Nigerian manufacturers have significantly reduced their bank loan exposure, cutting total credit by N1.44 trillion in the first nine months of 2025. This decline is attributed to persistently high borrowing costs and tight monetary conditions that have resulted in larger lending spreads. The Central Bank of Nigeria's quarterly statistical bulletin indicates that lending to the manufacturing sector decreased from N8.53 trillion in December 2024 to N7.09 trillion by September 2025, reflecting a 16.9 percent contraction.

This decrease in credit in the manufacturing sector began early in the year, with a notable drop occurring in January 2025, where loans fell by approximately N220 billion or about 2.6 percent from the previous month's level. The ongoing contraction has been a direct response to manufacturers grappling with high interest rates, poor demand for products, and increased operational costs. As the economic environment remains challenging, companies have been compelled to tighten their financial management and reduce reliance on bank loans.

The implications of this trend could be significant for the Nigerian economy, particularly as a decrease in credit availability may hinder growth and expansion in the manufacturing sector. With manufacturers pulling back from borrowing, this could lead to reduced production capacities and ultimately impact employment within the sector. If the high interest rate environment persists, the overall economic recovery could be jeopardized, requiring policy interventions from the central bank to support the manufacturing industry and stimulate demand in the economy.