The Impact of Bank Lending on Manufacturing Sector Output in Nigeria: Evidence from Bank Credit and Output Data, 2015–2024

Nigeria’s manufacturing sector has occupied a narrow 8–10 percent band of real GDP for over a decade even as bank credit allocated to the sector has moved substantially in naira terms. This article investigates the evidence concerning the impact of bank lending on manufacturing sector output in Nigeria between 2015 and 2024, treating the volume and share of deposit money bank (DMB) credit actually allocated to manufacturing, rather than the Monetary Policy Rate alone, as the principal explanatory variable. Because the available manufacturing-credit data are incomplete and unevenly sampled, the article’s own empirical analysis can establish statistical association rather than definitive causal impact, and it reports its findings on those terms throughout. Using DMB sectoral credit-allocation data drawn from Central Bank of Nigeria (CBN) reports, National Bureau of Statistics (NBS) GDP data, and Manufacturers Association of Nigeria (MAN) capacity-utilisation surveys, the article assembles the most complete publicly verifiable series of manufacturing bank credit that could be constructed from primary sources for 2015–2024 and tests it against manufacturing output. Manufacturing’s share of total DMB credit to the private sector ranged from roughly 13 to 18 percent across the period, peaking near 17.9 percent in late 2023 before falling to about 14.4 percent in November 2024. Over the same years, manufacturing’s GDP share, the article’s primary output measure, moved within a narrow 8.1–9.7 percent range with no clear trend that corresponds closely with changes in credit conditions. The article’s own analysis finds a weak and statistically insignificant association between manufacturing credit share and manufacturing’s GDP share across the seven years for which both figures could be matched (2015, 2016, 2020–2024; r = 0.237, p = 0.609, n = 7), with an ordinary least squares regression explaining under six percent of the variance (R² = 0.056); this result does not, on its own, establish that bank credit affects manufacturing output. Read separately, the longer-run Nigerian empirical literature generally reports a positive long-run relationship between aggregate bank credit and manufacturing performance using multi-decade cointegration methods that this article’s seven-observation series cannot replicate, a literature that typically requires 25–30 years of consistently defined data before a structural long-run relationship becomes statistically detectable, so the two sets of findings are compatible rather than contradictory. Average maximum manufacturing lending rates approached 30 percent by early 2025 reporting periods immediately following the sample window, capacity utilisation, a supplementary performance indicator distinct from GDP share, remained capped between 55 and 57 percent through 2024, and the naira depreciated by more than 200 percent between mid-2023 and end-2024. The article argues that the cost of credit, exchange-rate instability, non-performing loan risk, and non-financial constraints (power supply, multiple taxation, and idle installed capacity) may condition how much manufacturing output a given volume of bank credit can support, and closes with policy recommendations centred on risk-sharing credit guarantees, longer-tenor financing, and treating credit access as one part of a wider constraint set rather than a sufficient policy lever on its own.