Nigerian manufacturers are still facing crippling borrowing costs of up to 60 percent despite recent efforts by the central bank to ease monetary policy, according to new banking data that underscores the strain on one of Africa’s biggest industrial sectors.
Figures released by the Central Bank of Nigeria (CBN) show that as of March 20, lending rates to manufacturers remained sharply elevated across commercial banks, even after the apex bank cut its benchmark interest rate in February.
The CBN’s Monetary Policy Committee lowered the monetary policy rate by 50 basis points to 26.5 percent, marking its second rate cut under Governor Olayemi Cardoso after a similar reduction in September 2025.
The move was intended to support growth as inflation pressures gradually ease, but manufacturers say the relief has yet to reach the real economy.
According to the data, prime lending rates for manufacturers ranged widely, from as low as 1 percent at Stanbic IBTC to more than 30 percent at several lenders, including FCMB, Keystone Bank, Polaris Bank, Unity Bank, Wema Bank and Globus Bank.
But the more troubling figure for many businesses was the ceiling on lending costs.
Stanbic IBTC posted a maximum lending rate of 60 percent, the highest among surveyed banks. FCMB followed with 46 percent, while Union Bank and Unity Bank quoted 37 percent and 38 percent, respectively. Other major lenders, including Fidelity Bank, First Bank, Polaris Bank, and Sterling Bank, reported maximum rates ranging between 33 and 36 percent.
The wide spread reflects the harsh financing environment confronting manufacturers in a country where businesses are already grappling with high energy costs, currency volatility, weak consumer demand and infrastructure bottlenecks.
“The CBN needs to still go around their decision on the MPR and see what could be done,” said Eke Ubiji, director-general of the Nigerian Association of Small and Medium Enterprises.
“It is still not encouraging borrowing from the private sector,” he said.
Manufacturers have long argued that double-digit borrowing rates make long-term investment almost impossible, especially in a capital-intensive sector that depends on affordable credit for machinery, plant upgrades and working capital.
That pressure is already visible in credit flows.
CBN data showed lending to the manufacturing sector dropped from 8.53 trillion naira in December 2024 to 7.09 trillion naira by September 2025, a fall of 1.44 trillion naira, or 16.9 percent.
The retreat suggests many manufacturers are pulling back from bank borrowing as financing costs outpace profit margins and erode competitiveness.
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At the same time, returns for savers remain comparatively low, highlighting the broad imbalance in Nigeria’s financial system.
Savings deposit rates across most banks clustered around 7.95 percent, while demand deposit rates were generally below 1 percent. Time deposit rates varied more widely, with some banks offering as much as 19.59 percent, though these remain well below the steep cost of commercial lending.
The sharp gap between what banks pay depositors and what they charge borrowers has become a growing source of frustration for businesses, particularly in the manufacturing sector.
Foreign investors also appear increasingly cautious.
Data from the National Bureau of Statistics showed foreign investment into Nigeria’s manufacturing sector dropped from US$1.43 billion in 2024 to $772.45 million in 2025, a decline of nearly 46 percent.
Manufacturing’s share of Nigeria’s total capital importation also fell sharply, from 11.58 percent in 2024 to just 3.33 percent in 2025, suggesting investors are favouring quicker, less risky financial plays over long-term industrial commitments.
“The Nigerian manufacturing sector’s ecosystem is not encouraging for investment,” said Segun Ajayi-Kadir, director-general of the Manufacturers Association of Nigeria.
He cited “production cost risk, macroeconomic uncertainty, infrastructural deficiency, double-digit interest rates, and limited market linkages” as key deterrents.
Analysts warn that unless banks begin transmitting lower policy rates more effectively to businesses, Nigeria risks a fragile recovery that boosts financial markets without reviving the productive economy.
For manufacturers, the fear is that without cheaper credit, industrial expansion, job creation and export growth will remain out of reach.
