Nigeria: Manufacturers Groan As Rising Credit, Production Costs Threaten Recovery

What the report says

Nigeria’s manufacturing sector is still under pressure from expensive borrowing and higher operating costs, even as business confidence shows a modest recovery. In a report cited by Vanguard and distributed by AllAfrica, the Manufacturers Association of Nigeria said its Manufacturers’ CEOs Confidence Index for the second quarter of 2026 pointed to improved sentiment, but not to a meaningful easing of day-to-day business conditions.

The association said limited access to finance remains a major obstacle, with many executives describing commercial lending rates as too high and the amount of credit available to manufacturers as too low. It linked these borrowing conditions to the Central Bank of Nigeria’s monetary stance, including the Monetary Policy Rate, which it said stood at 26.5% during the quarter. MAN argued that this kept financing expensive and fed into higher production costs, which in turn affect expansion, investment and hiring.

The report also cited other challenges facing firms, including weak power supply, foreign exchange shortages, raw material constraints, multiple taxation, and higher energy, shipping and distribution expenses. While some manufacturers said foreign exchange sourcing had improved, many still said access was not sufficient for their operations.

Despite the pressures, confidence rose to 52.1 in Q2 2026 from 48.7 in the previous quarter. MAN said the improvement reflects expectations of better conditions rather than a broad recovery. Its director general, Segun Ajayi-Kadir, urged lower interest rates and cheaper credit, saying policy follow-through will be key to turning optimism into higher output and jobs.