Nigeria’s manufacturing sector remained under severe financing pressure in 2025, as businesses across all major industrial segments continued to access bank credit at interest rates exceeding 30 per cent, according to data from the Manufacturers Association of Nigeria (MAN).
Although borrowing costs eased marginally during the year, the reduction was not enough to significantly relieve manufacturers of the financial burden associated with funding production, working capital requirements and expansion.
MAN’s data showed that the average interest rate administered to manufacturers fell to 32.1 per cent in 2025 from 35.6 per cent recorded in 2024.
The decline represented a modest improvement in financing conditions, but manufacturers still operated in an environment where the cost of credit remained exceptionally high.
The average lending rate stood at 32.5 per cent during the first half of 2025 before moderating slightly to 31.8 per cent in the second half.
However, the improvement was broad but shallow, with no sector recording an annual average borrowing cost below 30 per cent.
The chemical and pharmaceutical industry enjoyed the lowest average borrowing rate among the sectors surveyed, at 30.4 per cent. Despite being the lowest, the rate remained high for businesses that require substantial and often long-term investment in production facilities, research, equipment and inventory.
Wood and wood products manufacturers, including furniture producers, recorded an average borrowing rate of 30.8 per cent, while textile, wearing apparel, carpet, leather and leather footwear manufacturers paid an average of 31.6 per cent.
The cost was even higher for several other industrial segments.
Manufacturers of metal, iron, steel and fabricated metal products faced an average borrowing rate of 32.3 per cent, while electrical and electronics companies recorded 32.4 per cent.
Food, beverage and tobacco manufacturers borrowed at an average rate of 32.5 per cent, the same level recorded as the overall first-half average.
Businesses operating in the domestic and industrial plastic, rubber and foam segment faced an average rate of 32.6 per cent.
Motor vehicle and miscellaneous assembly manufacturers recorded an average borrowing cost of 32.8 per cent, matching the rate paid by producers in the pulp, paper and paper products, printing, publishing and packaging segment.
Non-metallic mineral products emerged as the most expensive sector to finance, with manufacturers paying an annual average borrowing rate of 33 per cent.
The figures underline the difficulty confronting manufacturers that depend on bank financing to maintain production, purchase raw materials, meet payroll and energy expenses, and invest in additional capacity.
While the gradual decline in interest rates during 2025 pointed to an improvement in the broader economic environment, the cost of borrowing remained high enough to constrain business decisions.
According to MAN, the moderate easing reflected improving economic conditions, including softer headline inflation, more stable energy prices and sustained appreciation of the local currency.
The association, however, maintained that financing costs remained high and continued to pose a substantial hurdle to manufacturing competitiveness and output growth.
For manufacturers, the issue extends beyond the headline interest rate. High borrowing costs increase the expense of working capital and make it more difficult for businesses to maintain adequate inventories, replace machinery, modernise production lines or establish new factories.
The data therefore suggests that the modest improvement in credit conditions in 2025 did not amount to a significant reduction in the financing challenges confronting the real sector.
Manufacturers continued to face a difficult balancing act: absorb higher financing costs, pass some of the additional expenses to consumers through higher prices, or reduce investment and production.
The pressure is particularly significant for capital-intensive industries, where companies often require substantial funding before new investments begin generating returns.
With borrowing costs remaining above 30 per cent across every major manufacturing category surveyed by MAN, the sector entered the new period with financing still representing one of the major constraints to industrial expansion.
The figures also reinforce calls for more affordable and accessible long-term financing for manufacturers, particularly businesses seeking to expand production, deepen local value chains and improve their competitiveness.
For the manufacturing sector, the marginal fall in interest rates in 2025 offered some relief. But with average borrowing costs still hovering around 32 per cent, the improvement remained too limited to remove the heavy financial burden weighing on industrial businesses.