Nigerian banks have reduced credit to manufacturers and traders by N2.1 trillion in the first half of 2025 amid persistent structural and macroeconomic challenges in the manufacturing sector.

According to Central Bank of Nigeria (CBN) data, loans to manufacturers fell 16.8%, dropping N1.437 trillion to N7.091 trillion by June 2025 from N8.528 trillion in December 2024. Loans to the Trade/General Commerce sector fell 15%, or N682 billion, to N3.855 trillion, while Education loans decreased by 11% to N79.43 billion. The Real Estate sector also saw a 5.5% decline, and loans to sundry activities categorized as “General” dropped 22%.

Overall, loans to these five key sectors fell by 17.5%, from N19.909 trillion to N16.432 trillion, and total bank credit to the private sector declined 17.8% to N58.159 trillion. Consequently, the share of these sectors in total bank lending fell to 28.3% from 33.6%.

Analysts at FBNQuest Merchant Bank noted that limited access to affordable finance, coupled with high interest rates, weak consumer demand, and infrastructural deficits, has constrained manufacturing growth, which averaged just 1.29% over the past five quarters to Q1 2025.

The report also highlighted a sharp decline in foreign direct investment into the sector, falling to $129.2 million in Q1 2025, down from $421 million in the previous quarter, reflecting waning investor confidence.

FBNQuest analysts warned that while Nigeria’s manufacturing sector has strong potential to drive industrialisation and economic diversification, unlocking this potential will require urgent structural reforms, improved access to finance, and macroeconomic stability.