Nigeria’s manufacturing sector continued to face prohibitively expensive credit in 2025, with the average interest rate on industrial loans standing at 32.1 per cent.

Although the figure represented an improvement from the 35.6 per cent average recorded in 2024, borrowing costs remained too high to support sustainable industrial expansion and long-term investment.

Data from the Manufacturers Association of Nigeria showed that the average lending rate was 32.5 per cent during the first half of 2025 before declining slightly to 31.8 per cent in the second half.

Despite the moderation, every major manufacturing segment surveyed by MAN recorded an average borrowing rate above 30 per cent.

Chemical and pharmaceutical manufacturers faced the lowest annual average rate at 30.4 per cent, followed by wood, furniture and related producers at 30.8 per cent.

Manufacturers of textiles, clothing, carpets, leather and footwear obtained loans at an average rate of 31.6 per cent.

Metal, iron, steel and fabricated-metal producers paid an average of 32.3 per cent, while electrical and electronics manufacturers faced a rate of 32.4 per cent.

The average borrowing rate for food, beverage and tobacco companies stood at 32.5 per cent. Plastic, rubber and foam manufacturers paid 32.6 per cent.

Motor vehicle and miscellaneous assembly companies recorded an average lending rate of 32.8 per cent. The pulp, paper, printing, publishing and packaging sector faced the same rate.

Non-metallic mineral-product manufacturers recorded the highest average borrowing cost at 33 per cent.

The high rate in the non-metallic mineral sector could have direct implications for Nigeria’s housing and construction industries because the segment produces important building inputs, including cement, ceramics, glass, tiles and related materials.

When manufacturers finance production, machinery, raw materials and expansion at interest rates above 30 per cent, part of the cost may eventually be transferred to consumers through higher product prices.

Elevated borrowing costs can also discourage companies from increasing capacity, upgrading equipment or developing new factories. This could further weaken local production and increase dependence on imported goods.

MAN attributed the slight reduction in lending rates during 2025 to improving economic conditions, including lower headline inflation, greater stability in energy prices and the appreciation of the naira.

However, the association maintained that the cost of credit remained a serious obstacle to manufacturing competitiveness and output growth.

Manufacturers require financing to purchase raw materials, maintain equipment, meet working-capital obligations and expand production. At prevailing commercial lending rates, many businesses may struggle to generate returns sufficient to cover their financing costs.

The situation is particularly concerning for small and medium-sized manufacturers, which generally have fewer financing options and weaker balance sheets than large corporations.

The figures suggest that Nigeria must move beyond modest reductions in commercial lending rates and develop more accessible, long-term industrial finance for productive sectors.

Without affordable credit, efforts to increase local manufacturing, reduce building-material costs, create jobs and improve the competitiveness of Nigerian products could remain constrained.

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HBM Nigeria Plc, formerly Lafarge Africa Plc, has reported a strong financial performance for the first half of 2026, recording a 31% increase in revenue and a 57% rise in profit after tax (PAT). The company attributed the growth to higher cement sales volumes, improved operational efficiency, and stronger distribution performance amid sustained demand for building materials.

According to the company’s unaudited financial results for the six months ended June 30, 2026, net sales rose to ₦678.4 billion, up from ₦517.0 billion in the corresponding period of 2025. Profit after tax climbed to ₦208.3 billion, while operating profit increased by 51% to approximately ₦291 billion, reflecting improved cost management and operational excellence.

HBM Nigeria said revenue growth was supported by an 11% increase in sales volume, enhanced plant stability, improved logistics, and continued demand from infrastructure and construction projects across the country. The company also recorded stronger operating margins, which rose from 37% in H1 2025 to 43% in H1 2026, highlighting gains in production efficiency and disciplined cost control.

The company noted that its cement business remained the primary revenue driver, accounting for the vast majority of total sales during the period. It added that strategic investments in operational improvements and distribution efficiency continue to strengthen its competitive position within Nigeria’s building materials industry.

Looking ahead, HBM Nigeria said it remains focused on expanding production capacity, maintaining operational excellence, and creating long-term value for shareholders. The company is also progressing plans for a new three-million-tonne integrated cement production line in Calabar, a project expected to strengthen domestic cement supply and support Nigeria’s growing infrastructure and housing sectors.

Industry analysts say HBM Nigeria’s strong half-year performance reflects continued resilience in the construction materials market despite broader economic challenges. They note that sustained investment in cement production and operational efficiency will remain critical to meeting rising demand from housing, commercial real estate, and infrastructure development across Nigeria.

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Dangote cement has announced plans to invest $1 billion over the next four years to expand its cement production capacity across Africa, as demand for building materials continues to rise amid increasing infrastructure development across the continent.

The expansion plan was disclosed during an investor conference call in Lagos by the company’s Chief Financial Officer, .

Expansion Across Key African Markets

According to the company, the investment will help strengthen its footprint in several African countries, including and , among others.

Fapohunda said the expansion would increase Dangote Cement’s production capacity by about 45 percent, raising total output capacity to 80 million tonnes over the next four years.

The company noted that the expansion aligns with its long-term strategy to meet growing cement demand linked to infrastructure projects across the continent.

Financing Strategy

The $1 billion investment will be financed through a mix of funding sources, including:

• Operating cash flow
• Supplier credit
• Commercial papers
• Bonds
• Bank loans

This diversified financing approach is expected to support the company’s expansion without putting excessive pressure on its balance sheet.

Rising Infrastructure Demand in Africa

Demand for cement across sub-Saharan Africa is projected to increase as governments ramp up spending on roads, ports, housing, and energy projects.

According to the , countries across the region require about $170 billion annually to meet infrastructure development needs.

Major economies such as and are prioritising large-scale construction projects, which are expected to boost demand for cement and other construction materials.

Export Growth Strategy

Beyond expanding production, Dangote Cement is also increasing its export capacity.

The company plans to grow exports of cement and clinker to 10 million tonnes by 2030, up from 1.4 million tonnes recorded in 2025.

Strong Market Performance

Shares of Dangote Cement closed at ₦809 at the end of trading in Lagos and have gained 33 percent this year, outperforming the , which recorded a 26 percent increase over the same period.

The company also reported strong financial results, with net income more than doubling to ₦1 trillion for the year ended December 31, despite a slight 0.9 percent decline in sales volumes to 27.5 million tonnes.

Previous Expansion Deals

Recently, signed a $1 billion agreement with for the construction of 12 new cement plants and expansion of existing facilities across Africa.

The company is also preparing to launch a $1 billion investment project in , which will include cement manufacturing, coal mining, and power generation.

The investment forms part of the broader expansion strategy of the to deepen its industrial presence across Africa.

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Lafarge Africa Plc has announced the expansion of its Sagamu Cement Plant in Ogun State and Ashaka Cement Plant in Gombe State as part of efforts to strengthen local cement production and improve supply across Nigeria.

The company said the expansion projects will introduce modern dry-process production lines equipped with preheater kilns, vertical raw mills and roller presses for cement milling, aimed at enhancing energy efficiency and operational performance.

In a statement filed with the Nigerian Exchange Limited, Lafarge Africa disclosed that the expansion of the Ashaka plant is expected to increase its production capacity to two million metric tonnes per annum, while the Sagamu plant will reach 3.5 million metric tonnes per annum upon completion.

According to the company, the additional capacity will improve product availability and enable it to serve customers more efficiently across key markets, particularly in the housing, commercial construction and infrastructure sectors.

The development follows the acquisition of a majority stake in Lafarge Africa Plc by Huaxin Building Materials Group, a move the company said underscores continued confidence in Nigeria’s long-term economic and infrastructure growth.

Speaking on the expansion, the Group Managing Director and Chief Executive Officer of Lafarge Africa Plc, Lolu Alade-Akinyemi, said the projects reflect the company’s commitment to supporting national development through sustainable investments.

He explained that the expansion goes beyond capacity growth, as it is designed to deliver operational and environmental benefits while supporting value creation for customers, shareholders and host communities.

Alade-Akinyemi noted that increasing capacity at the company’s flagship plants would strengthen its supply chain, improve responsiveness to market demand and better position Lafarge Africa to support critical sectors of the economy.

Lafarge Africa added that it remains focused on the disciplined execution of the projects and transparent engagement with stakeholders as it continues to invest in strengthening its operations nationwide.

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