Nigerian Businesses Struggle with Credit Crunch Despite Rising Optimism — NESG-Stanbic Report

Nigerian businesses experienced a deepening credit crunch in June 2025 despite signs of robust economic recovery, according to the latest NESG-Stanbic IBTC Business Confidence Monitor (BCM). The report highlighted that while business activity and confidence improved for the sixth consecutive month, limited access to finance remains the leading obstacle for firms, reflecting deeper structural issues in the economy.

The Current Business Performance Index rose to 113.6 in June from 109.8 in May, signaling continued expansion. Meanwhile, the Business Confidence Measure surged to 134.5—its highest in 2025—indicating that businesses maintain a positive outlook even in the face of operational headwinds. However, that optimism is increasingly challenged by harsh operating conditions, including financial constraints, erratic power supply, forex volatility, and policy uncertainty.

The manufacturing sector led the growth trajectory, with its index climbing to 123.6 points, driven by key sub-sectors such as Textiles, Cement, Plastics, Wood, and Paper Products. Improved supply chains and recovering demand contributed to this expansion. Nonetheless, firms still contend with numerous challenges like rising input costs, unstable electricity, raw material shortages, and inflation-driven pressures.

Additionally, the non-manufacturing sector, though still expanding with an index of 120.7 points, saw its second consecutive monthly dip. Service-based industries faced increasing burdens from soaring energy and transport costs, currency instability, and outdated infrastructure. The Motor Vehicle and Assembly segment notably declined, but overall sectoral gains preserved growth momentum.

Amid these challenges, the Manufacturers Association of Nigeria (MAN) has urged the Central Bank of Nigeria (CBN) to cut interest rates and improve credit availability. However, at its late July meeting, the CBN opted to maintain the benchmark rate at 27.5%, resisting industry pressure. MAN emphasized the need for a more supportive fiscal framework to unlock long-term loans and stimulate real sector investment.

Source: The sun