Nigerian Manufacturers Suffer Blow as Borrowing Cost Balloons to 35.5%

Manufacturers in Nigeria have said rising interest rates posed a major financial burden, with commercial bank lending rates surging to 35.5 percent in 2024 from 28.06 percent in 2023.

The Manufacturers Association of Nigeria (MAN), in its economic review for the second half of last year, the rise in borrowing costs was driven by continuous rate hikes by the central bank, which raised the monetary policy rate to 27.50 percent.

“Consequently, manufacturers’ finance costs totaled N1.3 trillion, constraining investment and expansion plans,” Segun Ajayi-Kadir, director-general of MAN, said on Monday.

He said the country’s manufacturing sector faced significant hurdles in 2024, including high inflation, forex volatility, surging production costs, and declining consumer demand.

“While some resilience was observed in sectoral performance and increased local sourcing of raw materials, real output remained subdued,” he said. “Moving forward, stabilising macroeconomic conditions, improving energy supply, and ensuring access to affordable financing will be critical for sustaining growth and enhancing industrial productivity.”