MAN data shows average lending rate eased to 32.1% in 2025, but financing costs remain a major obstacle to expansion…..
Nigeria’s manufacturing sector continued to grapple with steep borrowing costs in 2025, with manufacturers across every major industrial segment paying interest rates of more than 30 percent on average.
Data from the Manufacturers Association of Nigeria (MAN) showed that the average interest rate charged to manufacturers stood at 32.1 percent during the year.
Although the figure represents an improvement from the 35.6 percent average recorded in 2024, the cost of accessing credit remained high enough to put significant pressure on manufacturers seeking funds for production, working capital and business expansion.
Borrowing costs averaged 32.5 percent during the first half of 2025 before easing slightly to 31.8 percent in the second half.
However, the moderation was not enough to bring lending rates to levels that would significantly ease the financing burden on the real sector.
MAN’s figures showed that the lowest annual average borrowing rate recorded among the sectors surveyed was 30.4 percent.
Sector-by-Sector Breakdown
Manufacturers in the chemical and pharmaceutical industries enjoyed the lowest borrowing cost during the year, with an average interest rate of 30.4 percent.
Despite having the lowest rate among the sectors, the cost remained considerably above levels generally associated with affordable long-term financing for industrial businesses.
The wood and wood products sector, including furniture manufacturers, recorded an average borrowing rate of 30.8 percent.
Textile, wearing apparel, carpet, leather and leather footwear manufacturers paid an average of 31.6 percent.
For metal, iron, steel and fabricated metal manufacturers, the average rate stood at 32.3 percent, while electrical and electronics companies faced an average borrowing cost of 32.4 percent.
Food, beverage and tobacco manufacturers recorded a slightly higher rate of 32.5 percent.
Manufacturers operating in the domestic and industrial plastic, rubber and foam segment paid an average of 32.6 percent.
The Motor Vehicle and Miscellaneous Assembly sector recorded an average borrowing rate of 32.8 percent.
The same 32.8 percent rate applied to manufacturers in the pulp, paper and paper products, printing, publishing and packaging segment.
At the top end of the scale were manufacturers of non-metallic mineral products, which faced the highest annual average borrowing cost at 33 percent.
According to MAN, the gradual reduction in borrowing costs during 2025 reflected some improvement in the broader economic environment.
The association linked the moderation to softer headline inflation, greater stability in energy prices and the sustained appreciation of the naira.
Despite these developments, MAN said financing costs remained elevated and continued to undermine the competitiveness of manufacturers and their ability to expand output.
The figures highlight the difficult balance facing businesses in the sector: while borrowing conditions improved compared with the previous year, the cost of obtaining credit remained prohibitively high for many manufacturers.
For companies dependent on loans to fund day-to-day operations, purchase inputs, maintain production or invest in additional capacity, interest rates above 30 percent can significantly increase operating costs and limit the scale of new investments.
The continued high cost of credit therefore remains one of the major challenges confronting Nigeria’s manufacturing sector, even as broader economic conditions show signs of improvement.
