Leading Nigerian manufacturers have significantly scaled down bank borrowings due to persistently high lending rates. Combined bank loans for major manufacturers fell 20.3% to N2.014 trillion in the first nine months of 2025 from N2.526 trillion in the same period of 2024.

Key drivers of the shift:

• Companies are increasingly relying on equities, corporate bonds, commercial papers, and retained earnings.
• The reduction in bank borrowing has resulted in a 52.8% decline in aggregate finance costs, dropping to N662 billion from N1.4 trillion.
• Despite the borrowing cut, the combined turnover of the firms rose 37.9% to N10.1 trillion, and the sector swung from a N116 billion loss in 2024 to a N2.5 trillion profit in 2025.
• Cost of sales, however, rose 57.9% to N5.7 trillion, reflecting persistent input inflation.

Examples of borrowing reductions:

• BUA Foods: N1.105 trillion (from N1.559 trillion)
• Nestlé Nigeria: N521.01 billion (from N653.70 billion)
• Nigerian Breweries: N162.17 billion (from N204.17 billion)
• NASCON Allied: N67 million (from N3.3 billion)

Expert commentary:

• David Adonri (HighCap Securities): Companies are moving away from banks due to high interest, which may reduce banks’ income, but lowers finance costs for manufacturers.
• Dr. Muda Yusuf (CPPE): The trend shows cautious business behavior; firms are leveraging cheaper funding options while FX stability and macroeconomic improvements boost profitability.
• Tajudeen Olayinka (Banker/Stockbroker): The 20% drop is prudent financial management and not a threat to the economy.
• Clifford Egbomeade (Public Analyst): The move is a defensive response to the CBN’s 27.5% Monetary Policy Rate, with lending rates above 30%.

Policy implications:

• Banks may face subdued loan growth as manufacturers increasingly bypass high-interest bank credit.
• Experts suggest targeted credit interventions via development banks, the Bank of Industry, or credit guarantees to reconnect banks with industry.

Sector outlook:

• The manufacturing sector shows signs of recovery, but remains fragile due to inflation, energy costs, and infrastructure bottlenecks.
• Continued policy consistency, affordable credit, and investment in productivity are needed to consolidate gains in 2026.