Banks cut loans to key sectors of the Nigerian economy by N2.1 trillion in the first half of 2025, amid challenges including high interest rates, weak consumer demand, and structural bottlenecks.

Key highlights:

• Manufacturing loans fell 16.8% (N1.437 trillion) to N7.091 trillion.
• Trade/General Commerce loans dropped 15% (N682 billion) to N3.855 trillion.
• Education sector loans declined 11% (N9.8 billion) to N79.43 billion.
• Real Estate loans fell 5.5% (N53 billion) to N904.15 billion.
• General activities loans slashed 22% (N1.29 trillion) to N4.03 trillion.

Overall, bank lending to these five sectors dropped 17.5% (N3.48 trillion) to N16.432 trillion, and total private sector credit fell 17.8% (N1.057 trillion) to N58.159 trillion. Their share of total private sector loans declined from 33.6% to 28.3%.

Analysts at FBNQuest identified limited access to affordable credit, unreliable power, inadequate infrastructure, and high interest rates as major constraints on manufacturing growth, which averaged 1.29% over five quarters to Q1 2025.

FDI into manufacturing also fell sharply, with Q1 2025 inflows at $129.2 million, down from $421 million the previous quarter—the lowest since Q2 2022. Analysts warn that realizing manufacturing’s potential requires tackling structural deficiencies and macroeconomic pressures.