Bank credit to Nigerian manufacturers plunges 26.8% to N5.19trn in one year

Credit extended by Nigerian banks to the manufacturing sector fell by 26.8 per cent year-on-year to N5.19 trillion in June 2026, highlighting mounting financing challenges for businesses grappling with high production costs and persistent operational constraints.

Data from the Central Bank of Nigeria’s (CBN) second-quarter 2026 statistical bulletin showed that outstanding bank credit to manufacturers declined from N7.09 trillion in June 2025 to N5.19 trillion in June 2026.

The contraction also reflected a sustained downward trend in manufacturing credit during much of the first half of 2026, raising concerns about access to financing for businesses seeking to maintain production and expand capacity.

CBN figures showed that credit to the sector dropped from N6.57 trillion in January 2026 to N5.19 trillion in June, representing a decline of approximately 21 per cent within six months.

Monthly data indicated that lending fell consistently between January and May before recording a modest recovery in June. However, the latest balance remained significantly below the level recorded a year earlier.

The figures measure outstanding credit balances and do not, on their own, establish whether the decline resulted from reduced new lending, loan repayments or other changes in banks’ credit exposure.

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The development comes as manufacturers contend with rising electricity costs, expensive raw materials, logistics bottlenecks, exchange-rate volatility and other pressures affecting their operations.

These challenges have increased production expenses, complicated business planning and heightened the need for affordable financing to support working capital, equipment purchases and capacity expansion.

Despite the decline in bank credit, manufacturing continues to contribute significantly to Nigeria’s economic output and government revenue.

The sector accounted for 9.57 per cent of Nigeria’s real Gross Domestic Product in the first quarter of 2026, according to previously reported figures.

Data from the National Bureau of Statistics (NBS) also showed that manufacturing generated N297.68 billion in Value Added Tax revenue in the second quarter of 2025, up from N286.95 billion in the preceding quarter.

For the full year 2025, the sector contributed N1.17 trillion in VAT revenue, compared with N803.53 billion in 2024.

The figures underscore manufacturing’s importance to public revenue even as businesses face financing constraints and rising operating expenses.

Manufacturers continue to face structural challenges, including unreliable electricity supply, high energy costs, insecurity, multiple taxation, exchange-rate instability and rising input prices.

The cost of alternative electricity generation has become a particular burden for businesses that depend on diesel and gas-powered generators to sustain production during grid outages.

Logistics constraints and fluctuations in the cost of imported raw materials have further increased expenses, making it more difficult for businesses to maintain competitive prices and invest in expansion.

Against this backdrop, declining outstanding bank credit could complicate efforts by manufacturers to finance daily operations, acquire machinery and upgrade production facilities.

Affordable and accessible financing is particularly important for businesses seeking to improve productivity, expand capacity and reduce unit production costs.

The latest CBN figures therefore highlight the importance of monitoring credit flows to the real sector, particularly manufacturing, as policymakers pursue efforts to strengthen domestic production, create jobs and reduce dependence on imported goods.