Banks Favour Oil Sector as Manufacturing Credit Falls

Nigerian banks continued to channel most of their lending to the oil and gas industry in 2025, while financing for manufacturers declined sharply.

New data from the Central Bank of Nigeria (CBN) shows that bank lending in Nigeria remained heavily concentrated in the oil and gas sector, which retained its position as the largest recipient of credit from Deposit Money Banks (DMBs). Total credit to the sector stood at N147.52 trillion in 2025, representing a slight decline of 0.9 per cent from N148.82 trillion recorded in 2024.

In contrast, the manufacturing sector experienced a significant reduction in financing. Credit extended to manufacturers dropped by 20.3 per cent to N88.82 trillion, compared with N111.39 trillion in the previous year. The decline highlights growing challenges facing industrial operators and signals a widening gap in sectoral credit allocation.

Despite the contraction in manufacturing lending, other sectors recorded notable gains. The financial services sector emerged as one of the strongest performers, with credit rising by 30.1 per cent to N99.84 trillion from N76.73 trillion in 2024. Similarly, lending to agriculture increased by 26.1 per cent to N38.15 trillion, reflecting continued support for economic diversification efforts.

The oil and gas sector remained the dominant destination for bank financing, underscoring lenders’ continued confidence in the industry despite efforts to broaden credit distribution across the economy. Meanwhile, credit to trade and commerce rose moderately by 4.4 per cent to N50.82 trillion.

Other sectors recorded mixed performances. Government borrowing increased by 7.2 per cent to N36.19 trillion, while information and communication lending grew by 4.6 per cent to N23.32 trillion. However, real estate lending fell by about 12 per cent, and education sector credit declined by 20 per cent.

Overall, bank lending in Nigeria grew modestly, with total private sector credit rising by 1.5 per cent to N700.31 trillion in 2025. Analysts say recent trends suggest a gradual shift towards financial services, agriculture and trade, even as the manufacturing sector continues to face tighter financing conditions.

Do you think banks should increase lending to manufacturers to support industrial growth and economic diversification?