Manufacturers’ Loans Climb to Five-Year High Amid Naira Devaluation, Soaring Production Costs

Loans to Nigerian manufacturers have surged to their highest level in five years as the sector grapples with the fallout from the naira’s sharp devaluation and mounting input costs.

Recent data from the Central Bank of Nigeria (CBN) reveals a significant increase in credit to the manufacturing sector, signaling a growing reliance on borrowed funds to maintain operations amid an increasingly hostile economic climate.

The weakening of the naira against major global currencies has inflated the cost of importing raw materials, machinery, and other production inputs, leaving manufacturers with limited options but to seek financial lifelines through bank loans.

“The cost of doing business has gone through the roof,” said Dr. Tunde Adetunji, an industrial economist. “Most manufacturers are now borrowing not for expansion, but simply to stay afloat.”

Analysts say the trend underscores the vulnerability of Nigeria’s manufacturing base, which remains heavily dependent on foreign exchange and imported materials. While credit growth may indicate resilience within the sector, it also reflects growing financial stress and declining profitability.

Compounding the situation is the high interest rate environment, as the CBN maintains tight monetary policy in an effort to rein in inflation. Manufacturers now face a tough balancing act—managing soaring costs, servicing expensive loans, and staying competitive in a sluggish economy.

Industry leaders are calling on the government to implement urgent measures, including subsidized credit schemes, FX allocation reforms, and improved infrastructure, to cushion the impact of the devaluation and stabilize the sector.

With the government aiming to boost local production and reduce dependence on imports, the performance of the manufacturing industry will be key to Nigeria’s broader economic recovery. But for now, rising debt levels may be a red flag rather than a sign of progress.

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