Nigerian Manufacturers Face 53% Surge in Loan Costs

Between 2020 and 2025, Nigerian manufacturers faced a significant 53% increase in the average cost of bank credit, as reported by the Manufacturers Association of Nigeria. In 2025, manufacturers paid an average interest rate of 32.2%, up from 21% in 2020, marking an 11.2 percentage-point increase over five years.

Although the average lending rate decreased from 32.5% in the first half of 2025 to 31.8% in the second half, the full-year average remained at 32.2%, which is 3.4 percentage points lower than the 35.6% average recorded in 2024. This indicates some easing in financing conditions, but borrowing costs are still significantly higher than five years prior.

Financial analyst Ike Ibeabuchi noted that borrowing rates above 30% can impact new investments, as businesses must consider financing costs in their projected returns. High interest rates also affect manufacturers' operational costs, as they rely on bank financing for both long-term investments and working capital.