Nigeria’s banks have cut loans to manufacturers and traders by N2.1 trillion in the first six months of 2025, highlighting growing financial pressures in key sectors of the economy. Loans to these sectors fell from N13.065 trillion at the end of 2024 to N10.946 trillion by June 2025, marking a 16.2% decline, according to analysis of Central Bank of Nigeria (CBN) data. The reductions come amid rising interest rates, weak consumer demand, and structural bottlenecks in the economy.
The manufacturing sector saw its loan portfolio shrink by 16.8% or N1.437 trillion, dropping from N8.528 trillion in December 2024 to N7.091 trillion in June 2025. Similarly, loans to the trade sector declined by 15% or N682 billion to N3.855 trillion. Education and real estate sectors were not spared, with loans dropping by 11% and 5.5%, respectively, while loans to sundry activities fell sharply by 22% to N4.03 trillion. Overall, the five sectors experienced a combined reduction of 17.5% in bank lending.
The contraction in sectoral loans also affected total credit to the private sector, which fell by 17.8% or N1.057 trillion, from N59.216 trillion at the end of 2024 to N58.159 trillion by June 2025. The five key sectors now account for 28.3% of total private sector lending, down from 33.6% six months earlier. Analysts warn that limited access to affordable credit remains a major factor constraining growth in Nigeria’s manufacturing sector, which has averaged just 1.29% growth over the last five quarters.
FBNQuest Merchant Bank analysts say the sector’s persistent underperformance stems from unreliable power supply, infrastructure gaps, regulatory bottlenecks, and elevated interest rates. Compounding the challenges are falling consumer purchasing power and declining foreign direct investment (FDI), with inflows dropping from $421 million in Q4 2024 to just $129.2 million in Q1 2025—the lowest quarterly inflow since Q2 2022. These conditions have dampened investor confidence and restrained industrial growth.
Experts note that despite these hurdles, the manufacturing sector still has the potential to drive industrialisation, create jobs, and boost government revenue. However, realizing this potential will require deliberate policy interventions, increased access to affordable finance, and sustained efforts to address structural inefficiencies in Nigeria’s economic landscape. Without these measures, analysts warn, the sector may continue to struggle to contribute meaningfully to national economic growth.
source: vanguard