Nigerian banks reduced lending to manufacturers and traders by N2.1 trillion in the first half of 2025, reflecting mounting pressures on the real sector amid structural challenges, weak consumer demand, and elevated interest rates.
Data analysed from the Central Bank of Nigeria showed that total bank loans to the manufacturing and trade sectors fell by 16.2 per cent to N10.95 trillion at the end of June 2025, down from N13.07 trillion recorded at the close of 2024.
Lending to the manufacturing sector declined by N1.44 trillion, representing a 16.8 per cent drop, as outstanding credit fell from N8.53 trillion in December 2024 to N7.09 trillion by June 2025. Similarly, loans to the trade and general commerce sector fell by 15 per cent, or N682 billion, to N3.86 trillion over the same period.
Other sectors also experienced notable credit contractions. Education loans declined by 11 per cent to N79.43 billion, while real estate lending dropped by 5.5 per cent to N904.15 billion. Credit to activities categorised as “general” recorded the sharpest decline, falling by 22 per cent to N4.03 trillion.
Overall, bank lending to the five affected sectors fell by N3.48 trillion, or 17.5 per cent, to N16.43 trillion by the end of June. As a result, total private sector credit declined by 17.8 per cent to N58.16 trillion, compared with N59.22 trillion at the end of 2024. The combined share of these sectors in total private sector credit also dropped to 28.3 per cent from 33.6 per cent.
Analysts at FBNQuest Merchant Bank attributed the weak performance of the manufacturing sector partly to limited access to affordable financing. In a recent report, the firm noted that the sector has averaged growth of just 1.29 per cent over the past five quarters, weighed down by unreliable power supply, poor infrastructure, regulatory constraints, and high borrowing costs.
The report also highlighted declining consumer purchasing power and a sharp fall in foreign investment. Foreign direct investment into manufacturing dropped to $129.2 million in the first quarter of 2025, the lowest level since mid-2022, underscoring growing investor caution.
Analysts warned that without sustained reforms to address structural and macroeconomic challenges, the manufacturing sector’s ability to support Nigeria’s industrialisation drive may remain limited.
