Nigerian banks have reduced the amount of loans they give to manufacturing companies by 26 percent in one year, according to the Central Bank of Nigeria.
The CBN’s economic report for February 2025 showed that total bank loans to the manufacturing sector dropped to N8 trillion in February 2025, down from N10.9 trillion in February 2024.
This marks the second month in a row that lending to manufacturers has fallen. In January 2025, loans to the sector stood at N8.309 trillion, compared to N8.529 trillion in December 2024 — a 2.6 percent decline. The figure dropped again by 3.4 percent to N8.029 trillion in February.
As a result of this steady decline, the share of manufacturing in total private sector lending has also reduced. It dropped to 13.9 percent in February 2025, down from 17.7 percent a year earlier. In January 2025, the share was slightly higher at 14.2 percent.
The CBN report also revealed that total credit from banks to important sectors of the economy fell to N57.94 trillion in February, down from N58.60 trillion in January — a 1.12 percent decrease.
The services sector, which includes businesses like transport, telecoms, and trade, recorded the biggest drop in loans during the month. Credit to the services sector went down by 6.11 percent.
However, there was some good news for other sectors. Loans to agriculture increased by 4.66 percent, and loans to the industrial sector went up by 4.98 percent. The CBN said this was due to “sustained policy support for food security and industrial growth.”
In terms of loan distribution, the services sector still got the largest share of credit at 52.10 percent. The industrial sector followed with 42.49 percent, and the agriculture sector got the least at 5.41 percent.
The steady fall in loans to manufacturers could affect production levels, job creation, and the prices of goods in the country. Many experts believe banks are becoming more cautious due to rising loan risks and economic uncertainties.
