January 02, (THEWILL) — Bank lending to Nigeria’s manufacturing sector has declined by N2.17 trillion, raising fresh concerns about the health of the country’s industrial base and the broader economy. The drop highlights growing challenges faced by manufacturers, including rising interest rates, foreign exchange pressures, and weak consumer demand.
Tighter monetary conditions have made credit more expensive and less accessible, forcing many banks to reduce exposure to the manufacturing sector. As borrowing costs rise, manufacturers are increasingly unable to finance expansion, purchase raw materials, or upgrade equipment, leading to lower output and, in some cases, factory closures.
The decline in credit is also linked to foreign exchange instability. Many manufacturers rely heavily on imported machinery and inputs, and limited access to foreign currency has increased production costs. This has reduced profitability and heightened the risk profile of manufacturing firms, making banks more cautious in extending loans.
Manufacturers warn that reduced access to credit could worsen unemployment and slow economic growth, as the sector remains a major source of jobs and value addition. They have called on policymakers to introduce targeted interventions, including lower-interest funding windows and improved access to foreign exchange, to support industrial production.
Economists note that reversing the trend will require a balance between controlling inflation and ensuring that productive sectors such as manufacturing are not starved of credit. Without improved financing conditions, the sector’s contribution to economic diversification and growth may remain under pressure.
Ogochukwu Onwaeze
