6.11 per cent decline in loan disbursements during the review period. However, some sectors showed modest gains, with credit to agriculture rising by 4.66 per cent and loans to industry increasing by 4.98 per cent, indicating that targeted interventions aimed at boosting food production and industrial activities may be yielding some results.
Despite the declines, the services sector continued to dominate total credit distribution, accounting for 52.10 per cent of all loans, followed by the industry sector with 42.49 per cent, while agriculture received 5.41 per cent.
The sharp contraction in bank lending to manufacturers has raised fresh concerns over the health of Nigeria’s industrial sector, which is already contending with high production costs, foreign exchange volatility, and weakening consumer demand.
Analysts warn that continued credit tightening could further depress industrial output and undermine ongoing efforts to diversify the economy.
Industry leaders have consistently called for more supportive lending policies and easier access to affordable financing as a means to revive the manufacturing sector, which is widely regarded as critical to job creation, economic resilience, and sustainable growth.
