The Manufacturers Association of Nigeria (MAN) has warned that the high cost of credit and escalating production expenses continue to pose major threats to the recovery of the country’s manufacturing sector, even as manufacturers’ confidence shows renewed improvement.
In its Manufacturers’ CEOs Confidence Index (MCCI) for the second quarter of 2026 (Q2’26), MAN revealed that limited access to finance remains the primary challenge facing the sector. Two in every three chief executives surveyed identified commercial bank lending rates as a major disincentive to manufacturing productivity, while describing the volume of credit available as inadequate.
Manufacturers linked the elevated cost of borrowing directly to the Central Bank of Nigeria’s (CBN) monetary policy stance. The Monetary Policy Rate (MPR) stood at 26.5 per cent during the quarter. Although the rate had been reduced and maintained at this level, manufacturers said it remained too high to support the financing needs of the real sector.
According to the report, the prevailing high-interest-rate regime has increased the cost of credit and, by extension, production costs. This has weakened manufacturers’ ability to expand output, invest in new capacity, and create jobs. Limited bank credit, combined with rising energy, distribution, shipping, and raw material costs, continues to constrain productivity and capacity utilisation.
“Two in every three CEOs cited commercial bank lending rates as a disincentive to manufacturing productivity,” the report stated, stressing that the cost of credit directly influences production costs.
CEOs also highlighted frequent power outages, inadequate foreign exchange supply, shortages of raw materials, multiple taxation, and insufficient government infrastructure as persistent challenges. Despite reforms in the foreign exchange market and relative stability in the naira, about half of the manufacturers surveyed said improvements in forex sourcing had not translated into sufficient access for their operations, limiting full capacity utilisation and raising the cost of imported inputs and machinery.
Only 27 per cent of manufacturing executives considered government expenditure on infrastructure encouraging for manufacturing activity.
Despite these headwinds, the MCCI rose by 3.4 points to 52.1 in Q2’26 from 48.7 in Q1’26. The improvement was driven largely by expectations of better business conditions rather than significant gains in the actual operating environment. Looking ahead to the third quarter, manufacturers projected business conditions at 55.6, employment at 55.2, and production conditions at 63 points.
Director-General of MAN, Segun Ajayi-Kadir, said the projected improvement would depend largely on effective policy implementation and measures to ease the cost of doing business.
He called on the CBN to reduce the MPR to below 20 per cent to unlock manufacturing growth, improve access to affordable credit, and prioritise foreign exchange allocation to manufacturers.
“Reducing financing and production costs is critical to converting the renewed confidence among manufacturers into actual increases in output, investment and employment,” Ajayi-Kadir stressed.
He noted that the current rise in confidence reaching a two-year high is based more on expectations that government will follow through on reform measures stabilising the economy, including exchange rate management and tax reforms, rather than on immediate improvements in operating conditions.
MAN urged policymakers to prioritise lower financing costs and reduced production burdens so that the sector’s emerging optimism can translate into tangible economic gains.