Banks’ credit to manufacturers falls 26.8% to N5.19trn

*… as credit guarantees unlock N47bn *MAN seeks stronger guarantee coverage, N1trn stabilisation fund *Nigeria needs $35bn yearly to industrialise —BoI *Guarantees critical to boosting access to finance — CPPE *FG advocates coordinated financing framework By Yinka Kolawole Loans extended by Nigerian banks to the manufacturing sector fell by 26.8 per cent year-on-year to N5.19 trillion in the first half of 2026 (H1’26), from N7.09 trillion in the corresponding period of last year (H1’25).

Read Also: Stock market extend losses, 55 stocks depreciate; 20 record capital gains This comes as manufacturers grappled with persistent financing constraints and rising operating costs. The decline also comes amid concerns over the availability of affordable, long-term funding for industrial production, with the Manufacturers Association of Nigeria (MAN) calling for stronger credit guarantees and the full operationalisation of a N1 trillion Manufacturing Stabilisation Fund.

Data from the Central Bank of Nigeria’s (CBN) Q2 2026 Statistical Bulletin also indicated a sustained decline as the outstanding bank credit to manufacturers declined by about 21 per cent between January and June 2026, from N6.57 trillion to N5.19 trillion. The 2026 monthly figures showed that credit fell from N6.57 trillion in January to N6.37 trillion in February, N5.77 trillion in March and N5.32 trillion in April.

It declined further to N5.02 trillion in May before a slight recovery to N5.19 trillion in June. Despite the slight month-on-month recovery, the June figure remained substantially below the level recorded in the previous year. The contraction highlights the financing challenges confronting manufacturers amid high production costs, expensive electricity, logistics bottlenecks and exchange-rate pressures.

However, the decline in outstanding credit does not, on its own, establish whether it resulted from reduced new lending, loan repayments or other changes in banks’ credit portfolios. Credit guarantees unlock N47bn Meanwhile, the National Credit Guarantee Company (NCGC) said it has unlocked N46.95 billion in loans for 67,512 borrowers across the country, renewing calls for credit guarantees to be expanded to improve access to finance for manufacturers and small businesses.

Managing Director/Chief Executive Officer of NCGC, Dr Bonaventure Okhaimo, said the credit was unlocked using N21.59 billion in guarantees to share lending risks with financial institutions. Nigeria needs $35bn yearly to industrialise — BoI The development comes as the Bank of Industry (BoI) estimates that Nigeria requires more than $35 billion annually to finance industrialisation and raise manufacturing’s contribution to Gross Domestic Product (GDP) to 25 per cent.

Highlighting the scale of the funding challenge, Managing Director of the Bank of Industry, BoI, Dr Olasupo Olusi, said no single development finance institution could close the gap. He stated: “It is a huge gap. BoI cannot do it alone from its balancesheet,\.” Olusi noted that the funding constraint was reflected in the bank’s 2025 pipeline, where loan applications reached N1.754 trillion against available funding of N645 billion, leaving a shortfall of about 63 per cent.

He said the bank’s mobilisation of more than 2 billion euros through global syndication in 2024, which he described as the largest of such transaction by an African development finance institution, underscored the scale of capital required to support industrial expansion in the country. Unlocked credit commendable, but insufficient — MAN Reacting to the NCGC intervention, Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, described the credit guarantee model as an example of the risk-sharing mechanism manufacturers had consistently advocated.

He said the amount was commendable but remained small relative to the estimated $35 billion annual industrial financing requirement. He stated: “Nigerian manufacturers are not unbankable, they are simply un-de-risked. “With MPR at 26.5 percent and CRR at 45 percent, banks would rather lend to oil and gas and government securities than to a factory in Kano or Port Harcourt or Lagos that is daily contending with power outage, logistics cost and high cost of forex.

So we truly have a credit squeeze, not just high cost. “Now, this is where credit guarantees matter. A guarantee does not give money, but it gives confidence. Let us look at a situation where NCGC guarantees 60 percent of a facility. ‘’It tells the bank that if this manufacturer struggles because diesel jumps or production is disrupted one way or the other, someone will stand in the gap.

That is how N21.59 billion could catalyse N46.95 billion – a multiplier of more than twofold. ‘’For our SMEs who form 70 percent of our membership and lack the 150 percent collateral banks demand, that is the difference between struggling and expansion, between 90-day overdraft and 5-year term loan to buy machinery to retool.