The Central Bank of Nigeria’s (CBN’s) withdrawal from direct intervention funding for manufacturers comes at the worst possible time for an already pressured sector. Instead of moderating the pain from President Bola Tinubu’s harsh economic adjustments, this move risks deepening a credit squeeze that threatens Nigeria’s industrial base.
On paper, the decision has one clear attraction: a cleaner separation between monetary policy and development finance. Removing direct intervention schemes from the CBN’s balance sheet could reduce distortions and leakages and force a more coherent approach to industrial financing. Specialist institutions such as the Bank of Industry (BOI), backed by appropriately regulated commercial banks, are better designed for long term project lending than an apex bank whose core mandate is price and financial stability. In theory, this reset could help discipline policy and improve transparency.
In reality, however, the withdrawal comes in the middle of a funding crisis. Commercial bank lending to manufacturing reportedly fell by about N1.92 trillion in 2025, a contraction of about one fifth that dragged outstanding credit to roughly N6.1 trillion. Across key sectors, banks have slashed loans by N5.45 trillion following the end of regulatory forbearance, forcing them to recognise bad assets and cut risk exposure. Manufacturers now confront prime lending rates in the high twenties and maximum rates in the mid thirties, while a very high Cash Reserve Ratio further constrains loanable funds. Stakeholders are not complaining about reform for its own sake; they are reacting to its timing and design. The Lagos Chamber of Commerce and Industry (LCCI) warns that pulling intervention funds without a workable replacement has pushed firms into a conventional credit market that is impatient and structurally unsuited to industrial capital.
Analysts point out that tough access to affordable finance is one of the biggest obstacles to production, as high cost loans, policy misalignment and weak demand combine to push vulnerable factories out of business. The Manufacturers Association of Nigeria (MAN) also fears that shrinking credit will suppress capacity utilisation, stall investment, weaken job creation and undermine the industrial policy framework. In this inclement economic climate shaped by this administration, it is untenable for the Federal Government to allow its monetary authority to retreat from the real sector. The state has a duty to ensure its organs support economic operators, not simply chase inflation while productive assets go idle. What is needed is more, and smarter, CBN engagement: well designed, ring fenced windows delivering genuine single digit, long term credit, tightly coordinated with fiscal and industrial policy.
At the same time, the Bank of Industry and other development finance institutions must be strengthened – properly capitalised, professionally run and protected from patronage – so they can consistently channel development funds to productive manufacturers. If Nigeria is serious about industrialisation, it must rebuild a financing framework that prioritises production over speculation.