Nigeria’s manufacturing sector is losing access to bank credit despite the N4.65 trillion raised through the banking sector’s recapitalisation exercise, raising concerns about whether stronger lender balance sheets will translate into industrial growth.
Credit to manufacturing fell by 33.8 percent, from N8.53 trillion in December 2024 to N5.65 trillion in August 2026, while the sector’s share of total bank credit declined to 8.7 percent from 17.4 percent in December 2023.
The figures, presented by Tayo Aduloju, chief executive officer of the Nigerian Economic Summit Group (NESG), at the Chartered Institute of Bankers of Nigeria (CIBN) Fellowship Investiture Ceremony in Lagos on Saturday, highlight the disconnect between increased bank capital and financing for productive sectors of the economy.
Read also: Meet the six executives shaping Nigeria’s petroleum regulation
The presentation showed that average credit to manufacturing fell by 26 percent year-on-year between January and August 2026 to N5.7 trillion, while average credit to trade and commerce rose by 49 percent to N5.9 trillion over the same period.
The shift suggests that banks are directing more financing towards trade and commerce than manufacturing, despite the latter’s importance to industrialisation, employment and export growth.
Nigeria’s banking recapitalisation exercise, launched in March 2024 and concluded in March 2026, raised N4.65 trillion in fresh capital, with 33 of 37 banks meeting the new minimum capital requirements. Domestic investors contributed 72.6 percent of the funds, while foreign investors accounted for 27.4 percent.
According to the NESG presentation, the additional capital could theoretically support between N31 trillion and N46.5 trillion in lending, depending on the applicable capital ratio. However, the estimates represent potential lending capacity rather than actual new loans.
Read also: Oando returns to operating profit with N159.7bn in nine months
The figures raise questions about how effectively the stronger capital base can support businesses that require long-term financing to acquire machinery, expand production and improve competitiveness.
Speaking at the event, Babajide Sanwo-Olu, governor of Lagos State, said the real measure of recapitalisation would be its impact on factories, expanding businesses, sustainable jobs and economic competitiveness.
He said manufacturers needed capital to acquire machinery, expand production and compete in international markets, while agricultural processors required financing for storage, processing and distribution.
Sanwo-Olu urged banks to develop financing models that support long-term industrial growth while maintaining prudent risk management.
He also pointed to investment opportunities around the Lekki Deep Sea Port, industrial activities along the Lekki corridor, rail and road infrastructure, and the Lagos State Electricity Law, saying stronger financial sector participation could unlock private investment, improve productivity and create jobs.
The challenge extends beyond manufacturing. The NESG presentation showed that oil and gas accounted for N18.15 trillion in bank credit as of August 2026, while finance and insurance received N11.46 trillion. Together, the two sectors accounted for approximately 46 percent of total bank credit.
Manufacturing received N5.65 trillion, representing 8.7 percent of total credit, while agriculture accounted for 6.2 percent, despite employing 33.5 percent of Nigeria’s workforce in 2025.
The presentation also highlighted Nigeria’s relatively shallow credit market, with private-sector credit standing at 13 percent of gross domestic product in 2025, compared with 38.1 percent in lower-middle-income economies.
High borrowing costs remain another obstacle to expanding industrial financing. Although the Central Bank of Nigeria reduced its monetary policy rate to 23 percent in September 2026, bank lending rates remained between 19 percent and 32.6 percent, according to the presentation.
Government borrowing is also competing with private businesses for available funds. Credit to the government rose by 63 percent year-on-year to N39.4 trillion in September 2026, compared with 16 percent growth in private-sector credit to N83.9 trillion.
Treasury bill yields of around 16 percent also provide banks with an alternative to lending to businesses, where credit risks may be higher and repayment periods longer.
The NESG argued that Nigeria’s industrial financing challenge is not simply a shortage of capital but the fragmented way existing financial institutions mobilise and deploy funds.
It called for a more coordinated financing framework involving commercial banks, pension funds, insurance companies, the Bank of Industry, the Development Bank of Nigeria and credit guarantee institutions.
The proposed framework would combine long-term funding with risk-sharing arrangements, credit guarantees, interest rebates and tax incentives to encourage investment in productive sectors.
The presentation also recommended that banks develop specialist industrial lending capabilities, provide longer-term financing and use digital cash-flow data and movable assets to assess borrowers beyond traditional land-based collateral.
It urged the CBN to improve the transmission of monetary policy rate cuts to lending rates and consider reducing cash reserve requirements as disinflation continues. Fiscal authorities were also advised to contain government borrowing that crowds out private-sector credit and fund the proposed N3 trillion allocation to the Bank of Industry.
Reliable electricity, logistics, ports and access to foreign exchange for machinery and industrial inputs were identified as additional requirements for industrial expansion.
The NESG’s proposed industrial policy targets include increasing manufacturing’s share of GDP to 15 percent by 2030 and 25 percent by 2035.
Dele Alabi, president and chairman of council of the CIBN, said the question was no longer whether banks had sufficient capital, but whether the funds would translate into new industries, expanded businesses, better infrastructure and sustainable jobs.
He said Nigeria had an opportunity to deploy the enhanced capital towards manufacturing, agriculture, infrastructure, energy, technology and other productive sectors.
Alabi also announced that the Institute would host its CIBN MSME Forum on December 1, 2026, to advance solutions for expanding access to finance and accelerating enterprise growth. The Institute is also advocating the establishment of small and medium-sized enterprise hubs across Nigeria to provide entrepreneurs with financing, business support, capacity development and market opportunities.
For the NESG, the ultimate test of recapitalisation is whether the additional capital supports production rather than remaining concentrated in safer or shorter-term lending opportunities.
The outcome, it argued, should be measured by improvements in industrial productivity, manufacturing growth, export competitiveness and job creation rather than by the amount of capital banks have raised.
Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.