Rising interest rates and tight credit conditions are taking a toll on Nigeria’s manufacturing sector, forcing several factory owners to suspend expansion projects and scale down production, industry stakeholders have warned.
According to recent data from the Manufacturers Association of Nigeria (MAN), access to affordable credit has worsened in recent months, with lending rates from commercial banks hovering between 25% and 30%. This spike, coupled with rising energy costs and currency instability, has discouraged new investments in the sector.
MAN President, Otunba Francis Meshioye, said the high cost of borrowing has become a major impediment to industrial growth, stressing that many manufacturers can no longer sustain operations or invest in new machinery.
“Most of our members have shelved their expansion plans because the cost of funds is simply unsustainable. When you borrow at 28% in an economy battling inflation and poor infrastructure, you’re already operating at a loss,” Meshioye stated.
Several factory operators in Lagos, Ogun, and Kano confirmed that they have either reduced production shifts or deferred planned investments until financing conditions improve.
Analysts say the Central Bank of Nigeria’s tight monetary stance—adopted to curb inflation and stabilize the naira—has had unintended consequences on the real sector, slowing job creation and deepening industrial stagnation.
Economic expert, Dr. Chioma Nwosu, noted that while monetary tightening is necessary, the government must introduce targeted intervention funds for manufacturers to boost productivity.
“If the cost of capital remains this high, Nigeria’s industrialization agenda will continue to suffer setbacks,” she warned.
The federal government is reportedly considering new policy measures to support the manufacturing sector, including concessional financing schemes and import-duty relief on key production inputs, as part of its effort to stimulate growth and competitiveness.
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