January 7, 2026/CSL Update

According to the Central Bank of Nigeria’s latest statistical data, total credit extended by deposit money banks to the manufacturing sector declined sharply from ₦8.49 trillion in October 2024 to ₦6.79 trillion by October 2025, representing a year-on-year contraction of approximately 20.1%. Over the same period, total private sector credit also weakened, falling from ₦58.37 trillion to ₦56.94 trillion. This contraction reflects a broad-based tightening in credit conditions, with manufacturers among the hardest hit.

The primary driver of this credit squeeze has been the record-high cost of capital resulting from the Central Bank of Nigeria’s aggressive monetary tightening cycle. Throughout 2024 and 2025, the Monetary Policy Rate (MPR) was raised to around 27.50% in an effort to curb persistent inflationary pressures. As a result, commercial lending rates surged to the 35–37% range, rendering debt servicing increasingly unsustainable for manufacturing firms and significantly discouraging new investment and capacity expansion.

Nigeria’s manufacturing sector, spanning food and beverage processing, cement, chemicals and pharmaceuticals, textiles, plastics, and basic metals, remains a critical pillar of economic diversification. However, despite the country’s large domestic market, the sector continues to face deep-rooted structural constraints, including unreliable power supply, inadequate transport infrastructure, high production costs, exchange-rate volatility, and limited access to affordable finance. Consequently, manufacturing’s contribution to GDP has remained modest and on a gradual downward trend, averaging 8–9% of national output in recent years.

Looking ahead, revitalising the manufacturing sector is essential for sustainable growth, job creation, and fiscal resilience. While the CBN implemented a marginal rate cut to 27.00% in late 2025 to support economic activity, borrowing costs remain prohibitively high for long-term capital projects. Without a more meaningful easing of financial conditions, alongside targeted structural reforms in energy, infrastructure, and industrial policy, the manufacturing sector risks prolonged stagnation and a further erosion of its contribution to GDP.

Click here to download full report:​ ​​CSL Nigeria Daily – 7 January 2026 – Economy.pdf​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​