The National Institute of Credit Administration (NICA), Nigeria’s chartered statutory professional body for the control, supervision, and regulation of credit management profession in the country, issues this advisory to all Manufacturing Companies operating in Nigeria.
The real sector cannot grow on cash-and-carry alone. In a liberal economy, trade credit remains one of the most effective tools to move products faster, gain market share, and keep factory lines running optimally.
Trade credit accounts for over 60% of working capital financing in the Nigerian real sector. Professionalizing it is key to achieving the Renewed Hope Agenda for industrialization, job creation, and import substitution. A collapse in trade credit is a direct threat to manufacturing output and GDP growth.
However, when credit is extended recklessly, it becomes a weapon that destroys working capital, stalls production, and shuts down factories.
The Economic Imperative
Manufacturers are among the largest providers of credit in Nigeria. Every bag of cement, carton of beverage, or bundle of steel sold “on credit” represents a loan from the manufacturer to the distributor. When managed well, trade credit accelerates sales velocity and drives industrial output. When managed poorly, it creates bad debts, cashflow crises, and plant closures. This is why NICA is calling for immediate reform.
NICA’S Directive: 4 Actions for Manufacturers
- Use Credit to Sell Faster, But Sell Smart
Credit should be viewed as a strategic sales accelerator, not a concession. A well-structured credit policy helps distributors stock more, sell faster, and remit quicker — so your factory never has to stop for lack of orders. Credit is your sales accelerator. Use it, but control it.
- Adopt Professional, Ethical And Prudent Practices
NICA encourages manufacturers to treat trade credit as a financial product. This includes conducting due diligence, setting appropriate credit limits, documenting terms, and monitoring receivables aging. Deploying trained and, where possible, NICA-certified credit management professionals can help institutionalize integrity and discipline in credit decisions
- Develop a Responsible, Aligned Trade Credit Policy
Sales objectives and credit risk management should complement, not contradict, each other. A responsible trade credit policy seeks to balance profitable growth with prudent risk-taking. The aim is a sustainable operating relationship where both manufacturer and distributor thrive, and neither is exposed to undue financial distress.
- Consider Reporting Distributor Credit Data to Credit Bureaus
NICA strongly advises manufacturers to consider reporting the credit history and related data of their product distributors to licensed Credit Bureaus and other relevant Business Information Agencies.
Shared credit information helps identify patterns of risk, rewards distributors with consistent payment records through better access to finance, and de-risks the entire value chain. What is measured and reported can be better managed.
Looking Ahead: Optimizing Receivables through Factoring
To further strengthen cashflow, NICA advises manufacturers to explore opportunities in placing receivables on Credit Factoring. Instead of waiting 30, 60, 90 days for distributors to pay, sell your clean, verified receivables to a factor and get cash upfront to buy raw materials and pay workers.
With credit bureau reporting in place, factoring becomes cheaper and faster. This is how you convert sales on credit into immediate cash for production — without stopping the factory.
Conclusion
To the Organized Private Sector, particularly MAN and all manufacturers: Do not fear credit. Fear unprofessional way of managing credit.
NICA, through the NICA CreditAcademy stands ready to train your teams and integrate your systems.
Build your sales on credit. Protect your cash with discipline. Report your data with integrity. Factor your receivables for liquidity. That is how Nigerian manufacturing will grow, profitably and sustainably.
The time to act is now.
NO. 71
